Last week, Heritage Place conducted its topping out ceremony with the Commissioner of Physical Planning marking a significant milestone and the obvious drive to fully clad and complete the building over the next few months.
The $65m development, owned by emerging market private equity firm, Actis and financed by FCMB Capital Markets is set to be Nigeria’s first green building aiming to achieve a LEED Certification with much lower operating costs than similar buildings. The development however, will face competition from Temple Tower, a neighbouring office development which is also beginning cladding shortly and aiming for completion soon. Although BAT Rising Sun, a mixed use development with office and residential elements will largely be used as the new HQ for British American Tobacco, growing completions on this road marks the start of a new era on Kingsway (Alfred Rewane Way).
The road’s transition into a mixed use hub with high rise office towers complemented by high rise residential, hospitality and leisure developments will come with increased competition from office developers to get their buildings fully tenanted. This may be even more apparent with 2 private equity firms Actis (Heritage Place) and African Capital Alliance, who recently began their flagship Ikoyi office development – Alliance Place (6,670sqm) on the same road. While both developments are different in terms of scale and other factors, these private equity investors will typically be pushing harder to reach full occupancy at attractive rentals to allow them exit their investment within 2 – 4 years of completion.
Recent market reports however, have stressed pressure on prime office rentals given the tough economic landscape, particularly in the Victoria Island office market where up to 30,000sqm was delivered in Q1 alone. Irrespective of current setbacks, Ikoyi’s diverse skyline and relatively limited land space could mean that it may be able to withstand this pressure.