Study of Commercial Real Estate Investment Decisions by Small and Medium Enterprises in Lagos

This study examines the real estate investment and accommodation decision-making behaviour of small and medium enterprises in Lagos State, South West Nigeria, investigating how SMEs choose between owning and leasing commercial premises and what factors influence their property acquisition strategies. SMEs constitute the dominant segment of Lagos's business ecosystem and represent a significant source of commercial property demand, yet their real estate decision-making processes are less studied than those of large corporate occupiers. The study employs a survey research design, administering questionnaires to 180 SME operators drawn from Ikeja, Surulere, and Lekki commercial districts. Interview themes covered business size, sector, lease versus own preferences, budget allocation for property costs, perceived barriers to property ownership, and satisfaction with current premises. Descriptive statistics and cross-tabulation analysis were applied. Findings indicate that leasing is overwhelmingly the preferred tenure arrangement, with 84 percent of sampled SMEs occupying leased premises. The primary barriers to property ownership cited are prohibitive purchase prices, limited access to commercial mortgages, and preference for maintaining capital liquidity for operational investment. SMEs in the technology and professional services sectors show greater willingness to invest in property ownership as an asset-building strategy. Rental cost is consistently ranked as the most significant property-related business cost. Recommendations include developing a commercial property credit product specifically tailored to SME financial profiles and creating co-working and managed office schemes to reduce property cost burden on early-stage businesses. Keywords: commercial real estate, SME, investment decisions, Lagos, lease versus own.