Mentor Management Limited (MML) released the Nairobi Office Market Report for the second half of 2014 revealing that the looming oversupply of office space will mostly hit Upper Hill and Westlands.
“By the end of 2016 we predict there will be over 2.8 million square feet of office space. This excess supply of office space is expected to originate from Upper Hill and Westlands in 2015 and 19 per cent of the total stock of new buildings delivered since 2009 will be lying vacant,” MML CEO James Hoddell said.
Based on accumulation of offices, the research grouped nine regions in and around Nairobi into 'nodes', it’s clear that the city seems to embrace dispersion of employment as a structure of multiple edge cities. Kilimani and Westlands were the best performing office markets for 2014 having enjoyed 84 % and 71 % take-up on newly-built offices respectively.
Currently, rents for Westlands offices average as high as KES 117 per square foot and running as high as KES 220 per square foot. Meanwhile, rents for Upper Hill offices have risen this year from KES 90 to KES 105 per square foot. The city’s outer suburbs have seen massive mushrooming of office buildings this year whereby Gigiri, Thika Road and Karen account for more than a quarter of all the newly-delivered office buildings in and around the city.
According to the report, Mombasa Road and CBD offices are losing tenants Thika Road, Karen and Gigiri due to lack of parking spaces
“The absolute determinant in how quickly office buildings are filling beyond the baseline of the location and quality of the building is the availability of ample parking. Only one in every 20 offices within the CBD meet the minimum international standards of parking yet there is an outright relationship between ample parking and speedy uptake,” Mr Hoddell noted.
He also attributed the lower demand on Mombasa Road offices to traffic congestion which has left tenants depressed.
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