Grade A office occupancy has improved significantly, reaching 73 per cent after a period of challenges, yet rental prices in Ikoyi have declined by 3.5 per cent, reflecting a mixed performance in the premium office market, the Knight Frank Lagos Market H1 2025 report has revealed.
This was disclosed at the media briefing to release the H1 2025 edition of the Lagos Market Update in Lagos.
The report stated, “The office market is showing resilience after a few challenging years. Occupancy rates in Grade A properties have climbed from 65 per cent to 73 per cent, showing a significant increase in the absorption of these premium office spaces. However, despite this rise in occupancy, average rental rates for Grade A office spaces in Ikoyi dropped by 3.5 per cent year-on-year, decreasing from $57 to $55 per square metre per month.
“This clearly indicates a tenant-led market, where landlords favour higher occupancy over rent hikes. Office activity has also picked up in key hubs. For example, Eko-Atlantic City is experiencing a significant surge in commercial activity, driven by its modern infrastructure.
This includes excellent road networks, top-notch telecommunication facilities, reliable electricity and gas infrastructure, and a sustainable design that promotes a live-work-play ecosystem. These features have attracted leading businesses to establish their offices in the city. In particular, MTN Nigeria and First Bank are relocating their headquarters in the city. MTN has already acquired a large plot of land, while First Bank has broken ground on its proposed 43-storey headquarters. This follows the recent establishment of the United States Embassy’s diplomatic facility in the city. These developments are set to transform the corporate landscape of the prime office market.
“On the other hand, a continuing trend in the broader office market is witnessing landlords adopting innovative strategies to address the oversupply and sustained demand for office spaces. This includes repurposing vacant office buildings into residential, retail, or hospitality uses.
“Furthermore, developers introducing new office projects are increasingly exploring mixed-use development styles. These offer experiential spaces by incorporating amenities such as retail shops, gyms, and bars. This approach helps developers diversify their income streams while catering for the growing preference for integrated work-life environments.”
Speaking on the release, the Senior Partner, Knight Frank Nigeria, Frank Okosun, noted that the Lagos property market was a vital component of Nigeria’s economic story.
He explained, “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.
“Our report provides insights into emerging trends: the growing shift to affordable housing in suburban areas, the rise of short lets, increased 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.”
Meanwhile, the Head of Marketing and Corporate Communications of Knight Frank Nigeria, Lanre Sonubi, said the H1 2025 edition not only presents facts and figures but also decodes the implications for investors, tenants, developers, and policymakers.
He added, “For example, while we see office occupancies improving, we also note rental softening in prime areas, a sign of a tenant-led market. Similarly, in the residential sector, affordability concerns are shifting demand towards emerging locations such as Ikorodu and Ibeju-Lekki.”
