Office space rent down as supply rises - Knight Frank
3 months ago, 12 July 01:11
Office rent dipped by seven per cent in the first half of 2018 due to an oversupply of space, the latest sector update shows.
Knight Frank’s Kenya Market Update shows absorption of office space on the other hand rose by 12 per cent within the review period.
The increase led to rent for prime office locations decline to Sh131.18 per square metre from Sh141.27 as tenants enjoyed better bargaining power due to the increased choices.
Westlands, Upperhill and Parklands were found to be most popular locations due to their proximity to the City centre.
“Its easier to get into and out of these locations, apart from security reasons, it boils down to their ease of accessibility and infrastructure developments in the areas,” Knight Frank Kenya managing director Ben Woodhams said yesterday.
In comparison to the second half of 2017, there was a slow down in completion of commercial developments in the first half of 2018 due to the charged political environment witnessed last year.
Completed developments in the review period include Sanlam Towers on Waiyaki Way which has 14,864 square metres and Galleria Office Park on Langata Road with 7,432 square metres.
The report shows there are 14 commercial developments in the pipeline set for completion in the second half of 2018. The developments set to have 228,963 square metres of space are being put up in Westlands, Parklands, Riverside,Kilimani, Upperhill and Lavington.
However, the realtor said oversupply and a dip in cement production to 1.46 million metric tonnes in the first quarter of 2018 from 1.63 million over the same period in 2017 could hold up work on new buildings.
The report found office rent in Westlands has registered the fastest growth in the last 20 years, from Sh35 per square metre in 1998 to a current average of Sh120 per square metre, a 242 per cent increase.
Upperhill follows with a 175 per cent increase over the two decades.
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