Despite being impacted by exchange rate volatility, rising inflation and worsening investment climate, the demand for warehousing is growing and commanding high rent in cities. Experts predict better designs and increased demand this year, VICTOR GBONEGUN reports.
Notwithstanding the exit of foreign manufacturing firms, the warehouse market is witnessing higher demand due to an increase in international trade volumes, a growing e-commerce market and the entry of new manufacturing outfits in the country.
Also, the increased population has been playing a major role in driving demand for strategically located warehouses to store and distribute items directly to consumers, such as food and beverages, automotive, healthcare, agriculture, and retail needs.
Despite the slight boom in the warehouse and industrial market, the manufacturing sector shows signs of struggle as factories operate at slightly lower capacity.
The poor state of the economy has not encouraged much expansion in the warehousing space by manufacturers, as they grapple with unsold products worth N1.24 trillion piled up in warehouses during the first half of 2024.
The Manufacturers Association of Nigeria (MAN) recently reported a concerning trend within the industry, revealing that about 767 manufacturing companies shut down operations, while 335 experienced distress in 2023 alone. The development was attributed to various economic difficulties, including exchange rate volatility, rising inflation, and a worsening investment climate.
MAN revealed in its first-half economic report by its President, Francis Meshioye, that the number of unsold goods jumped by 357.57 per cent in 2024 compared to the same in the previous year. He lamented that people aren’t buying as much because of rising prices, the government’s removal of fuel subsidies, and the weakening value of the naira.
Many multinational firms including GlaxoSmithKline, South African retailer Pick n Pay, Deli Food Nigeria Ltd, NASCO Fiber product Ltd, Tower Aluminium Nigeria Ltd, Procter & Gamble, Sanofi and others have recently exited the country. This further affected what could have been an increased demand for warehouses, as many remained vacant for years, while others were converted to other uses.
Despite the lull in manufacturing capacity, warehouses in urban centres and strategic locations in Ogun, Port Harcourt, Abuja, Ibadan, and Lagos, have attracted increased rent with prices ranging from N1.7 million to N20 million depending on size, location, and design. The average price of warehouses for sale in strategic locations is between N100 million and N450 million.
The Guardian learnt that major importers of finished goods and automobile parts, as well as new industries, are driving the demand in locations such as Trans Amadi in Port Harcourt, Idu district in Abuja, Mowe, Arepo in Ogun State, and Lagos such as Epe, Ogba, Agbara, Oregun, Ikeja, Isolo and Gbagada, Oshodi- Apapa.
The big manufacturing firms require between 500 to 1,000 square metres of space and a maximum of 36,000 square metres for storage. Most of the modern warehouses are occupied, while the unoccupied are obsolete warehousing facilities that need an upgrade.
Furthermore, locations such as close to the ports, and special economic zones constantly require integrated and upgraded warehouses to store goods, thus creating investment potential for would-be investors.
The Guardian gathered that smart warehouses, which leverage technologies to optimise operations and energy consumption, are becoming more common in demand. E-commerce operators now require sophisticated warehouse management systems to pick and pack items efficiently; hence, the rise of the Internet of Things (IoT) is transforming the industrial market.
IoT devices enable real-time tracking of goods and inventory, improving visibility and reducing the risk of errors. Warehouses equipped with IoT technology allow companies to monitor their operations more effectively, enhancing productivity and reducing downtime.
The industrial real estate global market report 2025, stated that the size of the market is expected to see strong growth in the next few years, with an equivalent of $108.6 billion this year and $140.07 billion by 2029 at a compound yearly growth Rate (CAGR) of 6.6 per cent.
The report revealed that the estimated growth can be attributed to rising infrastructure development, increasing urbanisation, increasing trade volumes, rising consumer expectations, and supply chain optimisation. As urbanisation intensifies and e-commerce continues to grow, companies seek ways to maximise space in cities where land is scarce.
Beyond the traditional single-storey buildings, multi-storey warehouses are now considered as they offer a solution by allowing companies to store goods vertically, increasing storage capacity without expanding their footprint. Modern warehouses are also being built with sustainability, featuring energy-efficient lighting, solar panels, and advanced Heating, Ventilation, and Air Conditioning (HVAC) systems.
Experts predicted that the demand for ultramodern commercial warehouse spaces that accommodate smart technological advancements will grow.
President of the International Real Estate Federation (FIABCI) Nigeria Chapter, Mr Akin Opatola, pointed out that money always follows value, stressing that embracing innovative design in warehousing spaces in major city centres, will further drive demand.
He explained that the demand for the warehousing and logistics sector is ‘still very promising’ and an attractive investment for investors and players. He noted that in 2024, it was attractive and there is hope that it will trend the same path this year.
According to him, automation, and smartness in the design and layout of warehouses play a pivotal role in driving up demand in the market. He said investors that prioritise such features will enjoy increased demand, where they are located.
Although, he said the departure of major firms would not affect the market.
Opatola, an estate surveyor and valuer said: “We have seen it from our colleagues that play in the areas such as Mile II where you have Logistics Park, in Ilu-Peju, Ikeja, along Lagos-Ibadan Expressway, and Epe, that the demand is still strong. The sector has been growing after the COVID-19 pandemic, with the supply chain effect. People moved into the logistics and warehousing sector, so the potential is still huge and will continue to move in that trajectory.”
According to him, there is also interest in documentation warehousing facilities, where institutions like banks and multinational firms subscribe to use the facility to keep sophisticated documents.
The Chairman, Rivers State branch of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Mr Nwokoma Nwankwo, observed that warehouses located within Port-Harcourt and Onne Port, always have high demand.
However, he disclosed that areas used to huge business activities such as Trans-Amadi are struggling to maintain a business that will require a warehouse. In contrast, some of the companies have been relocated elsewhere.
“Many years ago, you won’t find a warehouse within Trans-Amadi easily; the Abuloma axis became the hotbed of property development, but it’s no longer like that.
“Some of the facilities are still occupied but their use is low. The demands are not as they used to be within the Port-Harcourt metropolis. It is a pointer that facility users may have left, particularly oil and gas sector operators who use warehouses,” he said.
On the impact of smart design on warehousing facilities, Nwokoma emphasised that any improvement in property affects value and causes demand to soar.
He urged the government to improve the economy and initiate policies that boost the security of lives and property to revamp the industrial and economic life in major cities in the country.
Nwankwo, a fellow of NIESV, added, “When we started having security issues many years ago, it affected the city. Many people relocated their businesses to Abuja. If the people who need these facilities want to return, it will take some time to trust the system.”
The Principal Partner, Fisayo Alo & Company, a real estate firm, Mr Fisayo Alo, said many manufacturing firms prefer to have their products warehoused in locations such as Ibadan due to the proximity to cities like Ogun and Lagos, as the market commands cheap warehouse rent compared to Lagos. These factors, he explained, have ensured consistent high demand.
Alo said, “There is a ready market in Ibadan and its environs, and it is easier to connect places like Ogun, Lagos, Osun, Ondo, and Ekiti States. There are industries too in Ibadan; these are factors fuelling warehouse demand. In terms of rent, a standard 1,000-square-metre warehouse goes for about N10 million per year.
“If it is not standard, it’s about N7 million. Standard speaks to whether it is modern, the materials used, available parking space, how easy to offload and load goods and the location’s accessibility.”
According to him, standard warehouses command higher value and larger expanse of land compared to those in town where tenants must navigate through traffic snarls.
