Nigeria’s property market is currently evolving and throwing up new and exciting opportunities. One of such opportunities is in the area of tenant representation, a service being pioneered by specialist commercial real estate firm Templetons Realty. Jide Akinsemoyin, managing director, Templetons Realty, speaks with ODINAKA MBONU about the value addition his company offers to clients. Excerpts:
As a service provider in the commercial segment of Nigeria’s property market, what distinguishes Templetons Realty from other brands in this market?
Nigeria has been in the top three destinations for Foreign Direct Investment (FDI) in Africa. This fact simply means that international businesses are queuing up to enter the Nigerian market. As an indigenous company, we were quick to understand that the inevitable outcome of this dynamic would be an increase in the need for high-quality commercial premises in the country, particularly in Lagos.
In a market where most if not all property companies act and negotiate on behalf of the Landlord or owner, here was an opportunity for us to be unique and to do the complete opposite by acting and negotiating on behalf of the Tenant. And we do this without bias and without prejudice because we do not face the same conflict of interest as other Real Estate companies who specifically manage commercial properties.
This service is called Tenant Representation and it comes at no additional cost to the normal fees you would expect to pay for a property transaction. It is our flagship service and one which we have successfully pioneered in Nigeria with tremendous success, as represented by a growing client list that includes a Global Outsourcing multinational, an American Technology multinational, a German Health Care, Agriculture and Chemicals multinational and a British International Management Consultancy.
What are the current trends in the commercial segment of the property market and how is Templetons Realty responding to these?
The commercial segment of the property market has no doubt seen some significant changes over the past decade. Today, there are more local and international businesses operating in the country than there were 10 years ago. This has resulted in a corresponding increase in both the demand for and the supply of commercial space available in the market. As supply has increased, particularly in the number of Grade A commercial buildings that developers have already completed or marked for future completion, so too have property owners introduced greater flexibility into their lease terms by offering shorter contracts, serviced spaces and outsourcing. This is a trend we see continuing in the market as Landlords increase the diversity of property solutions available in order to attract more tenants to their buildings.
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With regards to prices, I expect there will be some level of downward adjustment in the middle-to-long term as new office buildings due for completion in 2015 and 2016, are added to the existing stock.
Developers are already responding to the predicted change in market conditions by building properties that include amenities and features such as multi storey car parking spaces or LEED certification in order to offer a level of differentiation that will attract the best tenants to their properties.
At Templetons, we cater for this sector of the market through our lease restructuring service.
From your perspective, what are the main challenges facing the commercial segment of the property market and how do these challenges affect your services?
With banks charging prohibitively high rates for short-term loans and the availability of long-term funds to support a mortgage industry still at an evolutionary stage with the establishment of the Nigeria Mortgage Refinance Company, you could say that the environment is indeed challenging from a financial perspective.
From a legal perspective, we have issues around land ownership and title which create their own separate challenges for investors and developers. However, for our Tenant Representation Service, we deal principally in lease negotiations for completed or near completed buildings and as a result do not have to directly confront these issues.
Our value proposition to clients is strong. We apply our deep market knowledge, expertise and experience as unrivalled market leaders in the field of Tenant Representation in Nigeria, to sourcing and negotiating the best lease terms for clients on their Real estate requirements.
To achieve this, we adopt a conflict free business model whereby prospective tenants can be rest assured that they will only ever get presented with options that are in their interests, not options in which we may have an interest, direct or otherwise. And as I said earlier, all this comes at no extra charge to the client because our fees come out of the normal costs associated with a property transaction. We believe this truly represents exceptional value for new or incumbent tenants.
You earlier mentioned tenant representation as your flagship service. Can you provide more detail on what this service actually entails and what services do you offer your clients?
Tenant representation is part of our corporate services portfolio. Basically, it consists of the following sub services: Lease Acquisitions and Renewals, Lease Restructurings, Build-to-Suit transactions, Transaction Management, Portfolio Management and Lease Audits.
Our Lease Acquisitions and Renewals Service focuses on saving tenants money, particularly when it comes to lease renewal time. We have the skills and market knowledge to negotiate the best terms for our clients. In past engagements we have achieved savings of up to 25 percent or more off Landlords original asking price. And as I mentioned earlier, these savings come at no extra cost to the tenant, so really they have everything thing to gain by engaging us, and absolutely nothing to lose.
Lease Restructuring, I have already mentioned, is our main service offering to clients looking to introduce greater flexibility into their existing lease terms.
Our Build-to-Suit Transactions Service is targeted at clients whose Real estate needs are not catered for within the portfolio of existing offerings in the market. We are experts in this field, having structured numerous projects of this type in the United Kingdom and Nigeria.
Our Transaction Management Service enables client companies to outsource their Real estate department to us so that they can focus on what they know best, running their business.
Finally, our portfolio management service involves us working with clients to devise real estate strategies for their portfolios. This can range from developing criteria for determining whether specific properties should be owned or leased to identifying opportunities for monetising assets, shedding unnecessary space and consolidating properties to achieve greater operational and economic efficiencies.
In addition to the above corporate services, we also offer land and development services to investors and developers. This is comprised of the following sub-services: Identification and appraisal of development opportunities; viability appraisals based on projection of sales income and analysis of development costs; advisory services on development partnerships, including landowners consortia, joint ventures and option agreements; advisory services on preferred basis of sale and management of the sale/tender process through assessment of bids.
Who are your target clients?
Our clients are mostly global multinationals and large Nigerian companies, who desire Grade A office space in prime locations in Lagos. This means we operate at the very top end of the commercial property market where annual rents per square metre average $1,000. As I mentioned earlier, a major component of this market segment are foreign companies who want the same high spec offices that are similar to what is available in their home countries. Such buildings are largely limited to the following locations: Victoria Island, Ikoyi and to a lesser extent Ikeja.
ODINAKA MBONU
