The most popular trends in office spaces in Nairob,Cytonn Report 2018
It is no debate that Nairobi is a hub for business activity; ranking as the most dynamic city in Africa and 10th in the world according to the JLL City Momentum Index 2017. The city is host to a number regional offices for multinational companies-with the most recent one being caller ID firm Truecaller. Here are the emerging and most popular trends in office spaces in Nairobi.
These are furnished offices that allow payment on a monthly basis instead of on long term leases, therefore providing flexibility for tenants-you can move in, move out or expand-as need be. Additionally, tenants can share conference rooms, office equipment, security etc. resources that would other be expensive to buy-such offices have an on-site manager and receptionist serving everyone.
According to the report despite serviced office occupying less than one percent of Nairobi’s office floor space its rate of return (office yield) is at 13.4 percent against a yield of 9.2 percent for conventional office spaces-investors take note.
The World Green Building Council defines green buildings as buildings that in their design, construction or operation reduces or eliminates negative and can create positive impacts on our natural environment.
Buildings are considered green if there is efficient resource (water, energy etc.) use, measures in place to reduce pollution and waste in addition to resource reuse, good indoor air quality, environment consideration in design etc.
According to the report, green buildings in areas such as Kilimani in Nairobi are able to charge higher than average rates and predicted to have higher occupancy in the future. Such buildings are attractive because of the aspect of sustainability, reduced utility bills, lower construction costs and higher property value to building developers.
Vienna Court in Nairobi is a green building that attracts yields of up to 10.8% at sh124 per square feet monthly-higher than the average rents for grade A buildings that have yields of 9.8% and charge sh112 per square feet monthly.
One of the most interesting trends the report outlines is the emergence of new office districts including areas like Gigiri, Karen and Parklands, that have caused an exodus of firms from the Nairobi Central Business District (CBD).
For instance in the first quarter of 2017, Kenya Investment Authority (KenInvest) moved to UAP Old Mutual Tower in Upperhill from its headquarters in Railways (CBD) while Ecobank moved to Fortis Office Park, Off Waiyaki Way in Westlands from Ecobank House (CBD).
The shift has been spurred by the need for better quality office spaces, ample space for parking (the CBD has the highest average monthly parking fees at 12,167 per bay area) and easier movement (the CBD is congested).
As a result the CBD is experiencing a 8.6% points decline in occupancy rates from 92.7% to 84.1%. The rental yield averaged at 8.7% in 2017 a 0.3% decline from the 9.0% recorded in 2016.
As more startups and SMEs set-up, more residential homes are being converted into offices with the aim to reduce operational costs. This trend is common in areas such as Gigiri, Karen, Kileleshwa and Westlands where there is relatively low office space supply.
The report notes that increased infrastructural development in counties especially in regards to ICT penetration, power distribution and road construction, has fanned the establishment of home offices.
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