Commercial office rents fall 13pc in second half of 2020

Mr Ben Woodhams, Knight Frank managing director. PHOTO | FILE

By BRIAN NGUGI
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Summary

• Industry data compiled by realtor Knight Frank Kenya shows that the rental cost for a square foot went down from $1.3 (Sh142) per square foot per month to $1.12 (Sh122.75) in the June to December period.
• The survey further says absorption of Grade A and B office space decreased by 50 percent in the second half of last year compared to a similar period in 2019, with overall absorption for the year 2020 declining by 47 percent.
• At the same time, prime retail rents remained unchanged at $4.2 (Sh460) per square foot per month.

Prime commercial office rents in Nairobi fell by 13.8 percent in the second half of last year as developers adjusted to reduced demand in increased adoption on on work-from-home policy by firms to combat the Covid-19 pandemic.

Industry data compiled by realtor Knight Frank Kenya shows that the rental cost for a square foot went down from $1.3 (Sh142) per square foot per month to $1.12 (Sh122.75) in the June to December period.

The survey further says absorption of Grade A and B office space decreased by 50 percent in the second half of last year compared to a similar period in 2019, with overall absorption for the year 2020 declining by 47 percent.

At the same time, prime retail rents remained unchanged at $4.2 (Sh460) per square foot per month.

“The decline in office uptake and rental values is mainly attributed to the continued oversupply of commercial space in some locations, the ongoing economic climate, and tightened restrictions implemented in the second quarter of 2020, which affected business operations and resulted in majority of occupiers halting their space requirements due to most of their staff working remotely,” said Knight Frank Kenya in the report.

The worst of the hit was in the first half of the year, when the country’s Covid restriction measures were at their toughest.

Businesses suffered as a result of the restrictions on movement and the precautions that people were taking to avoid physical contact.

There were thousands of job losses in the economy also, which came with a circular effect where reduced purchasing power meant that businesses suffered and had to downsize their space demands.