Peter Theuri
Now is the time to consider renting, negotiating good commercial terms
and looking around for well-priced, modern Grade A space, new research
shows.
Investors in the real estate industry are experiencing dwindling
fortunes with intense competition and continuous softening of rental
levels, the inaugural Commercial Office Real Estate Market Report
indicates.
Uptake and absorption of space is also lower than projected, according
to the joint study by Garden City Business Park and Pam Golding
Commercial released on March 2.
Grade B offices, which are the older, less desirable and less often
renovated offices, are being vacated by occupants as they look for newer
spaces with better access to facilities, more parking space and better
asset management.
“The real estate boom started to slowly deflate from 2016 and this
research shows the market correction, which a lot of commercial
developers have had to accept,” said Pam Golding Commercial Property
Consultant Neha Sahi.
“We thought it was important to understand how the market adjusted, and
why, and to shine a light on the quality and quantity of actual
commercial stock available.”
But while some developers are stuck with an avalanche of unoccupied space, another has identified a niche for retailers.
Real estate developer Myspace Properties is planning to partner with an
undisclosed investor to bring goods and services closer to high density
settlements.
The company says it will invest Sh20 billion in construction of mini shopping malls that will serve people in low-income areas.
The project that targets 50 strip malls is expected to ride on the government’s Big Four agenda on affordable housing.
“As the government builds houses for people to live in, we will be
helping them by bringing markets closer to homes. For healthy living,
people need to work, live and play,” said Myspace Properties Chief
Executives Mwenda Thuranira.
“This is part of our strategy to come up with properties that will
accommodate various clients, especially the lower middle class who are
unable to pay huge rents in high end malls.”
According to the Pam Golding research, Grade A offices were experiencing
vacancy rates of between 50 and 70 per cent.
The study noted an 11 per
cent decline in the uptake of Grade A office spaces from 2016, in spite
of them remaining the most attractive for tenants.
This was necessitated by the market correction that followed the pre-2016 real-estate boom.
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