Nairobi Trails Kampala and Dar es Salaam in Prime Warehouse Rental Yields

Nairobi recorded a lower rental yield on prime warehouse assets in the first half of 2025 compared to Kampala and Dar es Salaam, according to new data from Knight Frank.

Knight Frank’s report shows that Nairobi’s average yield stands at 9.5 percent, falling behind Kampala’s 13 percent and Dar es Salaam’s 10 percent. This gap comes despite similar rental rates across the three markets, with Nairobi’s prime warehouses averaging Sh775.08 ($6) per square metre, compared to Sh904.33 ($7) in Kampala and Sh645.95 ($5) in Dar es Salaam. 

The data suggests that landlords in Nairobi are operating on tighter margins, even as demand for high-quality facilities remains steady. In Nairobi, consistent rental prices are supported by sustained interest in Grade A warehouses, particularly those located within Special Economic Zones (SEZs) and Export Processing Zones (EPZs). The ongoing development of logistics infrastructure around the capital and along major transport corridors has further strengthened Nairobi’s position as a key distribution hub. 

Emirates Logistics’ recent entry into the market, with plans to build a modern logistics centre at Tatu City SEZ, reflects increasing investor interest in the sector. Environmental sustainability is becoming a key factor in Nairobi’s warehouse market. Cold Solutions Kenya’s facility at Tatu City recently received LEED Gold certification, making it the first temperature-controlled warehouse in Africa to achieve this standard. 

Mark Dunford, CEO of Knight Frank Kenya, noted that tenants are increasingly seeking environmentally compliant facilities that offer energy efficiency and lower operating costs. Developers are responding by incorporating green building standards into both speculative and customised projects. In Kampala, the industrial sector continues to perform strongly, with Grade A warehouse occupancy rates exceeding 80 percent. 

The city remains attractive to tenants in agro-processing, manufacturing, and fast-moving consumer goods (FMCG). Most leasing activity is focused on small to mid-sized units between 300 and 1,000 square metres, while larger spaces are less in demand. The Industrial Business Park in Namanve offers competitively priced options, with rents ranging from $3 to $4.5 per square metre.

Judy Rugasira Kyanda, CEO of Knight Frank Uganda, said occupiers are looking for modern facilities with features such as cold storage, high eaves, durable flooring, and proximity to key transport routes. The increasing popularity of warehouse-showroom combinations and flexible lease terms reflects the operational needs of small and medium-sized enterprises (SMEs).

Dar es Salaam is also seeing growth in its industrial zones, particularly along Nyerere Road, Pugu Road, Mandela Road, and in Mikocheni. Demand is being driven by e-commerce growth, expanding manufacturing, and rising cross-border trade. Tanzania’s push to modernise its agriculture sector is also contributing to the need for logistics infrastructure. 

Ahaad Meskiri, Managing Director of Knight Frank Tanzania, noted that most lease and sale agreements are now being priced in Tanzanian shillings, in line with government efforts to stabilise the currency and reduce exposure to foreign exchange risks. The differences in warehouse yields across Nairobi, Kampala, and Dar es Salaam highlight the varied investment conditions and structural factors shaping East Africa’s industrial property markets. 

While Nairobi focuses on long-term resilience through sustainability and infrastructure, Kampala offers stronger immediate returns and high occupancy levels. Dar es Salaam, with its policy reforms and location-driven growth, presents opportunities for investors looking to diversify in the logistics sector.