Over the last five years, the office space segment of the commercial real estate industry has witnessed major changes, with the development of a number of new spaces, particularly in prime locations across Nigeria.
Typically, properties in the office space market are classified into Grade A, B and C, based on the standard of finishing, range of facilities, location, quality of amenities and rental value. Agusto & Co. notes that the office space market is the largest segment of the commercial real estate market, accounting for more than half of the transactions, closely followed by the retail and industrial segments.
Nonetheless, transactions in the office space market have slowed in the last two years, due to the economic recession which adversely impacted business activities. As a result, some corporate organisations have shut down operations, with a number of international companies exiting Nigeria due to the challenging operating environment. Thus, leaving the office space market segment with a high vacancy rate, particularly in the Grade A category at circa at 57% in 2019 (2018: 54%). The office space vacancy rate is expected to average about 61% in 2020, on account of the challenging operating environment which has adversely weakened demand.
Co-working is increasingly becoming a phenomenon taking root in Nigeria, particularly as operators endeavour to wean large scale tenants/occupiers from conventional office spaces with the offer of more modern and flexible office spaces. This is largely due to the growing number of start-ups in the country, changing preferences in the demand for office space and the budding ICT industry. Co-working spaces are mushrooming and providing increasing competition for the traditional office space market.
Agusto & Co. Research
This report offers a broad insight of the office space market. In particular, the report:
Information that the Report Provides