Amid a tough economic climate and reduced consumer purchasing power, Lagos’ retail real estate market is finding stability by aligning with changing shopper preferences.
According to Knight Frank Nigeria’s Lagos Market Update for the first half of the year, consumers are increasingly prioritising convenience and proximity, driving demand for smaller, hyper-local shopping destinations rather than large regional malls.
This shift has created opportunities for agile local operators, who are outpacing international brands in meeting neighbourhood needs. For instance, Bokku Mart launched in September 2022, expanded to more than 70 branches within 18 months. It now operates nearly 150 outlets across Lagos, alongside peers such as Addide and Primemart, whose compact formats thrive where bigger chains have pulled back.
The report also shows renewed resilience in the office market after years of sluggish performance. Occupancy rates in Grade A properties rose from 65 per cent to 73 per cent, reflecting stronger absorption of premium office space.
However, despite the uptick in occupancy, average rents in Ikoyi’s Grade A segment fell 3.5 per cent year-on-year, from $57 to $55 per square metre per month. The report said the trend underscores a tenant-led market, where landlords prioritise maintaining occupancy over raising rents.
Office activity is picking up across Lagos, with hubs such as Eko Atlantic City experiencing a surge in commercial developments. The city’s modern infrastructure, comprising robust road networks, advanced telecommunications, reliable power and gas supply, and sustainable urban design, has attracted leading businesses seeking a live-work-play ecosystem.
In the residential segment, Lagos State is intensifying efforts to close its housing gap by leveraging public-private partnerships (PPPs). Initiatives range from large-scale new towns along the Ikoyi–Ibeju corridor to estate-level projects. The government has also launched a new PPP-based housing scheme in the Ibeju-Lekki corridor.
Despite these interventions, housing demand continues to outpace supply. Rising rents and growing defaults are forcing tenants to seek affordable alternatives in suburban and emerging areas such as Ikorodu and Ibeju-Lekki, where rental costs remain significantly lower than in urban centres.
The trend underscores a shift in tenant priorities, with affordability now outweighing the traditional appeal of central locations. Short-let and studio apartments are also reshaping the property market, buoyed by hybrid and remote work models that allow young professionals to manage housing costs while maintaining flexibility.
Speaking at the unveiling of the report, Senior Partner/CEO of Knight Frank Nigeria, Mr Frank Okosun, described the Lagos property market as a vital component of Nigeria’s economic story.
“In the first half of 2025, we witnessed significant reforms that stabilised the naira, a notable drop in inflation, and a renewed push for infrastructure development. These macroeconomic shifts are directly shaping real estate dynamics across the residential, retail, office, industrial, and infrastructure markets in Lagos,” he said.
Okosun explained that the report highlights key trends, including the growing shift to affordable housing in suburban areas, the rise of short-lets, stronger absorption in Grade A offices, the resilience of hyper-local retail, and the expansion of digital infrastructure with new data centres.
“We believe these findings will spark meaningful conversations and guide stakeholders as we collectively navigate the opportunities and challenges in the market,” he added.
Head of Marketing and Corporate Communications at Knight Frank Nigeria, Mr Lanre Sonubi, said the report goes beyond data to interpret the implications of market shifts. “While office occupancies are rising, rents are softening, creating opportunities for tenants. These insights are essential for investors, occupiers, and policymakers who must anticipate change and make informed decisions,” he said.
Also speaking, Lead Research Analyst at Knight Frank Nigeria, Mr Daniel Fabi, noted that oversupply continues to shape strategies in the wider office market. “Many landlords are repurposing vacant office buildings for residential, retail, or hospitality uses. At the same time, new projects are adopting mixed-use formats, blending workspaces with retail shops, gyms, and bars. This not only diversifies income streams but also reflects tenants’ growing preference for integrated work-life environments,” he explained.
