Operators in the built industry have noted that the demand for office spaces is dwindling.
They made this observation in separate interviews with our correspondent.
The Managing Director and Chief Executive Officer of Wemabod Limited, Bashir Oladunni, said it was apparent that the country had lots of vacant office spaces due to a number of reasons.
He highlighted, “The reasons cannot be far-fetched; the first is technology, as people no longer require a large space to conduct their businesses. Another reason is the issue of Covid-19 that happened in 2020. After Covid, people ventured into co-work spaces and worked from home or hybrid.
“It is now for us to rethink and look towards the regeneration of urban centres, which Wemabod Nigeria Ltd. is currently doing. We have a block of 21-storey buildings located in Marina, Lagos State, which were commercial spaces before now, but right now, we have remodelled them into mixed-use residential apartments, which are selling very fast. These are the kinds of initiatives we are trying to collaborate with the Lagos State Government to be able to achieve our purpose.”
The Chief Executive Officer of Global PFI, Dr. MKO Balogun, who also weighed in with his thoughts in a chat with our correspondent, described the decline in demand for office spaces as an emerging trend that was not only obtainable in Lagos but also in other parts of the world.
He said, “Two things have happened. Before COVID-19, people hadn’t started thinking about shared spaces or working from home, but COVID-19 came and forced people to adjust.
One, they were on full shutdown. Then, after that, people found out they could work from home and still deliver and save costs. I had conversations with a lot of companies, some of whom were the clients we managed. They are reducing their footprints in the offices, even globally, not only in Lagos.”
According to the real estate expert, corporate organisations operated based on cost-effective methods and had now adopted a system that would allow them to procure smaller office spaces for a small fraction of their workforce.
He said, “We don’t expect that it continues to be empty. We can still have some semblance of full office operations, but we are going to see a trend where most companies are either downsizing or returning or maintaining the Covid-era arrangement where people work in the office. Immediately after COVID-19 subsided, about six major companies in the US divided their employees into three categories. Twenty-five per cent were those who had a permanent stay in the office. Another 40 per cent would come to the office to work when they wanted to work, basically twice a week. Then 35 per cent were to work from home. So, that had an impact on the spaces.
“A lot of people are familiar with the US and the UK. There are people who are turning office spaces into other uses. It’s not a local trend; it’s a global trend.”
The Managing Director of MDS Properties, David Mbah, also corroborated Balogun’s sentiments, saying, “There are several factors that are spearheading this. Number one is the whole COVID-19 outbreak that disrupted the way we worked. It made people have a rethink. So, when the COVID-19 lockdown was in place, people worked from home, but when the lockdown restrictions were lifted, people had a rethink. They thought they could work from home and still deliver results. That is the way workplace culture is shifting.
“They looked at it and asked themselves why they had to maintain those 1,000 square metres of office space when everybody could work from home. They could reduce the size of space from many 1,000 to maybe 200 square metres. That way, they cut costs by over 80 per cent. You can see that the incentives are so many. From a cost perspective, it makes sense for the employer. From a result perspective and from a flexibility perspective, it makes sense for the employee because they can work from home; they can be in their comfort zones and still be able to deliver results.”
According to Mbah, there was an oversupply of prime office space in places like Victoria Island, particularly in the wake of the COVID-19 pandemic, which put a heavy strain on the financial strength of most corporate entities. This, he said, had played a contributory role in shrinking demand for prime office spaces in the high-brow areas of Lagos State.
He added, “Of course, you know that those who own those buildings have already done their numbers to be able to recoup their investments. So, they can’t go below a certain rental threshold. When you are unable to meet up with paying that kind of rent, the building is going to be empty. When people can’t afford it, your building will be empty. It’s multifaceted, and these are just some of the issues responsible for that situation.”
A realtor, Kingsley Osalume, believes that inflationary pressure and its resultant effect on the economy were primarily responsible for the decline in demand for prime office spaces.