Why Nairobi's Premium Offices Are Winning While Older Buildings Struggle

Nairobi’s office market recorded a sharp improvement in 2025, with vacancy rates falling and demand rising for modern Grade A developments in areas such as Westlands and Upper Hill.

According to Cytonn Research, the Nairobi Metropolitan Area ended 2025 with an office space oversupply of 3.4 million square feet, down from 5.7 million square feet a year earlier. Vacancy rates also declined to 15.3 per cent from 19.3 per cent, marking the strongest recovery in the sector in almost a decade after years of excess supply.

The improvement has been driven mainly by tenants moving from older office buildings into newer developments that offer modern facilities, energy efficiency and stronger environmental, social and governance standards. Premium properties have continued to attract occupiers, while older buildings have struggled to maintain high occupancy levels.

Knight Frank Kenya said prime office occupancy reached 81.58 per cent by December 2025, supported by demand for developments such as Purple Tower and The Mandrake. Rental yields for prime office assets remained stable at between 8 and 9 per cent, while asking rents held at about $13 (Sh1,700) per square metre each month.

Mark Dunford, chief executive of Knight Frank Kenya, said tenants were increasingly prioritising high-quality office space with modern amenities and sustainability features. He added that prime developments continued to outperform secondary properties, which still faced elevated vacancy levels.

Knight Frank expects occupancy rates in prime office developments to continue rising in 2026, particularly in Westlands and Upper Hill, where the supply of high-quality office space remains limited.

Despite the recovery, the wider office market continues to favour tenants. Owners of older buildings are offering rent discounts, flexible lease agreements and refurbishment incentives to retain occupiers.

Knight Frank noted that the trend reflects wider conditions across Africa, where Grade A office developments in many markets are recording occupancy rates above 90 per cent, while Grade B properties continue to face weaker demand.

Analysts have, however, warned that Nairobi’s recovery could face pressure from a new wave of developments. About 2.5 million square feet of office space is expected to enter the market between 2027 and 2028, raising concerns about a possible return to oversupply.

Even so, investor activity in the sector remains active. Gulf Group of Companies recently began construction of a Grade A office complex in Lavington that will house Gulf African Bank, GulfCap Investment Bank and GulfCap Real Estate.

The project will consist of two five-storey buildings designed to international standards. The company said the development is intended as a long-term institutional investment rather than a speculative project.

Gulf Group chairman Suleiman Shahbal said the company remained confident in Kenya’s economy and Nairobi’s role as a regional financial centre. He said the project aimed to support institutional growth while providing a modern working environment built to international standards.