This archive report was first published on 2 September 2019.
According to the latest industry reports, Riverside and Lavington in Nairobi's upmarket registered the highest annual rental growth for grade A offices, with 1.9 per cent and 2.2 per cent respectively, as of 2019.
However, the report by Broll property, titled Kenya Office Market Snapshot half year One 2019, casts doubt on the prospective growth in the sector, citing low average rental rates.
"This is largely attributed to surplus of office stock in the capital city," says the report.
Westlands, Kilimani, Parklands, Karen, and Gigiri had the largest office space market share, with 623,141 square meters translating to 36.5 per cent, while Upperhill was the second most sought-after area for office space, with 453,006 square meters translating to 26.5 per cent of total office stock.
Grade A offices registered the highest yearly yield growth in occupancies, increasing by 17 per cent points to an average of 83 per cent in the first half of 2019, from 65 per cent in the same period last year.
Grade B offices also registered an increase, with 8 per cent points to 88 per cent from 80 per cent.
The report attributes the growth in tenancy to innovative occupational terms, such as revenue share rent approach and progressive escalation rates, as well as the acceptance of security deposits in the form of bank guarantees.
As the sector hits the home stretch of the second half of 2019, the report paints a positive picture, with expected high foreign direct investments and a boost in demand for high-quality office stock.
