In major cities, there is a mounting challenge of finding adequate space to store goods, driven by importers and logistics companies stockpiling merchandise to hedge against inflation and volatile exchange rates. Retailers, e-commerce businesses, and distributors of major manufacturing firms are all accumulating goods as a precautionary measure to ensure uninterrupted inventory supply and sustain profitability.

The scarcity of commercial warehouse and industrial space is the consequence of a combination of economic uncertainties, rising costs of building materials, and high interest rates on commercial loans. These factors have discouraged some developers from pursuing new warehouse construction projects. Nevertheless, certain cities like Port-Harcourt, Abuja, Kaduna, Ibadan, and Lagos continue to present attractive investment opportunities in the form of distribution centers.

 

In Port-Harcourt, many companies are opting to build new warehouses in the outskirts due to a shortage of available land in industrial areas. In contrast, in Lagos, existing warehouses are either becoming obsolete or undergoing conversions into churches, banks, or shopping malls.

 

A recent report from the Oxford Business Group highlights the global retail sales figure of $22 billion, with online shopping playing a significant role. In Nigeria, the growth of online platforms like Jumia, Konga, Yudala, and others has expanded the scope of internet businesses, leading to a surge in online orders.

 

According to the Knight Frank report for 2023, the demand for top-tier warehouses across Africa remains unmet in many countries, including Nigeria. This persistent inadequacy has led multinational corporations to establish their own purpose-built facilities in areas like Ikeja, Sagamu, and Agbarawe.

 

The average price for warehouse rentals in Lagos typically starts at N12 million to N15 million annually, with the most expensive warehouses exceeding N3,000,000 per year. Industries requiring large warehouses typically seek spaces ranging from 500 to 2,000 square meters for storing goods. Locations such as Trans Amadi in Port-Harcourt, Idu district in Abuja, Lagos-Ibadan Expressway, and various areas in Lagos boast a mix of outdated and modern warehousing facilities.

 

Dr. Solomon Aigbavboa, CEO of Sonedis Logistics, projects that the warehousing market, with an annual growth rate of 11%, is expected to reach a value of $170 million by the end of 2023. He emphasizes the need for government and the private sector to invest in the logistics sector to meet the increasing demand driven by agro-products, fast-moving consumer goods, and specialized markets like pharmaceutical cold chain facilities.

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Mr. Hamilton Odom, Chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV) in Rivers State, underscores the scarcity of warehouses in major industrial areas of Port-Harcourt due to a shortage of available land. He highlights the high demand and limited supply of warehousing, leading to rental rates as high as N15,000 per square meter.

 

In Lagos, former NIESV Lagos branch Chairman Dotun Bamigbola points out that existing warehouses in industrial locations may lack modern facilities such as Closed Circuit Television (CCTV) and sprinkler systems, making them inadequate for firms with specific requirements.

 

Estate surveyor and valuer Abraham Akinropo adds that due to evolving service sector needs, many existing warehouses are becoming obsolete in terms of height and other conditions. Modern warehousing requires certain building conditions and materials to meet new industry standards.

 

Mr. Gladstone Opara, President of the International Real Estate Federation (FIABCI), notes that e-commerce innovations have sustained the growth of the warehousing sector, despite challenges in the broader economy. E-commerce has reshaped various aspects of real estate and is widely embraced.

 

Mr. Niyi Fadoju, former Chairman of NIESV Faculty of Real Estate Consulting, suggests that the impact of e-commerce and retail on warehousing demand in locations like Abuja is relatively low due to a smaller population. He highlights specific zones in Abuja, such as the Idu industrial district, designated for warehouses but notes potential security concerns in these less populated areas."

 

Source: TheGuardianNg