Kenya will host more staff from the World Bank and the International Monetary Fund as the multilateral institutions decentralise services from the head office in Washington to regional centres.
The staff, together with the 270 already based in Nairobi, will be housed in the newly acquired Delta Centre office block in Upper Hill, raising the profile of Nairobi, which hosts a UN office as a diplomatic hub.
“The projection is that the new office block (Delta Centre) will be fully occupied by the World Bank Group and IMF, who are now operating from several rented premises,” said World Bank country director Johannes Zutt.
The IMF and the World Bank including the International Finance Corporation, the latter’s private sector lending affiliate, will fully occupy the more than 157,000 square feet of space in the premises leaving no space for letting.
Delta Centre was acquired for a record Sh2.2 billion from Delta Corporation East Africa, a firm associated with Indian billionaire Mukesh Ambani, in a transaction concluded in September.
Mr Zutt said the World Bank Group’s business in eastern Africa has “considerably expanded” and is expected to grow more with the increased decentralisation of the institution’s programmes from the Washington D.C headquarters.
The country director said more staff would be posted to Nairobi, without disclosing the numbers involved or the time frame. The World Bank currently occupies Hill Park building, the International Finance Corporation is housed at CBA building, while the IMF is a tenant at Kenya-Re Towers.
“The present premises are all rented and will revert back to their respective owners,” said Mr Zutt.
Relocation of the offices for the twin institutions, expected next year, means additional lettable office space in the commercial property segment which experts fear could be experiencing a supply glut.
Main Mwangi, a director at Knight Frank, said that the commercial property segment was nearing saturation following steady investment over the last decade.
“High returns from investments in commercial property helped by undersupply of office space have over the years attracted many developers, but the steady growth is likely to lead to saturation,” Mr Mwangi said.
Experts in the real estate sector have also pointed out that the shift among businesses to own their own office premises, as opposed to letting, is also expected to dampen demand for commercial space especially within Nairobi’s Central Business District.
Rising demand for ownership of commercial space means a faster increase in property values, even as the outlook on rental incomes seems gloomy.
Knight Frank and CBRE, which are among the leading commercial property management firms in Nairobi, project an oversupply in office space. CBRE estimated the oversupply at one million square feet in September, with another seven million square feet expected to enter the market by 2013.
Knight Frank puts the completed office space at 15 million square feet, some of which is vacant, while two million is under construction.
Rental rates for office space has remained flat in Nairobi, with the most expensive spaces letting at about Sh120 per square foot, inclusive of service charges.