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17 March, 2024

In 2023, we published the Nairobi Metropolitan Area Commercial Office Report 2023 themed ‘Persisting Tenant’s Market’. The report provided an in-depth analysis of the sector's performance in 2022, along with insights into future prospects and investment opportunities. According to the report, the sector experienced notable improvements, with average rental yields reaching 7.6% in 2022, up by 0.3% points from the 7.3% recorded in 2021, attributable to increased occupancy and rental rates. Occupancy rates also saw a significant uptick, rising by 1.8% points to reach 79.4% in 2022, compared to 77.6% in 2021. Despite some firms continuing to adopt work-from-home policies, the demand for office space remained robust as more firms resumed full operations. Asking rents and prices increased to an average of Kshs 96 and Kshs 12,223 per SQFT respectively in 2022, from Kshs 94 and Kshs 12,106 per SQFT, respectively, recorded in 2021. Moreover, the market was characterized by an oversupply of 5.8 mn SQFT in office spaces, which persisted and restrained the sector's overall performance. However, this was an improvement from the 6.7 mn SQFT oversupply in 2021 attributable to heightened demand for physical office spaces, with many businesses returning to full office operations and others opting for a hybrid work policy following the transition from remote work. Additionally, factors such as ongoing economic recovery and a peaceful post-election period contributed to this trend.

This week, we update our previous research with the Commercial Office Report 2024 themed ‘Shifting Landscapes’, in order to determine the market’s performance and analyse the ongoing trends, by looking at the following:

  1. Overview of the Commercial Office Sector,
  2. Commercial Office Supply in the Nairobi Metropolitan Area,
  3. Commercial Office Performance, by Location and by Grades, and,
  4. Office Market Outlook and the Investment Opportunity in the Sector.

Disclaimer: The views expressed in this publication are those of the writers where particulars are not warranted. This publication, which is in compliance with Section 2 of the Capital Markets Authority Act Cap 485A, is meant for general information only and is not a warranty, representation, advice or solicitation of any nature. Readers are advised in all circumstances to seek the advice of a registered investment advisor