Nigeria's Prime Office Space Market Witnesses a 24% Decrease in Vacancy Rate: A Promising Trend
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Loading... - Victoria Benjamin
- 30 May 2023
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A recent report indicates that prime office space suppliers and landlords in Nigeria are optimistic about the market's recovery to pre-pandemic levels of activity. This positive outlook stems from improved business operations, leading to increased demand for office space and a reduction in vacancy rates.
During the second half of 2022, the vacancy levels at prime office facilities, also known as grade A offices, dropped significantly. The vacancy rate decreased from 42% at the beginning of the first half of the year to 24%, marking a substantial 57% decline.
Bolaji Edu, CEO of Broll Properties, stated that landlords are taking various measures and offering concessions to retain existing tenants and attract new ones. These measures include rent reductions, flexible leases, and rent-free periods, which are not typical practices in the market.
Edu recalled that during this period, there was an increase in inquiries from tenants in prime-grade buildings who sought to renegotiate their leases for more favorable terms. Many tenants were exploring options to benchmark their current leases and take advantage of attractive offers.
In terms of new leases, the office market experienced a 19% decrease in signings during the second half of 2022. However, it's worth noting that there were a significant number of inquiries made, with Victoria Island accounting for 54% of total leases and Ikoyi accounting for 46%.
Despite these fluctuations, Edu emphasized that the market was driven by tenants' preferences. Landlords who could best cater to these preferences had an advantage in attracting more tenants. He acknowledged that the market had evolved and introduced non-traditional practices due to the pandemic. These practices include hybrid systems and sustainable approaches. Tenants prioritized flexible leases, accessibility, a safe environment, and security when considering office space options.
Edu explained that a flexible lease provided tenants with the option to opt out of a long-term commitment. Traditional leases typically lasted for five years or more, but tenants were now seeking shorter lease terms that allowed for adjustments based on their performance and preference changes.
Furthermore, occupiers were increasingly interested in co-working and hot-desking solutions, which significantly reduced costs and setup periods. This approach allowed them to manage their workplace setup in the short to medium term.
