At 75 percent, EKO Atlantic Mall has the highest vacancy rate
Tenants are deserting Nigeria’s new large sized malls with alacrity, signalling dwindling consumer purchasing power and the deteriorating state of the economy. With a vacancy rate of 75 percent, Atlantic Mall in Lagos, which is reputable to be one of the largest malls in Africa in West Africa, are top on the list of retail outlets unoccupied, according to a report by Northcourt Retail Estate.
The Mall has a 107,500 square meters retail facility, and it includes a vast array of amenities and entertainment, with ample on-site parking. Novare Mall came in at 28 percent, down from 47 percent at the end of 2017. Artee’s Port Harcourt Mall, Big Treat and Genesis Centre had 8%, 15 percent and 25 percent respectively. Ceddi Plaza and Gateway Mall in Abuja recorded 21% and 38% respectively. Abuja’s largest mall – Jabi Lake (20,000sqm) recorded the highest vacancy rate in city – 40 percent due to a number of stores that
closed down in Q1 and high rentals.
The high vacancy rate is largely driven by spiralling service charge as a stuttering economy makes it difficult for tenants to break even. Shoppers seen at Malls are low income earners who buy basic food items as rising inflation and hike in the fuel price has put them in check.
The economy doesn’t support growth and a lot of companies are closing down due to high cost of production. We don’t have the amenities and tenants can hardly survive, according to Otukoya Abiola, Centre Manager Leisure Sulure, and Lagos.
Next year will be tougher because the Value added Tax (VAT) increase will result in increased price of diesel, which means the service charge will further go up. The service charge would have gone down if there was no need to run the generator,” said Abiola.
Abiola said that Landlords will have to bear the burden of overhead cost so that tenants can stay. It is another form of subsidy.
Service charge as much as N120, 000 and N150, 000, but it has been increasing every year.
A total of 9 stores at the Shoprite malls are empty while 3 are sealed, some of them the vacant spaces are large enough to take 2 offices. The stores are on the same floor with KFC Foods, but the 26 stores at Leisure
mall have tenants.
A visit to the Apapa Malls shows a total of 19 stores are without tenants, even the cinema hall has been sealed. Some of the top brands that have evacuated include: Ruff and Tumble, the seller of kid clothes, Samsung Phones, and Cash and Carry.
Experts attribute the vacancies in Apapa to the menacing gridlock in the town as a lot of high end earners have relocated to other parts of the state, while those that stay very close to the city rather go shopping in other malls or conventional markets.
“Even if economic activities pick, the gridlock will continue to discourage people from coming here to shop,” said Adebukunola Taiwo, an Architect and Head of the Apapa Management Office.
Over a decade ago, Nigeria was at cusp of an economic boom as investors had wagered that the country’s rapidly expanding middle class, and a copious young population that craved for consumption would spur growth.
Developers began to respond to the aforementioned benign environment and positive optimism by building American style shopping mall, home to famous end brand stores, movie theatres and large supermarket chains.
In short Chinese developers and other Asian investors were looking to invest in the country’s malls.
However, the economic recession of 2016 that stoked a severe dollar scarcity that paralyzed business activities have crimped consumer spending, and the once thriving malls are not a shadow of themselves.
Nigerians are getting poorer as over 50 percent of a population of 200 million live on less than $1.98 a day; little wonder the country has overtaken India as the world’s poverty capital.
Unemployment rate is at an all-time high of 23 percent, and to further exacerbate the already anaemic situation of consumers is the incessant fuel hike and devaluation of the currency.
The country’s economy has been growing sluggishly as GDP slowed to 1.94 percent in the third quarter, this compared to the 2.10 percent expansion in the second quarter of the year.
Experts are proffering solutions to of high rent for would be tenant retailers, and they said has to formulate policies that will help spur consumer spending.
Dolapo Omidire, lead researcher at Estate Intel, said investors would have to build less elaborate and smaller malls of around 7,000 square meters —around half of the size of typical large malls—and simply focus
on delivering space at affordable rates. ”If I build a $100 million mall and people are showing up just to take pictures, then it’s a big problem” said Omidire, in a recent interview with Quartz. There are potentials in the Nigerian retail industry as consumers are price sensitive and they crave for shopping.
Experts say the tenant mix matter a lot that people shouldn’t be selling identical products. Malls in the United States, Asia and the Europe houses recreational centres, big parking lots and lounges to relax.
“There are has to be banks, a nice car space, hyper supermarket where people can get what they want, and saloons,” said Abiola.
According to Nielsen Shopper Trends syndicated study, Nigerians shop 30 times per month and they want value and assortment when they shop.