Nairobi by-passes give rise to industrial logistics hubs
Workers put up a billboard in April last year at the site of the proposed Tatu City Industrial Park in Nairobi. FILE PHOTO | FILE |
What you need to know:
The bypasses were initially built to divert traffic away from Nairobi’s central business district.
However, demand for high-end industrial property has spurred new developments in Nairobi that are set to change the warehousing and logistics space in the country.
The newly constructed by-passes around Nairobi have freed up transport routes making a number road intersections latest hotspots for logistics parks.
Prime logistics warehouses currently under development include, Tilisi on Nairobi-Nakuru highway, Nairobi Gateway Logistics Park on Mombasa Road, Infinity Industrial Park and Northlands Commercial Park on Eastern Bypass and Tatu Industrial and Logistics park on Northern Bypass.
The bypasses were initially built to divert traffic away from Nairobi’s central business district. However, demand for high-end industrial property has spurred new developments in Nairobi that are set to change the warehousing and logistics space in the country.
Most logistics space is currently in Nairobi’s Industrial Area, which is already clogged and devoid of technologies that support varying occupiers.
“Nairobi lacks adequate supply of prime logistics space. The existing space in Industrial Area is congested, old and does not feature latest technology. But we are seeing new developments come up outside Nairobi to support the space. Tatu City, for instance, features a huge industrial space and has already attracted huge players like Dormans and Chandaria industries,” said Ben Woodhams, managing director Knight Frank, a property management firm.
The latest prime logistics hubs are being built in line with the high-tech specifications and demands — such as refrigeration — of sophisticated international occupiers. The modern specifications move away from the empty “go-downs” to facilities said to “support modern retailing, distribution and manufacturing practices”.
New industrial park projects underway are expected to feature computer controlled wrapping systems, computerised storage and retrieval processes, spacious storage rooms up to 18 metres high.
“Because of the new developments coming up we are going to see a huge change in warehousing in a few years to come,” said Mr Woodhams.
The growing demand from companies leasing non-core activities such as storage has seen property developers diversity to industrial property.
Major users of warehouses include producers of fast moving consumer goods and importers of heavy equipment for construction, energy and the nascent oil and gas industry.
In the Logistics Performance Index (LPI) 2016 — a World Bank survey of operators providing feedback on the logistics ‘friendliness’ of countries — Kenya is placed second in sub-Saharan Africa, after South Africa, with a score of 3.33 out of 5. Globally, Kenya is ranked 42nd in the LPI out of 160 countries.
The rising demand for high quality logistics space is driven by retailers and consumer goods manufacturers seeking to expand their operations in Africa, improve distribution networks and supply chains to tap the growth of continent’s middle classes as well as the associated expansion of its consumer markets.
Last year, the Nairobi County government issued record levels of planning approvals for multi-unit, developer-led industrial warehouse developments at 280, 000 square metres, the majority of which is expected to be complete in the next two years.
“We anticipate that opportunities in this sector will continue to increase as African consumer markets grow and retailers and manufacturers require increased volumes of warehousing space.
“We see locations near ports, and along transport corridors connecting ports with inland commercial cities, as particularly important for operators developing logistics property networks in Africa,” said Peter Welborn, head of Africa at Knight Frank, during the release of Logistics Africa report in September.
Africa Logistics Properties is set to develop three warehouses in Tatu, Tilisi and Embakasi. The firm has acquired 71 acres of industrial zone sites to set up grade A warehouses for international companies.
Tilisi’s mixed-use development will feature 17 five-acre warehouses and packaging centres with own shops, petrol stations and bus bays.
Tilisi is targeting freight forwarding companies and owners of online shops looking for mass storage of goods. The firm also has its eyes on pharmaceutical companies and players in the agricultural supply chain.
“We see the Tilisi logistics estate as a key contributor to Kenya’s economic growth and success, with many companies now suffering insufficient warehousing capacity and insufficient access to facilities for repackaging and dispatch,” said Tilisi co-chief executive Kavit Shah during launch in May 2015.
In Tatu city more than 13 companies have sealed deals with the developer in the planned city industrial park. For instance, Unilever East Africa has acquired 70 acres of industrial space where it plans to build a manufacturing business while Bidco Oil Refineries has also purchased 78 acres.
