A new report has revealed that the long-term effects of the COVID-19 pandemic and a decade of macro-economic underperformance have continued to reshape occupier behaviour in Nigeria’s office market, pushing businesses toward asset-light and flexible operating models.

The report titled “Nigeria Managed Office Report” noted that the shift is making managed offices increasingly attractive to firms seeking affordability, operational agility and reduced real estate exposure amid prevailing economic uncertainties.

According to the study by Fortren & Company, managed office supply in Nigeria is heavily concentrated in Lagos and largely dominated by local operators converting lower-grade office buildings and residential properties into premium flexible workspaces.

The report observed that despite the dominance of Small and Medium Enterprises (SMEs) within Nigeria’s furnished office market, several multinational and Fortune 500 companies, including Canon, Universal Music Group, Spotify, British Council, The Mauritius Commercial Bank and Warner Music Group, also occupy managed office spaces in the country.

“With traditional offices remaining tenant-led, managed offices are poised for counter-cyclical growth, provided stakeholders rethink space as a service. Landlords and operators must find ways to collaborate at scale as occupiers continue to treat flexibility as a strategic hedge amidst the current economic headwind,” the report stated.

The study showed that Lagos accounts for 69 per cent of Nigeria’s managed office supply, reflecting the city’s concentration of corporate demand, capital and skilled talent, which continue to attract both local and international operators.

It further revealed that 48 per cent of operators are now focused on business-to-business (B2B) services, up from 45 per cent in 2023, signalling a gradual shift toward corporate demand, although SMEs and freelancers still account for a significant portion of revenue generation.

Within Lagos, Lekki Phase 1 emerged as the leading managed office hub, accounting for 18 per cent of total supply, ahead of Victoria Island, Ikeja, Yaba and Ikoyi.

The report attributed Lekki’s rising dominance to its proximity to fast-growing residential communities, relatively lower operating costs, strong demand from startups and SMEs, and the availability of lifestyle infrastructure supporting the live-work-play concept.

In the Federal Capital Territory, Abuja, about 40 per cent of tracked managed office supply is concentrated in Wuse, followed by Maitama, the Central Business District and Gwarimpa.

Regionally, the report noted that demand for managed office spaces remains relatively widespread across Nigeria, except in Port Harcourt, where over 60 per cent of demand is concentrated within the Greater Port Harcourt metropolitan area.

The study highlighted that Nigeria’s office market is not lacking in premium office stock, as Grade A and A+ developments have continued to enter the market based on the assumption that higher quality buildings would guarantee occupancy.

However, it noted that in a cost-sensitive economy, premium office pricing models no longer align with the financial realities of many occupiers, leaving several high-end office spaces underutilised.

According to the report, demand is increasingly shifting toward older and lower-grade buildings as well as residential conversions, where lower base rents and targeted capital expenditure allow operators to offer competitive pricing.

“In Nigeria’s managed office sector, value comes from repositioning what already exists, not building new,” the report stated.

The study also showed that indigenous operators currently control about 91 per cent of the managed office supply market. It noted that while traditional office leases offer tenants long-term cost efficiency and operational control, they often lack the speed and flexibility required by modern occupiers.

Demand for managed office space, the report said, is primarily driven by indigenous firms, particularly in the financial services, non-profit and information technology sectors.

The report projected that the managed office market would continue to grow as stakeholders increasingly view flexibility as a strategic advantage and adopt space-as-a-service models.

It advised landlords, investors and operators to prioritise affordable, scalable and growth-ready solutions for local firms while improving operational standards, data capabilities and regulatory compliance.

According to the report, the managed office sector is expected to evolve into a more institutionalised alternative to traditional leasing arrangements. It recommended that landlords and investors reposition existing assets, optimise older stock, strengthen partnerships and adopt flexible leasing structures as risk management tools.

Research Director at Fortren & Company, Martin Uche, said Nigeria’s office market was originally shaped by strong economic optimism witnessed in the early 2010s.

According to him, expectations of increased foreign direct investment and multinational expansion encouraged the development of several prime office projects across Lagos and Abuja.

He explained that the market outlook later weakened significantly due to slower-than-expected economic growth, rising inflation, repeated currency devaluations and changing workplace models driven by remote and hybrid work trends.

“The aggressive delivery of new stock that met weaker-than-forecast macroeconomic performance culminated in persistent oversupply and elevated vacancy, especially within the prime office segment,” Uche said.

He added that landlords have increasingly resorted to rental concessions and flexible lease terms to attract tenants, although these measures have not fully addressed the growing mismatch between conventional leasing structures and the operational realities of modern businesses.

“Corporates are now prioritising flexibility, speed to occupancy and balance sheet efficiency requirements that traditional office leasing structures are often unable to meet,” he added.

Uche noted that the report draws insights from proprietary data covering over 1,000 corporate occupiers and more than 130 flexible workspace operators across Nigeria.