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Nigeria’s Office Vacancy Rate Records Downward Trend

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  • Nigeria’s Office Vacancy Rate Records Downward Trend

Vacancy rate in A-grade office buildings across the country is going down, a new report on the real estate sub-sector says.

According to the report, Office Market Viewpoint in Q4 2018 by Broll Nigeria, vacancy rates in A-grade buildings in Ikoyi and Victoria Island, which have the highest rate, are currently down by 59 per cent and 54 per cent, respectively.

Broll stated that in 2018, landlords were increasingly sensitive to the existing oversupply of stock in the market and as such strategic leasing options had to be devised in order to attract tenants to their buildings.

It stated that these leasing options included attractive financial incentives such as extended rent-free periods as high as 12 months, longer beneficial occupation periods of six months and tenant fit out allowances of as high as $400 per square metre.

“Therefore, although asking rentals remained constant for much of 2018, net effective rents (base rents net of incentives) fluctuated below asking rents.

“The median average asking rent for A-grade offices in Ikoyi remained constant at $750 per square metre per annum in the fourth quarter. In the Victoria Island commercial node, the median average asking rent also remained fairly constant at $650 per square metre,” it added.

The report said 2018 saw a significant amount of activity relative to the previous year, especially as the economy emerged from recession and moved towards a path of recovery.

It added that the level of enquiries for office space also increased in the year under review with a more diverse profile of tenants in the tech, finance, oil and gas, FMCG, aviation and pharmaceutical industries.

“In the quarter under review, occupiers with longer term horizons continued to enhance their presence in the market with a number of signed leases being for more than 1,000m², which deviates from the smaller-sized office transactions in previous years. Approximately 14,500m² of A-grade space was taken-up in the Ikoyi market in Q4 of 2018 alone,” the report said.

“This move by investors occurred irrespective of the elections scheduled to take place in February 2019, highlighting less risk aversion to the aftermath of the elections relative to the previous electoral cycle of 2015,” it added.

According to the report, 2018 also witnessed a slight evolution of occupier requirements for lease acquisitions while an increased number of tenants have started looking at flexible, serviced office options, especially small scale new entrants seeking flexibility to either expand or exit the market as and when required.

It explained that co-working space requirements also rose and service operators were operating at full or near full capacity, adding that service providers, primarily local providers, operating in standalone converted residential properties or B- to C-grade office buildings.

Key factors to watch in 2019 and their potential impact on the office market, according to the report, include oil prices and the local currency, among others.

“The outlook for oil prices is one embedded in risk, and a possible devaluation in the local currency by year end could introduce transactionary risk impacts in the form of increased occupational costs within malls as well as higher product prices for retailers if goods are imported,” it added.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Business

Businesses Groan as Price of Diesel Rises to N250 Per Litre

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Petrol Importation

Businesses Groan as Price of Diesel Rises to N250 Per Litre

Businesses have started feeling the negative impact of the rising price of Automotive Gas Oil, known as diesel.

A single litre now goes for N250 in some parts of Lagos, with businesses taking a beating on the back of rising energy costs.

Our correspondent observed that some filling stations in Lagos had increased the price of the product to N250 per litre, while many others sold it at between N220-N245.

Northwest Petroleum along the Oshodi-Apapa road increased the pump price of diesel to N250 per litre; AP (Ardova Plc), along Airport road, Ikeja, N248; and Oando, along Acme Road, N240.

The National Bureau of Statistics, in its AGO price report on Tuesday, said the average price paid by consumers for diesel increased by 0.22 per cent to N224.86 per litre in January 2021 from to N224.37 in December 2020.

It said states with the highest average price of diesel were Adamawa (N268.33), Zamfara (N262.78) and Kebbi (N257.50).

“States with the lowest average price of diesel were Osun (N194.60), Anambra (N195.83) and Enugu (N198.24),” the NBS added.

Crude oil price accounts for a large chunk of the final cost of petroleum products, and the deregulation of the downstream oil sector by the Federal Government means that the pump prices of the products will reflect changes in the international oil market.

The international oil benchmark, Brent crude, has risen by more than 25 per cent this year from the $51.22 per barrel at which it closed last year. It rose to $65.25 per barrel as of 6:30pm Nigerian time on Tuesday.

Diesel is mostly used by businesses to power their generators amid a lack of reliable power supply from the national grid.

The President, Association of Small Business Owners of Nigeria, Mr Femi Egbesola, lamented that the recent increase in the price of diesel was taking a heavy toll on businesses, especially Small and Medium Enterprises.

“The cost of diesel and raw material is giving us a nightmare. The price of diesel has been skyrocketing in a way that creates fear in particularly manufacturers,” he told our correspondent on Tuesday.

According to him, it is difficult for businesses to factor all the increase in diesel price in their final product prices.

Egbesola said, “That is why a lot of companies are downsizing and are making sure that they only produce products that they are so sure will sell in the market.

“Many companies have reduced their product lines significantly just to be able to cope. And that is not good for us because by the time this goes on, unemployment will increase. I believe government should be able to do something about this.”

He said although the downstream petroleum sector had been deregulated, there should be checks and balances.

Egbesola said many small businesses’ savings had been eroded already because ‘we keep spending our savings to make sure we don’t close shop’.

He said, “If things continue this way, there is no way we are not going to close shop. We are still struggling with the recent increase in electricity tariff.

“Many small businesses still depend so much on diesel generators because there is no alternative power supply. It is only the big players that have the facilities to use gas. And we cannot use solar installation because it is very expensive.”

Nigeria, Africa’s largest oil producer, relies largely on importation for petrol and other refined products as its refineries have remained in a state of disrepair for many years.

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Appointments

United Capital Appoints Latunji Head, Marketing/Corporate Communications

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United-capital

United Capital Appoints Latunji Head, Marketing/Corporate Communications

United Capital Plc has been appointed, Tolu Latunji as its Head, Marketing & Corporate Communications.

In the new role, he is expected to drive a strategic communications, marketing and brand management programme for the investment banking group.

Latunji is a communication and marketing expert with 12 years’ experience in products development, marketing, brand & franchise building, effective management and communication of strategic objectives whilst ensuring adequate visibility for both organisation and product/service offerings through product, content and brand initiatives.

“With a 360 degree knowledge of communications and marketing, which includes but not limited to – brand management and initiatives, corporate affairs, internal and external affairs, product and brand marketing, event management and experiential marketing, cluster/segment marketing, Tolu has served at various capacities on government constituted sub-committees on financial inclusion,” a statement explained.

Prior to joining United Capital Plc, he was the Managing Partner of Ten & Square Media Co., a bespoke creative ideation and brand/crisis management firm, based in Lagos, Dakar and London.

Latunji was recently the Strategic Communications lead at FMDQ Securities Exchange, Nigeria’s first integrated financial market infrastructure (FMI), where he had the responsibility of effectively positioning the group, together with its subsidiaries, as the most sophisticated and technologically driven securities exchange in Africa.

Prior to that, he worked in Guaranty Trust Bank for nine years with roles in brand management & monitoring, events and experiential marketing, products and content marketing and user experience.

He led the marketing team to the successful development and launch of various retail, SME and corporate products. He was also instrumental in curating and developing the bank’s social footprints. Outside the corporate environment, Tolu engages in various humanitarian activities with food banks and empowerment programmes. He holds a B.Sc. Economics from University of Lagos.

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Business

Firm to Train 100 Nigerians in Solar Installation

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300MW Solar energy

Firm to Train 100 Nigerians in Solar Installation

A learning institute, GreCo Academy is seeking to train 100 Nigerians on solar installation in Nigeria.

The trainees are expected to undergo a 90- day intensive vocational training after which successful candidates will be rewarded with a three-month paid internship with a renowned Renewable Energy Company in Nigeria, according to a statement by the firm.

The training will consist of 80 days virtual engagement and 10 days physical engagement.

This initiative, according to the firm is aimed at giving the trained candidates hands-on practical experience in their journey to becoming professional solar installers in the country.

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