In our 2022 Lagos Pipeline report, we highlighted that the commercial office development pipeline remains active with approximately 63% of the projects under construction. This is expected to result in an increase in supply over the next few years.
Despite these massive additions to the Lagos office market, there are still high vacancy rates, estimated at 12% and 36% in Grade A and B offices respectively. To understand market performance in terms of occupancy, we review 5 office buildings that we had previously highlighted in an empty offices article.
The table below shows the five empty buildings as at 2020 as well as their respective status:
Below we present the updated status of the same five buildings as at May 2022:
According to our analysis, up to 50% of the office space has been empty for up to 7 years, with the remaining percentage either partly occupied, having to be converted for another use, or sold completely.
As vacancy rates remain high, attracting and retaining tenants will remain a key priority to Landlords as they seek to understand emerging themes such as flexibility and affordability. As such, we are likely to see the global trend of flight to quality continue to play out in the market in terms of upcoming supply.
In addition, conversions and repurposing might also be likely for developments that have been empty for 5 years such as the one on Idejo Street or a sale like in the case of Kanti Towers.
