Landlords in Nairobi Feel the Impact of Vacant Office Space

According to a report from Knight Frank, companies are not showing interest in renting office space despite rent prices remaining constant.

The report states that in the second half of 2023, the percentage of office occupancy dropped from 75% to 72%. This decrease is attributed to businesses being more concerned with saving money on operations rather than renting office spaces, given the economic situation. Consequently, landlords in the city have had to maintain their rental prices. The majority of multinational companies in Nairobi are situated in affluent neighbourhoods such as Upperhill, Westlands, and along Mombasa Road.

According to the report, the cost of renting prime office spaces has remained consistent at USD13 (Sh2,097) per square meter every month since mid-2023. This lack of change can be attributed to the surplus of offices available and the current tough economic conditions. Due to these economic hardships, many companies have postponed their need for office space and are focusing on operational issues rather than spending on capital.

Due to the ongoing economic decline, there has been a growing interest in the usefulness of shared workspaces as they offer a cost-effective solution. The local currency has witnessed a substantial drop of about 24% against the US dollar in the past year, which has increased the demand for affordable workspace options. As stated in the report, the cooperative nature of co-working spaces allows for the sharing of office expenses among multiple users, ultimately leading to lower overhead costs.

Despite the decline in the number of people working in offices, Westlands continues to attract companies, especially larger ones. This is because there is a high demand for top-quality offices that have impressive architectural designs and offer various amenities like parking, gyms, security, and elevators. Moreover, these offices are conveniently located near the Central Business District (CBD).

Westlands has seen the construction of several office buildings in the past five years, including the Global Trading Center (GTC). Moreover, the incorporation of Environmental, Social, and Governance (ESG) standards in office designs has further enhanced the appeal of Westlands. These offices prioritize energy efficiency, reducing energy expenditure and costs through the utilization of energy-efficient technologies. As a result, many offices in Westlands feature glass walls as part of their design.