Glossary

Months of Supply

Also known as: Supply Overhang

A market inventory metric measuring how long it would take to lease or sell all currently available space in a market at the prevailing absorption rate, expressed in months, used alongside absorption rate to gauge whether a market is tightening or loosening.

Months of supply is calculated by dividing current available inventory (vacant space plus space under construction expected to deliver) by the trailing average monthly absorption rate, producing a single figure that translates raw vacancy and pipeline data into an intuitive 'how long until this space clears' timeframe that is easier to communicate to investment committees and lenders than vacancy percentage alone. A rising months-of-supply figure signals a softening market even if the current vacancy rate looks stable, since it captures forward supply pressure from the development pipeline that a point-in-time vacancy snapshot does not — making it a more forward-looking companion metric to absorption rate for markets with substantial construction activity underway. The metric is most useful in comparative and trend terms (is months of supply rising or falling relative to its historical average for this market and property type) rather than as an absolute threshold, since what constitutes a 'balanced' months-of-supply figure varies meaningfully by property type, market size, and typical lease-up velocity.