Report: More Offices Adopt Co-working Model in Lagos

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Peter Uzoho

Grade A offices which are also known as skylines in Lagos State are experiencing high vacancy rate due to the increasing adoption of co-working model of rents by corporate organisation, a report has shown.

In addition, the report pointed out that the sub-market has struggled to shake off the garment of weak demand.

Analysts at Northcourt Real Estate Research & Advisory, stated this in their ‘Nigeria Real Estate Market Review for first quarter of 2019,’ obtained recently.

The report also stated that land values have continued to appreciate despite the fact that the Grade A office market continues to struggle.

The report made available to THISDAY by the research firm’s Chief Operating Officer/Director, Ayo Ibaru, however, said the three towers in Lagos, namely Cornerstone, Greystone and Kingsway brought 12,000sqm, 11,190sqm and 13,317sqm of leasable office space to the market.

It added that with Heritage Place, The Wings Complex and Alliance Place recording vacancies around 55 per cent, the use of anchor/off-taker tenants, accessibility, security and green features were increasingly being recognised as key drivers to the success of Grade A office buildings.

In Maitama, a major city in the nation’s seat of government, the report indicated that rental values were considerably higher than other areas in the capital city.
It explained that office spaces on average went for N45,000- N60,000/sqm, and that major tenants included pharmacies, boutiques and travel agencies.

It also explained that commercial vacancy rates currently stood at 12 per cent, while rentals in the Utako area of the FCT averaged N35,000/sqm with commercial vacancy rate at 52 per cent.

Furthermore, the report stated that vacancy rates in Port Harcourt have moved, but only slightly, when compared with end of year 2018, explaining that Old GRA, GRA Phases 1, 2 and 3 recorded vacancy rates of seven per cent, nine per cent, nine and 15 per cents respectively.

It added that while Abuja’s Apo and Gwarimpa were 14 per cent and two per cent vacant, Ikoyi and Victoria Island in Lagos state were respectively 41 per cent and 23 per cent vacant.

Furthermore, the Nigeria Real Estate Review also noted that the growing demand for co-working spaces, especially in Lagos State, has seen ‘landlord flexibility’ demonstrated in friendly lease terms.
The report added: “Security has grown as a critical selector tool in the residential market. Secure gated communities are priced higher than estates perceived to be less so.

“Investment thinking in property is shifting. Some expect the new administration to devalue the currency with the uncertainty around this delaying property purchasing decisions. Some investors are opting to buy assets out of the country.

“Many are looking to sell local assets. On this backdrop is the migration of young and middle-aged professionals to Western economies, a fact not lost on the balance sheets of local agents. The residential real estate market is gradually picking up. Tenants pushed for better deals with Landlords making little or no reductions. Mini flats, 1 and 2 Bed flats remain favourites”.

It also stated that owners’ refusal to sell off ancient structures has contributed to the poor ambience of otherwise high-end residential areas in Benin City, Edo State.

According to the review, Etete GRA, Ihama GRA, and Boundary Road were respectively six, nine per cent and six per cent vacant, while low and mid-income areas such as 1 Ugbor, 2 Ugbor, recorded low vacancies due to their being centrally located in the state.

In its review of activities in the hospitality industry in the period under review, it noted that, “high-end room prices per night average N70,000 in Lagos and N80,000 in Abuja. And Lagos was rated the among the fastest growing Airbnb markets due to tourists exploring the arts and culture scene.

“The large number of Nigerians who live abroad who return home for holidays during the festive seasons driving Airbnb bookings in Lagos.
“Business, leisure and MICE (Meetings, Incentives, Conferences and Events) are the pillars on which Nigeria’s hospitality sector currently stands. The Nigerian hospitality market depends on the business traveler.”