Lagos’s Logistics Challenge: Warehouse Rents Skyrocket as Demand Outpaces Supply

In a clear indication of a flourishing but challenged logistics sector, the cost of leasing a warehouse in Lagos has surged, with rental prices reaching unprecedented highs. A new report reveals that rents have increased by as much as 10%, with premium, Grade A facilities now commanding monthly rates of approximately $6 per square meter. This price hike reflects a critical shortage of modern warehouse space and a burgeoning demand from a rapidly evolving economy.

The primary force behind this surge is the explosive growth of the e-commerce industry, which requires vast and efficient storage solutions for seamless delivery to consumers. Companies in sectors like food and beverages, retail, pharmaceuticals, and manufacturing are also driving demand, as they seek to optimize their supply chains to meet growing market expectations. According to Oyebode Oyegoke, the Chief Executive Officer of GokeRhema Consultancy Services, warehouses are no longer just storage facilities; they are “highly efficient operation centers” that allow businesses to get goods to customers faster while reducing costs.

The data supports this observation, with key industrial zones in Lagos experiencing exceptionally high occupancy rates. Reports indicate that spaces in prime locations, such as Apapa, Ikeja, and the newly developing Lekki Free Trade Zone, are almost fully occupied, with vacancy rates falling below 10%. This limited supply of modern, well-equipped facilities has created a landlord’s market, with a noticeable trend toward dollar-denominated rent, particularly among developers who rely on imported materials and foreign loans for their projects.

The current situation presents both a challenge and an opportunity. While the high rental costs increase the cost of doing business for companies, they also highlight a major investment opportunity for developers. The President of the International Real Estate Federation (FIABCI) Nigeria Chapter, Mr. Akin Opatola, noted that the demand for the warehousing and logistics sector is “still very promising” and an attractive prospect for investors. However, a slow pace of new construction, coupled with high costs and regulatory hurdles, means the supply-demand gap is unlikely to close anytime soon.

Looking ahead, experts predict that the demand for ultramodern commercial warehouse spaces will continue to grow. While the exit of some foreign manufacturing firms has created some vacant spaces, the overall market is experiencing a net increase in demand fueled by a rising population and a shift in consumer behavior. For businesses operating in Nigeria’s commercial hub, securing adequate and affordable storage space has become a critical strategic challenge that directly impacts their bottom line. The market’s future will depend on how quickly developers can respond to this demand and how effectively the government can create an enabling environment for the construction of more quality industrial properties.