Oversupply in commercial office space is pushing some owners to cut asking prices to secure occupation.
The glut follows growing completions at a rate of 52.6 per cent.
The country has an office space oversupply estimated at 3.2 million square feet this year and is expected to hit 3.9 million by 2018.
A new report by Cytonn Investments notes the growing glut in commercial office space is pushing some owners to cut asking prices to secure sale or occupation.
“Increased supply is constraining performance with occupancy rates and yields declining as rents and prices experience slower growth rates,” says Cytonn in the report released Monday.
The study indicates that occupancy rates have remained fairly stable with a 1 per cent decline between 2015 and 2016, while asking prices declined by 5.8 per cent.
The average asking price per square foot in 2016 stood at Sh12,031 compared to Sh12,776 in 2015.
More building completions
The glut follows increased supply with completions growing at a 5-year annual rate of 52.6 per cent, increasing from 2.1 million square feet in 2012 to 7.4 million square feet in 2016.
The trend has been compounded by a tough operating environment that has seen several businesses restructuring, leading to companies cutting down their operations in the country, says Cytonn.
