The commercial real estate market in Nigeria is witnessing mixed developments, as the cost of renting office spaces skyrockets due to naira devaluation, while industrial real estate is enjoying renewed attention driven by e-commerce growth.
A new market report has revealed that modern retail outlets and co-working spaces are gaining ground, even as traditional markets remain resilient in several parts of the country.
The report noted that co-working spaces, especially in Lagos and Abuja, have continued to gain popularity as businesses adapt to hybrid work models. Prices for dedicated desks in co-working centres now range between N50,000 and N100,000 per month, providing more flexible options for small businesses and remote workers.
On the flip side, the report highlighted a sharp jump in the cost of leasing Grade-A office space in Nigeria’s top commercial zones. In 2023, renting a 1,000-square-metre Grade-A office space in highbrow areas such as Victoria Island, Ikoyi, or Maitama cost $700 per square metre. At the time, with the exchange rate at N465 to $1, the total cost was around N325 million.
However, by June 2024, the Nigerian Autonomous Foreign Exchange (NAFEX) rate had surged to N1,400 to $1, pushing the cost of that same office space to a staggering N980 million — a 200 per cent increase within one year.
The report, citing data from Lagos-based real estate firm Ubosi Eleh + Co, said the spike in rental prices was largely due to inflation, naira depreciation, and instability in the foreign exchange market. Analysts say the rising cost has forced many small and mid-sized businesses to either downsize or migrate to shared office spaces.
Despite the overall drop in demand for traditional office spaces, prime locations such as Victoria Island, Ikoyi, and Maitama still remain in high demand among multinational companies, banks, and large law firms.
Meanwhile, Nigeria’s industrial real estate sector is recording notable growth, thanks to the rapid expansion of e-commerce and logistics services. According to the report, the need for warehouse space and distribution hubs has surged, with online retail companies leading the charge.
“This rising demand is driven by the increasing volume of online retail transactions and the need for efficient supply chains,” the report said.
However, challenges remain. Poor road networks, irregular electricity supply, and high operating costs continue to hold back full-scale growth in the industrial real estate segment.
In Lagos State, significant infrastructure and industrial investments are shaping the future of the property market. The report highlighted major developments such as the Dangote Refinery, which sits on 2,635 hectares — seven times the size of Victoria Island. The Dangote Fertiliser Plant, occupying 500 hectares, also adds to the state’s growing industrial base with an annual production capacity of three million metric tonnes of urea.
In addition, the Lekki Deep Seaport occupies 90 hectares and is part of the larger 850-hectare Lagos Free Zone, which falls within the expansive 16,500-hectare Lekki Free Trade Zone.
The state’s push for better transport connectivity is also playing a key role in property development. Projects like the Blue Line Railway (Phase 1), which links Marina to Mile 2 via a 13-kilometre rail track, and the 28-kilometre Red Line connecting Agbado to Ebute-Metta, are designed to improve mobility and boost economic activity.
The Lagos-Ibadan Expressway, which stretches 127.6 kilometres, continues to serve as a vital link between Lagos, Ogun, and Oyo states, supporting industrial and commercial traffic.
Between 2010 and 2013, Lagos reportedly reached the trillion-naira revenue milestone. A decade later, that revenue has grown by over 145 per cent, driven in part by real estate investments, transportation projects, and strategic partnerships.
Operators believe that if the challenges in the industrial sector are addressed, Nigeria’s commercial real estate market will become more stable and attractive to investors both locally and internationally.
