Nairobi office market occupancy declined to 72.7pc in the second half of last year from 77.2pc in the first half owing to oversupply as most companies progressively implemented in-office work arrangements.
The latest Knight Frank Kenya Market Update H2 indicates that while new office completions such as Purple Tower along Mombasa Road, Highway Heights in Kilimani, Matrix One, the Mandrake, and Museum Hill Towers in Westlands added 522,284 sq. ft. of prime space, a challenging economic environment slightly reduced the take up of prime offices as monthly prime office rents held steady at $1.2 per sq. ft
“The Nairobi office market is adjusting to shifting demand, with a steady rise in flexible workspaces,” said Mark Dunford, Chief Executive Officer at Knight Frank Kenya.
According to the real estate agency, the preference for in-office work remains strong despite development of flexible workspaces. The firm expects the market to maintain its focus on in-office arrangements for the foreseeable future.
“While studies have shown that employee productivity is largely unaffected by work location, many companies opted for an in office work arrangement. This was driven by factors such as justifying office space costs, direct supervision, and fostering in-person collaboration,” the firm says in the report.
Nonetheless, the firm says the sector remained resilient in the second half of the year supported by easing inflation, stronger shilling which gained 20.86pc against the dollar and a cut in interest rate from 13pc to 11.25pc.
“Kenya’s resilience remains strong despite economic challenges. With inflation and the Kenya currency stabilizing, we see continued investor confidence and exciting opportunities for strategic, long-term investments,” added Dunford.
In the retail market, at least 250,000 sq. ft. of new retail space was added in six months to December 2024 due to completion of projects such as Mwanzi Market, Runda Mall, and The Cove in Lavington and expansion of retailers such as Naivas, Carrefour and Chandarana.
On the residential segment, Knight Frank says prime residential market saw increased demand, with sale prices rising 8.27pc year-on-year, up from 2.45pc in 2023. Prime rental prices also grew 6.56pc in second half of last year.
