Markets & Finance

Traffic jams hit Mombasa Road offices demand

Offices along Mombasa Road and the Thika Road registered highest vacancy and the lowest rents in 2015 partly because of heavy traffic, a market report by Cytonn Investments says.

Cytonn in its debut report on the Nairobi commercial office market said the two nodes had average rental yields of 8.3 per cent and occupancy levels of 72 per cent.
They performed below the Nairobi average rental yield of 9.7 per cent and vacancy level of five per cent.

Heavy traffic and trucks on Mombasa Road, home of many factories and main highway to ports of entry, are some of the reasons making tenants and developers avoid the area.

“Mombasa Road is the worst performing submarket having the lowest yields and occupancy rates. This is attributable to traffic congestions and its zoning for industrial use hence unattractive to both office tenants and developers,” said Cytonn real estate services manager Johnson Denge.

The report found that rent along Mombasa Road is Sh75 per square foot and Sh11,233 is the selling price for office space.

Mr Denge added that Thika Road on its part has mostly been a residential area and as a result there has not been heavy office space development in the node.

The Gigiri area on the other hand had the highest average rental yield at 12 per cent despite having a relatively lower occupancy level of 77 per cent.