Owners and managers of commercial properties are beginning to see vacant office buildings as a huge challenge, which is due to companies’ adoption of Work from Home (WFH) because of the economic realities in Nigeria. Remote work among employees began during the COVID-19 pandemic, becoming a permanent trend afterwards. This work style was more encouraged by the removal of fuel subsidy, costs of staff transportation and rising operations. Northcourt had also recently predicted an increased adoption of flexible work arrangements, due to fuel subsidy removal.
During this period of subsidy removal, companies would either be forced to increase transportation fees in remuneration or adopt hybrid work systems. Firms that had returned to full office work after the pandemic might reconsider office schedules to reduce transportation costs. This period would also see some firms delay rent payments and reduce space requirements. The consequence of all these is massive in the commercial real estate industry as property owners and managers lose revenue, while government agencies lose taxes.
Some office buildings are currently undergoing conversion into residences.
Report has it that there is still moderateness in the demand for premium office spaces, particularly among tech firms, although there is a considerable decline in the demand for generic offices. This has resulted in a rise in office vacancy rate in many Nigerian cities in Lagos, Port Harcourt, Abuja and Kaduna States, causing conversion of empty spaces into residential buildings. There has also been a downward shift in the traditional demand drivers in the office market.
In 2022, the situation of the office space market was not so impressive as there was no new project launched in Lagos, which is the commercial hub of the country. Although market volatility has reduced, there are challenges with the economic backdrop due to rising inflation and interest rates, and pressurizing of properties that are in need of remodelling and refinancing. Some office buildings in Ikeja, Ikoyi, Maryland, Surulere, Victoria Island, and Lekki Peninsula are currently undergoing conversion into residences.
Professional estate agents have different perspectives on the market state.
According to officials, majority of the office conversions are in residential areas where rent is quite expensive, with houses in short supply. State agencies have began issuance of fines to owners of these buildings. Professional estate agents and valuers do not have the same perspective on the current state of the market. Some affirm that changes are present in office segments and managers are ensuring their recreation, while others assert that the better option is renting as firms are still searching for office spaces.
Former Chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Prof. Adebowale Kemiki, said that the major advantage of Work From Home (WFH) is that it reduces the cost of office maintenance. However, it would result in reduced demand for commercial offices and a rise in the number of vacancies in the commercial property segment. The Chairman of NIESV board of trustees, Chief Emeka Onuorah, said that renting is a better option to conversion of empty office spaces.
People are going for the WFH alternative because it is cheaper — surveyor.
Managing Director of Global Property and Facilities International Limited, Dr. Muhammad Balogun, stated that it had become challenging to rent out commercial office spaces after the COVID-19 pandemic as a result of the WFH options for companies. Chief Executive Officer of Kings Court Realtors, Mr. Emeka Okoronkwo, said that people are going for the WFH alternative because it is cheaper, without realizing that they are not generating enough revenue and are not working at full capacity. He urged the government to carry out an urban regeneration in Lagos Island business district.
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Remote work increases office vacancy rate — Economic realities in Nigeria has led to adoption of Work From Home (WFH). – Express your point of view.
I completely understand the economic realities in Nigeria that have led to the adoption of Work From Home (WFH) arrangements. Remote work has indeed increased due to these circumstances, and it’s natural to see an impact on office vacancy rates. With more companies embracing remote work, there is a decreased need for physical office spaces, which can result in higher office vacancy rates. However, it’s important to recognize that remote work also offers several benefits. It allows for greater flexibility, reduces commuting time and costs, and promotes a better work-life balance. Additionally, companies can save on overhead expenses associated with maintaining office spaces. While the increase in office vacancy rates may present short-term challenges, it also opens up opportunities for repurposing these spaces for other uses, such as co-working spaces or creative hubs. It’s crucial for businesses and policymakers to adapt to these changing dynamics and explore innovative solutions to make the most of the evolving work landscape. By embracing remote work and finding creative ways to repurpose office spaces, we can navigate the economic realities and create a more flexible and resilient work environment in Nigeria.
The impact of the subsidy removal as forced Owners and managers of commercial properties to see vacant office buildings as a huge challenge, which is due to companies’ adoption of Work from Home (WFH) because of the economic realities in Nigeria and this reality began during the advent of the COVID-19. The increase in office vacancy rates present short-term challenges, but it also opens up opportunities for repurposing these spaces for other uses, such as letting out for residential purposes.
Due to company downsizing or preference for more affordable remote work choices, this change in working habits has led to greater office vacancy rates. Despite obstacles, it also gives companies a chance to rethink the use of traditional office buildings.Although an increase in office vacancy rates may provide immediate difficulties, it also creates opportunity for the repurposing of these premises for other uses.
These factors have increased the amount of remote work, therefore it makes sense to anticipate that office vacancy rates will be impacted. There are several benefits to working remotely, which must be acknowledged. It promotes greater flexibility, a better work-life balance, and lower costs.