Demand for shared workspaces in Nairobi continued to gain momentum in the first six month of the year as small and medium enterprises, maturing start-ups and multinational firms took up space.
Knight Frank’s Kenya Market Update attributed serviced-office space popularity to flexibility as opposed to traditional office accommodation where tenants have a fixed location and spend money in acquiring furniture and hiring of staff.
“Serviced-office market is expected to continue recording growth over the next few years as new entrants establish themselves whilst existing providers expand,” it observes.
The market has witnessed new investments from Kenyan investors with the latest being the 12,000 square feet facility, Workable at Sanlam Towers and Nairobi Garage’s third branch—a 14,000 square feet space at The Watermark Business Park, Karen opened last February.
The report observed that mall owners reduced rental prices for prime spaces by 5.9 percent to accommodate current clients and woo new clients.
“Landlords remained under considerable pressure to provide concessions to attract new tenants and retain existing occupiers. Tough economic conditions have left most consumers with less disposable incomes, directly impacting on retailers,” it said.
The report said oversupply of high-end developments in some locations and a credit crunch hurt Kenyans’ spending power leading to a 1.8 percent price drop, which increased to an annualised of 6.7 percent in the year to June.
Rents for residential houses in prime locations also suffered a 1.7 percent drop that stood at 3.3 percent for the same period.
“These factors have transformed the market in favour of buyers and tenants as multinationals are downsizing while sending in fewer expatriates to Kenya.” says the report.