Devolution hits demand for Nairobi office space

Companies are targeting counties for new business leased office space in major towns while scaling down their interest in the capital city. FILE PHOTO | NMG 

In Summary

• The emergence of devolved governments has fuelled demand for office space for county governments and companies.

By JAMES KARIUKI
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Devolution has driven demand for office space up within key county towns adversely affecting uptake of office space in Nairobi.

A Cytonn Real Estate report dubbed ‘Nairobi Commercial Office Report’ observed that companies targeting counties for new business leased office space in major towns while scaling down their interest in the capital city.

“The emergence of devolved governments has fuelled demand for office space for county governments and companies.

“Private equity fund Fusion is putting up a Sh3.7 billion mixed-use development commercial building while Cytonn has announced a Sh6 billion real estate development in Nyeri,” it observed.

READ: Cytonn says Nyeri needs investors in office blocks

Cytonn said Nairobi was currently suffering from an oversupply in commercial office space and advised investors to consider value-addition as an integral part of wooing clients.

“The opportunity lies in differentiated concepts such as serviced offices, mixed-use developments and green buildings,” said the report.

As at 2017, the report said commercial office theme was oversupplied by about 4.7 million square feet where average rental yields remained attractive at 9.2 per cent and occupancy fell by 4.8 per cent to stand at 83.2 per cent compared to 88 per cent in 2016.