Nairobi’s Westlands remains the most prime location for commercial property investors in Kenya according to the Kenya Market Updates Report by Knight Frank.
The data shows that Westlands has maintained the lead in rental rates since 2004, above Upperhill, Kilimani and the CBD. In the second half of 2019, rental rates for prime commercial office space was the highest of the four locations at Ksh. 130 per sqft per month.
Kilimani and CBD maintained the rates at Ksh. 100 per sqft per month while Upperhill’s rates dropped from a high of Ksh. 110 per sqft per month in 2016 to about Ksh. 90 per sqft per month.
Absorption of Grade A and B office space increased by 41% in the review period compared to the first half of 2019, which is indicative that the oversupply situation has begun revising
According to Knight Frank, the increase was mainly due to the closing of a few, large transactions of office space in recently completed Grade-A buildings such as serviced office providers’ expansion, and mergers and acquisitions.
Following the trend, fewer but larger transactions are expected to continue in 2020 as Nairobi remains a major commercial hub and a favourite location for multinationals looking for regional headquarters.
This is an indicator that the commercial market is slowly beginning to recover.
One of the main contributors to the increase in absorption of office space were serviced office providers who continued to expand over the review period.
Examples included Kofisi, formerly known as Eden Square Business Centre (ESBC), which opened a new co-working space in Karen, while Nairobi Garage opened its fourth co-working space at The Promenade in Westlands in December, taking up approximately 30,000 sqft.
Tenant profile for Grade A offices shows that international clients make up the better portion of demand compared to local ones. International tenants constituted 57 per cent of the total while local tenants constituted 47 per cent.