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Kenya prime office uptake dips to 72.7pc in second-half of 2024
An interior of a modern office. Kenya saw a steady increase in the supply of Grade A office space from 2010 as the country established itself as a regional hub for international investors, governments, diplomatic missions, and multinational corporations.
Kenya’s prime office occupancy rate fell from 77.2 percent in the first half of 2024 to 72.7 percent in the second half, on increased supply of new units in the market.
The latest Knight Frank Kenya report shows the completion of the office spaces along Mombasa Road, Kilimani, and Westlands led to increased square footage leading to more unoccupied units.
“During the review period, notable completions included Purple Tower along Mombasa Road, Highway Heights in Kilimani, Matrix One, the Mandrake, and Museum Hill Towers in Westlands - collectively adding at least 522,284 square feet (sq. ft) of prime office space,” said global property consultant, Knight Frank Kenya.
“[The] released new stock caused a downward pressure on occupancy levels with average occupancy rates falling from 77.2 percent in H1 2024 to 72.7 percent in H2 2024,” it added.
Westlands in Nairobi has been the country's primary office hub attracting developers and expanding the supply of co-working spaces in the market.
This has seen an increase in the number of new operators in the office space including Regus, Ikigai, and Spaces among others taking a piece of the location.
Despite the increased supply, Knight Frank notes that there is a looming decline in the future office space supply.
The return to in-office work arrangement has seen several employers globally ask employees to return to office as Covid-19 restrictions eased.
The return-to- office mandates have seen an increase in the demand for office space globally leading to an oversupply.
“In post-pandemic Kenya, the preference for in-office work remains strong… While global discussions on work-life balance and remote work evolve, the Kenyan market is expected to maintain its focus on in-office arrangements for the foreseeable future,” added Knight Frank.
In the period under review, Knight Frank says that Workable, a flexible office space provider, took an additional 12,000 square feet at Sanlam Towers in Westlands attributed to the slow shift in workplace dynamics.
The monthly prime office rents remained at Sh145.4 ($1.2) per sq. ft exclusive of taxes.
Knight Frank says the sale of offices remained subdued owing to high asking prices.
“During the period under review, the Central Bank Pension scheme sought to sell two buildings —Timau Plaza and Twiga Hill Park in Nairobi for a price of Sh1.08 billion,” added Knight Frank.
Kenya saw a steady increase in the supply of Grade A office space from 2010 as the country established itself as a regional hub for international investors, governments, diplomatic missions, and multinational corporations.
This led to the rapid expansion of the commercial hubs of Upper Hill and Westlands, which attracted businesses away from the Nairobi central business district (CBD) where accessibility and supply of Grade A offices were limited.
