Nigeria’s biggest shopping malls were hit by the recession, as many of them recorded high vacancy rates in the first half of 2017, a recent survey revealed.
A half year report on the performance of the real estate market showed that the rising unemployment and inflation rate led to a significant decline in patronage at the malls, thus, leading to high vacancy rates in H1 2017.
The report showed that big malls in the three major cities of the country, including; Lagos, Abuja and Port Harcourt, felt the greatest impact of the economic recession.
In Lagos, Apapa Mall, Circle Mall and Silverbird Mall have taken hits, with vacancy rates at 35%, 27% and 31% respectively.
Also, Novare Lekki Mall, a 22,000 square metre retail facility had a 57% vacancy rate as at June 2017, slightly reduced from the 63% figure recorded in December 2016.
However, The Palms has continued its no vacancy rate, with a client-friendly pricing. It has also welcomed global clothiers, Tommy Hilfiger, which has given shoppers more variety.
In the same league, Jabi Lake Mall, a 30,000 square metres shopping outlet, occupying about 48, 000 square metres of land also recorded an estimated vacancy rate of 56 % by the first half of this year.
Other malls within Abuja are Ceddi Plaza with 27 % vacancy rate, Grand Towers, 22%; and Silverbird Entertainment Centre, 32%.
Vacancy rates in Port Harcourt malls averaged almost 10%, as the three malls in the city, namely Big Treat, Genesis Centre and Port Harcourt Mall, recorded 14%, 6% and 8% vacancy rates respectively.
Analysts’ take on the vacancy rates
Analysts attribute the rising vacancy rates across the malls to the lower purchasing power in the economy and the high political risk in places like the FCT.
Tayo Odunsi, CEO, Northcourt Real estate also noted that the increase in vacancy rates of malls in Abuja within this period is a result of the implementation of the government’s whistle-blowing policy and the fierce anti-corruption crusade.
Odunsi, also noted that in Port Harcourt, the vacancies reflect the consumer’s weakened financial strength and the waning influence of oil, which is a major wealth driver in Port Harcourt.
The increasing unemployment rate which has drastically reduced consumers’ purchasing power was also identified as a major cause of the recent rising vacancies rate across malls.
For instance, the recent figure by the NBS shows that unemployment had risen to 14.2%, making it the eight straight quarterly rise from second quarter 2015 when it stood at 6.4%.
In response to these underlining macroeconomic trends, consumers’ patronage at these malls drastically reduced during the first half of 2017.
This of course adversely effected sales at these malls and as such resulted to a fall in the demand for large sized retail.
Moreover, it was noted that landlords have had to reduce rents to curtail the increasing vacancy rate.
However, “should the economy ease up and basic food and retail prices drop, the retailers are expected to see reduced vacancies, but more importantly, sustained footfalls,” Odunsi said.