The exit of former renowned Kenyan retailer Nakumatt may have dented the rental yields of mall owners but not for so long. Local and international retailers have had a better time feeding of the spoils left by the financial ailments that killed the former giant. This together with the gradual downsizing of Uchumi have given retailers a bit of choice and space to play according to Knight Frank.
Far from the former’s woes, thriving retail brands have been actively filling the vacuum space created by Nakumatt and Uchumi’s exits.
In January, Naivas took over retail space at Development House on Moi Avenue previously occupied by Nakumatt, and at Capital Centre in April, which was previously occupied by Uchumi. This increased the retailer’s total outlets across the country to 45.
French retail chain Carrefour also opened at Sarit Centre in April, filling a vacancy created by Uchumi. Carrefour expects to operate in the space temporarily before shifting operations to the new Sarit Centre wing upon completion by year-end.
In addition, the French retailer plans to open its sixth store at Galleria Shopping Mall in July, taking over space previously occupied by Nakumatt.
Another international player, Botswana-based Choppies is also currently in talks with the owners of Nanyuki Mall to take over as the anchor tenant after Nakumatt vacated in January.
South Africa-based retailer Shoprite took up anchor tenant space left by Nakumatt at Westgate and Garden City Mall. Both branches are expected to open within the second half of the year while Game announced opening the second outlet at The Waterfront Karen, replacing Nakumatt as the mall’s anchor tenant.
According to Knight Frank’s recent Market Updates, established malls have retained high occupancy levels at 90% while newer retail centres have between 60-75%. The high occupancy levels indicate that there is still good demand for retail space in the right locations.
Further, the report indicates that footfall in major shopping malls increased slightly in the first half of 2018, as expanding retailers took up anchor tenant spaces vacated by ailing rivals.
Prime retail rents remained unchanged in the first half of 2018 at US$55/sqm/month while the service charge across retail malls in Kenya ranged from KSh.480 to KSh.615/sqm/month. This was attributed to the continued oversupply in certain locations, slow recovery from the 2017 political situation and the economic downturn.
Increased supply of retail space continued to exert a downward pressure on escalations that stood at 7.5% per annum for Kenya Shilling leases. With a positive economic outlook for the second half of the year, the retail sector stands to benefit from improved consumer spending power.
The country also welcomed activity from major international brands opening new shops in the first half of the year. LC Waikiki opened its doors at City Mall Nyali, while Japanese lifestyle brand Miniso opened three new stores at The Junction, Southfield Mall and Thika Road Mall, with an additional store set to open at The Hub Karen during the second half of 2018.
Choppies supermarket opened at Southfield Mall in Embakasi while Tuskys Supermarket took up 35,000 square feet at Diamond Plaza II. French sports retailer Decathlon is also expected to test the Kenyan market by opening its first branch at The Hub Karen during the second half of 2018.