The Ikeja office market is experiencing a bit of a renaissance, with demand for premium office space at its highest level in recent years, driven by a number of factors including its close proximity to the Local and International Airports, Alausa CBD, major industrial estates and the inter- state road transport networks. Grade B/B+ offices in Ikeja have been limited in supply over the last 20 years, with very little supply of contemporary Grade B office buildings since the delivery of Etiebet's Place in 1992 adding 3,500 sqm of prime office space on Mobolaji Bank Anthony to the Ikeja submarket.
The supply gap reduced slightly with the delivery of Landmark House in 2013, adding circa 4,000 m to the prime Ikeja office market, representing the first premium grade office building to be delivered in Ikeja over a 10 - year period, attracting pre-let agreements from P&G as an anchor tenant and other blue-chip multinationals before completion In more recent times, the demand for premium office buildings in Ikeja has been driven primarily by a gap in the supply of quality office buildings and changing global policies from multinational and large local office occupiers across a number of sectors. The FMCG sector has led the pack to create standardized workplace experience across all global locations. The effects of this led to increased demand from global players present in Nigeria, desirous of cementing their market position as industry leaders not just through their product or service offerings but also through their public image and by extension,the quality oftheir office premises.
The current demand /supply dynamics for offices in the prime Ikeja office market has resulted in an uptick in absorption rates for quality buildings at a premium, with average annual rental rates for Grade B/B- buildings, ranging between $200 – $450 per square meter depending on specifications and location which is significantly lower than the prime office markets of Ikoyi & Victoria Island where annual rental prices range between $350 – $500 per square meter for Grade B/B+ buildings. A recent example would be CDL in Ikeja GRA, which was delivered in 2019, adding a further 2,800m² of Grade B+ office space, was fully leased out 12 months from completion, attracting blue chip multinationals. The prime Ikeja office market is expected to be further boosted by the delivery of a number of 4/5 star business hotels, including the 250 key Marriot Hotel in 2021, the 79 key Providence by Mantis in 2020, and the 94 key Radisson Blu delivered in 2017
As the demand for quality office space from discerning occupiers increases in Ikeja, the limited supply of premium office buildings has put upward pressure on rents in this location even as other prime office districts of Ikoyi & Victoria Island experience downward pressure on rent as a result of increased supply.