After the end of an eventful decade that saw over 300,000sqm of space being delivered to the Lagos Office Market, there is still a healthy statewide development pipeline of over 120,000sqm. Despite the existing supply overhang and a low take-up as shown by occupiers shuffling between A & B Grade Offices, Converted Residential Buildings and Serviced Office Spaces, new developments are still breaking ground almost quarterly. Though many of the projects in the pipeline are part owner-occupied, the consistent development starts demonstrate that some investors still have confidence in the market.
While some recently delivered buildings including Temple Tower and Heritage Place among a few others are nearing or at full occupancy, many others are struggling. Here are 5 properties that have been empty since they were completed over 5 years ago.
Why are they still empty?
A lot of emphases has been placed on the completion of A-Grade developments and the ensuing dip in their achievable rentals, however, many B Grade properties on the market have had it worse. The graph below shows the trend of rents over the past few years.
Year on Year, B Grade property rents have noted an annual decline of over 23.8% on average, much worse than the annual average decline of 12% seen from A+ and A Grade property. Even though there is a clear case for investing in refurbishments and renovations or strategically located B Grade developments, the brand new B Grade stock delivered when better quality space was under pressure gave them little to no competing chance.