By Kingsley Adegboye
Following global and local market dynamics, rents are expected to remain at their current levels as companies strive to secure a firm growth trend. It is also anticipated that there will be more relocations to newly built, and better managed facilities, as the general business environment improves.
However, “We do not anticipate any major new entrants (occupiers) into the office market as blue chip and multinational firms will continue their prudent ‘wait and see’ approach to space acquisitions”, National Bureau of Statistics has said.
According to NBS, annual prime office rents in Victoria Island and Ikoyi sub-markets are expected to remain around the $600 /sqm and $700 /sqm marks respectively, and given this stabilisation of rentals, some prudent companies may seize the opportunity to obtain the ideal office space at a very reasonable price, adding that landlords on the other hand, are faced with the need for product differentiation while trying to maintain a profit on their investments.
“In addition to rentals, given some of the additional pressures that may negatively affect the real estate market in Lagos, (the changes to the Land Use Charge for example), it may also be the time to try to entice corporate tenants to take up more formal office spaces with the lure of a lifestyle change by including cafés, gyms, crèches and/or a bit of retail, as well as green solutions and power-saving features in these offerings.
“A good retail experience appeals to the average Nigerian. Like the office market, we do not anticipate any changes in actual retail rentals, even though tenants continue to negotiate concessions and rent holidays from landlords. We note that with the adoption of Naira-based leases, many smaller retail centres have increased their uptake from retailers, even though these are still having to contend with the problems of stock purchase and pricing.
“For those larger malls that are unable to convert their leases to Naira, agreeing a fixed exchange rate lower than the inter-bank rate, helps to retain good tenants. We note that despite the difficult operating environment, the retail market is gradually recovering, as evidenced by the increase in footfall in some malls, examples of which include Circle and Novare Malls both in Lekki. Reduced vacancy rates and some increased activity may also be attributed to new international retailers like the new Japanese retailer, Miniso.
Without a doubt, the size of the population of Nigeria is every retailer’s dream. While the cinemas and the grocery tenants draw a large portion of the shoppers as anchors, it is observed that the paying customers are desirous of a more exciting retail experience. This is evidenced by the population at the various retail fairs organised from time to time.