The mandate
Venture Garden Group, a pan-African technology group, was evaluating the acquisition of a 4,867 SQM site on Airport Road, Ikeja, with the intention of developing a mixed-use innovation hub combining hospitality, office, and retail uses. The site was intended to serve as both the group's global headquarters and an income-generating commercial asset.
Before committing capital, the client required three things: an independent view on whether the land price was commercially justified relative to the Ikeja market; validation that demand existed across all three proposed uses; and a pre-qualified database of potential corporate off-takers to underpin the office component's commercial case. The engagement was designed as a prelude to a full financial feasibility study.
Our approach
Fortren & Company structured the engagement across four parallel workstreams. The first benchmarked Ikeja asking land prices across sub-markets to establish a validated acquisition price range for the proposed site. The second assessed current supply, rents, average daily rates, and sector direction across hospitality, office, and retail in Ikeja, with competitive project mapping. The third involved a physical site visit, planning classification review under the Ikeja Model City Plan, infrastructure mapping, and FAAN height constraint identification. The fourth produced a database of 415 Lagos-based corporate occupiers across 12 sectors, with named decision-maker contacts, building grades, and credit indicators.
Market context
Ikeja is Lagos' administrative capital and primary airport corridor, with a catchment population of 470,200 and a median aggregate annual household spending of ₦208,955. Murtala Mohammed International Airport generates over 12 million domestic and international passengers annually, anchoring consistent corporate and institutional demand across all three proposed uses.
Land prices on the corridor have grown at an average of 44% per year since 2021, driven by scarcity of sizable plots and rising institutional demand. Retail rents have grown 12.5% per year over the past five years. Hotel average daily rates have grown 16.25% per year since 2022, reflecting post-COVID recovery and strengthening corporate travel. Traditional office rents have declined at an average of 7.24% per year since 2021, primarily due to the impact of currency volatility on dollarised prime stock and an oversupplied market.
Across all three sectors, the defining characteristic of the Ikeja market is the performance gap between average stock and premium or experience-led product. Better-specified, better-operated assets outperform the market materially in every category.
Hospitality: average daily rate of ₦124,103 across the market, with premium branded products commanding up to ₦512,238 per night. Sector direction: balanced. Office: average rent of ₦157,726 per SQM per annum across 395,739 SQM of total stock. Sector direction: oversupply. Retail: average rent of ₦139,200 per SQM across 230,140 SQM of formal stock. Sector direction: balanced.
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Key findings
The site has planning alignment. The proposed site falls within the institutional and commercial mixed-use zone under the revised Ikeja Model City Plan, directly supporting the scale and character of the proposed concept. Airport Road functions as the economic spine of the district, concentrating the highest-intensity commercial activity on the Lagos mainland.
The corridor has proven institutional appetite. The presence of Marriott, Radisson Blu, Sheraton, and Hilton on the same corridor confirms that international operators and institutional investors are already underwriting Ikeja as a viable location for premium, income-generating assets. The spread between average ADR and premium branded ADR — over ₦388,000 per night, quantifies the quality premium available to well-positioned products.
Office requires product differentiation, not traditional GLA. Traditional office stock is oversupplied and under rent pressure. Selective opportunity exists in managed flexible office formats that serve hybrid and satellite teams, a product type that is currently underrepresented on the corridor and aligned to the client's corporate tenant profile.
The three proposed uses are commercially complementary. Hotel guests sustain F&B and experiential retail, flexible office occupiers drive consistent weekday footfall, and the combined activation strengthens the investment case for each component individually. Mixed-use developments structured around this logic outperform single-use assets on this corridor.
A pre-qualified corporate off-taker pool exists. The off-taker database identified 415 companies currently occupying commercial office space across Lagos, spanning 12 sectors led by financial services, energy, and ICT. The concentration of these firms in the increasingly constrained Victoria Island and Ikoyi corridors signals latent relocation demand that a well-specified mixed-use asset on Airport Road can directly intercept.
Strategic insight
The Ikeja airport corridor supports a mixed-use development of the proposed scale and character, but location alone is insufficient. Across all three sectors, better-specified and better-operated assets outperform the market materially. The site's commercial viability is contingent on operator quality, not just concept positioning.
The proposed site addresses a visible gap in Ikeja's commercial stock. The corridor has validated demand, planning alignment, and a proven institutional operator base. The determining factor in asset performance will be the quality of operator partners engaged across each use.
Recommendations
For the developer: confirm land title and FAAN height restrictions before commissioning design. Title quality and achievable density are the primary determinants of land value and the cost structure of the entire project.
For the operator: engage institutional-grade operator partners across all three proposed uses before design is finalised. On this corridor, operator quality is the primary driver of performance variance between comparable assets.
For the developer on product positioning: target premium branded hospitality, managed flexible office, and experiential F&B-anchored retail. The airport catchment rewards activation and experience delivery. Goods-led GLA is structurally misaligned to how demand on this corridor is moving.
For the investor: commission a full financial feasibility study before capital is committed. The pre-feasibility findings support the viability of the concept. Translating that into investment returns requires detailed financial modelling on GFA, operator terms, construction costs, and yield assumptions.
Outcome
The engagement provided the client's leadership with an independent, data-backed basis for evaluating the land acquisition decision. The validated price range gave the client a negotiation anchor relative to the asking price. The sector analysis and off-taker database reframed the project's commercial positioning, shifting focus from traditional office GLA toward managed flexible workspace and experience-led retail formats more closely aligned to the corridor's demand profile and the client's own corporate ecosystem. The engagement concluded with a full financial feasibility study commissioned as the next phase.
With just 3,577square meters in land mass, Lagos is home to over 17 million residents, making it one of the most densely populated cities in the world. One of the most pronounced effects of clear overpopulation in overcrowded cities like Lagos is the increase in informal settlements, land grabbing, and illegal construction. Internal data from the Lagos State government shows that more than 349 buildings have been erected illegally and do not comply with the planning laws set out by the state. In response, the Lagos State Building Control Agency (LASBCA) and the Ministry of Physical Planning and Urban Development have intensified enforcement of planning laws to ensure that buildings within Lagos State are designed, constructed, and maintained to a high standard of safety. Their enforcement efforts have led to numerous building demolitions and are primarily targeted at three recurring violations across the state, which we will be discussing below.
- Lack of building development permit:
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Failure to obtain required development permits remains one of the most common triggers for demolition across Lagos. Under Section 27(1) of the Lagos State Urban and Regional Planning and Development Law, no building is allowed to be erected across the state, except when necessary permits and approvals have been duly sought and obtained. “No person shall carry out any development in Lagos State without obtaining a permit from the relevant planning authority.” Non-compliance with section 27(1) of the Lagos State Urban and Regional Planning and Development Law authorises the state government to demolish any building that has not sought and obtained the necessary approvals. Despite this clear guideline, unauthorised construction continues to proliferate in the state. In a recent enforcement action, 13 illegal buildingswere demolished in Lagos for non-compliance, highlighting the Government’s resolve to clamp down on developments that violate planning regulations. Several factors may explain why some developers bypass the approval process, including a lack of awareness of regulatory requirements, the perceived complexity or delay in obtaining permits, and, in some cases, a calculated risk to evade official fees or oversight. While these issues don’t justify non-compliance, they underscore the need for continued public education, transparency, and reform of the permitting process.
- Encroachment on Drainage Channels and Setbacks:
Building on drainage channels and designated setbacks stands out as one of the leading causes of demolition across Lagos. This issue not only breaches planning regulations but has also contributed to environmental and public safety risks.The Lagos State Building Control Agency(LASBCA) mandates a minimum setback of nine (9) meters for residential buildings in high-density, flood-prone zonessuch as Victoria Island, Apapa, and the Lekki Peninsula Schemes I and II. Despite these regulations, many developers have reclaimed and erected structures directly on waterways, obstructing water flow and increasing the risk of flooding. Recently, the Lagos state government marked 39 buildingsfor demolition in the Eti-Osa Local Government Area (mostly along the Ikota corridor) for obstructing drainage channels and encroaching.Similar actions have been taken in other areas like Amuwo Odofin. These demolitions have left many homeowners devastated. In response, affected owners have petitioned the government through their community associations, while others seek court injunctions to challenge the demolition or delay it pending clarification of their land status. Urban experts, however, emphasise the need for property buyers to secure proper planning permits from the Lagos StatePhysical Planning Permit Authority(LASPPPA) before embarking on any building or development project within the state.In many cases, properties built on canals, drainage channels, or government-designated right-of-way have little to no legal standing, making it difficult for affected owners to obtain compensation or favourable rulings in court. This is because such developments typically contravene established planning laws and are considered public safety hazards. We love your feedback. Let us know what you think about this article or your experience renting in Africa by sending an email toadvisory@fortrenandcompany.com. You can also join the conversation here onLinkedIn.
