Demand for office space in Ghana and Nigeria has slowed down due to the economic situation while countries such as Côte d’Ivoire are experiencing unprecedented demand for rental properties.
In addition to the slowing demand, the last 24 months have seen a significant supply of A- and B-grade offices coming onto the market with prominent properties such as the Civic Centre Towers, Heritage Place, The Wings and Temple Towers in Nigeria; and One Airport Square, NCA Tower, Nester Square, Accra Financial Centre and Stanbic Heights (previously Icon House) in Ghana.
“We have seen a decrease in enquiries from multinationals and large corporates looking for space measuring over 1,000m². Achieved commercial rentals have declined by as much as around 6% as a result of challenging economic environment and oversupply of office space in some locations,” says Eric Abu, portfolio executive at commercial property services company Broll Ghana.
He explains that demand and enquiries are for smaller office spaces measuring between 100m² to 200m². Rentals for A-grade developments have fallen to between US$32 per m² per month to $35 per m² per month.
Nigeria has seen significant increases in the cost of maintaining and operating commercial buildings due to soaring inflation and foreign exchange challenges.
“Furthermore, the office market is experiencing a widening gap between asking and achievable rents due to the downward pressure on achievable rents from the oversupply of office space and low tenant demand,” notes Bolaji Edu, Broll Nigeria CEO.
Asking rentals for A-grade offices are priced between $615 and $815 per m² per annum while B-grade rentals are charged in naira with asking prices of up to ₦60,000 per m² per annum.
Furthermore, Abu and Edu note that landlords are willing to include attractive non-rent incentives, by way of fit-out allowances and rent free periods as a means to drive up occupancy in their buildings.
Achieved rentals are expected to fall further as landlords of newly completed developments compete for the shallow pool of corporate tenants who can afford A-grade office properties.
Over the next 12 months in Nigeria, over 47,000m² of office space is expected to be delivered with the likes of Alliance Place (6,670m²) and Kingsway Towers (12,000m²) nearing completion.
In Ghana, Abu notes that tenants are eyeing the concept of serviced offices and these are mainly located within core markets and are only beginning to emerge in secondary markets. Average charges range between $500 to $1,500 per desk for these types of office accommodation.
While Ghana and Nigeria are battling oversupply and slowing demand for office properties, Broll notes that after the war, Côte d’Ivoire experienced slow growth in the development of office buildings in Abidjan. However, the return of the African Development Bank to Abidjan has put additional strain on the market thus pushing demand up.
“Côte d’Ivoire is experiencing high demand for office space leading to anticipated office developments in areas like Plateau, Cocody and Zone 4, meanwhile, buildings such as La Prevoyance and Green Buro built after the war are fully leased.”
It is expected that more than 250,000m² of A- and B-grade office space will come onto the markets within the next 20 months in west Africa. Some of these will be spread through the CBD of Ridge and emerging areas such as Airport City in Accra, Ghana; Victoria Island in Nigeria; and Plateau and Cocody area in Côte d’Ivoire.