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Prime office space rents up 17% as investors raise demand

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Increased demand for prime office space from international investors comprising mostly insurance companies and property fund managers seeking entry into Nigeria’s commercial real estate market has increased rents in exclusive locations such as Ikoyi by about 17 percent in the past six months, a Q2 2014 office space market report by Broll Nigeria has shown.

The report reveals further that, similar to the previous quarter, demand has also been driven by growth within the oil & gas and technology sectors as companies previously in incubator and host spaces now look set to expand into their own modern and comfy offices.

An earlier report by Broll shows Nigeria as the most expensive office space market in Sub-Saharan Africa with an average monthly rent of $70 per square metre against Ghana’s $37, Rwanda and Namibia’s $20 and $18 respectively and Mauritius and Madagascar’s $26 apiece.

According to the new report, Ikoyi, which had been exclusively residential, has seen a rise in multiple mixed use and commercial developments projecting the neighbourhood as a future up-market mixed use hub, as yearly rents for the few available spaces have increased to about $1,000 per square metre, representing 17 percent rise from $850/sqm in Q4 2013.

Of the over 6,500 square metres of prime grade office space transaction in Lagos in Q2,2014, the report points out, 75 percent of these spaces were within Victoria Island, the city’s most sought after office address where a square metre presently rents for $850 per annum as against $600 to $800 range it went for as at the end of 2013.

As demand for 200-500 square metre space continues to increase, expectation is that when the 200,000m2 of Grade A office spaces expected in the market in the next 24 months within Victoria Island are delivered, tenants will have more options to meet their demand and rents might also adjust slightly downwards.

 The regeneration of Ikeja, Lagos Island and its environs is expected to also slightly push rent upwards either in the mid or long term as tenants might see these  axis as likely alternatives to Victoria Island. Yearly asking rents on these axis currently range from $180 to $187/sqm.

Lekki which wa planned as a residential area has seen new office developments along Lekki-Epe Expressway and rent per square metre currently stands at $240 per annum.

This stable demand and consequent surge in rents however, tallies with the projected global office space demand which had been tipped to grow in the current year as companies demand for a conducive workplace that improves productivity and work place satisfaction which are rare in old office spaces.

Article Credit: Businessdayonline

Updated 4 Years ago

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Tags:     Broll Nigeria     Prime Office     Ikoyi     Victoria Island