The average rental rates across the retail market in the second half of 2018 remained fairly unchanged in comparison to the first half of the year according to the latest Broll retail report. The report provides a detailed analysis of the going rents within various segments of the retail property market at the time.

Accordingly, kiosks achieved an average rent of between Ksh. 50,000/month (US$488/month) and Ksh. 120,000/month (US$1,172/month) while line shops recorded average rental rates of between Ksh. 120/ft²/month (US$12.60/m²/month) and Ksh. 340/ft²/month (US$35.77/m²/month).

The report says that anchor tenants have been noted to achieve average rental rates of between Ksh. 55/ft²/month (US$5.78/m²/month) and Ksh. 100/ft²/month (US$10.51/m²/month) depending on the lettable space, centre type and location. Additionally, certain anchor tenants have been negotiating rentals payable on a turnover basis.

This shows that in retail, the anchor tenant is still king following the cost advantage they enjoy compared to smaller occupiers. Retail developers do well to allow anchor tenants to benefit from their economies of scale because anchor tenants are often long-term occupiers who also contribute the single largest source of revenue to most retail developments.

Kiosks and line shops on the other hand are sensitive to minor macroeconomic changes affecting their operations making them more risky tenants. This accounts for the premium they have to pay in rent.

Another major cost for tenants is service charges and here, small regional centres registered the highest average rate of Ksh. 52.75/ft²/month (US$5.5/m²/month) net of a promotion fund at an average of Ksh7/ft²/month (US$0.7/m²/month). Promotion fndss involve the cost of leasing, installing, maintaining and operating advertising signs.

Small regional centres (with a Gross Lettable Area of 25,000m² – 49,999m²) are the second largest types of development under the classification, after regional centres which can have a GLA of up to 99,999m2. Others are community centres and neighbourhood centres. You can find the data here.

Still on costs, an average of Ksh. 13/ft²/month (US$1.37/m²/month) of the service charge rate is shared amongst cleaning (US$0.35/m²/month), security (US$0.81/m²/month), insurance (US$0.19/m²/month) and rates at US$0.02/m²/month.

Related; For Nairobi’s retailers it’s a tenants market