Multinationals drive office space demand

High-end office sales in Nairobi grew by 41 percent in the second half of 2019 on the back of increased demand by multinationals looking for a base for regional operations.

Realtor Knight Frank said in their market report for the second half of last year that provision of serviced offices enabled multinational firms to move in fast and start operations as opposed to past traditions where global companies bought land in to build their regional headquarters.

“This trend of fewer but large transactions is expected to continue in 2020 as Nairobi’s stature as a commercial hub and a favourite location for multinationals looking for regional headquarters grows. The commercial market is slowly beginning to recover,” the firm said.

Multinational firms with offices in Nairobi include the World Bank, lenders Citi and Standard Chartered, vehicle assemblers Toyota and Isuzu, IT giants Microsoft, IBM, Asus and Cisco, beverage makers Coca Cola and Nestle’ as well as German agro-chemical manufacturer BASF among others.

Retail space demand which had endured a slow first half of the year owing to oversupply also recorded some recovery in the second half as increased take up of space in malls by international brands helped shore up occupancy that stood at 77 percent on average with more established malls enjoying 90 percent occupancy.

Some of the large foreign retailers have also expanded or announced intention to open new branches outside of Nairobi— such as Game (Massmart) in Kisumu— which has helped occupancy in the malls in other towns.

In the residential property market, property developers reported renewed higher sales this January, thanks to lifting of the interest rate cap which saw many lenders release money for purchasing houses.