International corporates in the financial, technology, and management consulting sectors who account for up to 70% of prime office tenants in Lagos are increasingly adopting remote work options, and this will impact the Lagos A-Grade office market during the next round of renewals.
Though many offices are starting to open up, the enforcement of varying levels of lockdown as a result of the coronavirus forced corporates to temporarily close their offices in the first half of the year or introduce new work policies to sustain business operations during the period. In response, most companies allowed staff to work remotely during the lockdown period.
Though working remotely was a means of keeping businesses running in the heat of the pandemic, it is clear that many international corporates will not be returning to the status quo. Instead, they are considering a number of options centered around downsizing the space they currently occupy as many have realised that they can operate without the entire team in the same brick and mortar space. For example, a firm that occupied 1,000 sqm. may consider downsizing to 500 sqm or less, depending on their internal policy choices.
Here are a few firms we profiled alongside their current remote work policies:
Though these companies are introducing remote strategies, the impact will not be immediate. Leases typically run for 3- 5 years, however, excess supply and a weak economy have fostered increasing competition among landlords leading to more incentives including shorter leases and break periods. We will begin to see the impact of remote work on the office market once lease renewals begin to emerge over the next 12 – 24 months.
While the remote option is becoming commonplace for international corporates, not all of them will operate fully remotely. This is because staff who may not have access to amenities such as fast internet connection, power supply, and workstations, will need to access these amenities in the office and will also need the office to hold meetings, and collaborate. The implication is that office that will be in demand will be those that have fewer workstations, but more open spaces for team members to collaborate when they are in the office.
We look forward to the changes that remote options will bring to the market during the next round of renewals.
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