High Occupancy Rates Driving up Kenya’s Retail Space Supply – Reports

David Indeje is Khusoko’s Digital Editor, covering East African markets.
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Kenya’s retail market is projected to have an increased retail space supply by the end of 2018 attributed to high occupancy levels according to Knight Frank’s Kenya Market Update – 1st Half 2018.

This is despite the closure of select local retail chain stores. 

According to Knight Frank Kenya, occupancy levels remained high for established malls at 90% and between 60-75% for new retail centers.  Footfall in major shopping malls increased slightly in the first half of 2018, as expanding retailers took up anchor tenant spaces vacated by ailing rivals.

“The high occupancy levels indicate that there is still good demand for retail space in the right locations. By the end of 2018, the retail market will have increased retail space supply by circa 340,000sqm.”

From a year of mixed fortunes for the Kenyan retail sector, 2018 seems to be promising the report notes.

“The second half of 2018 projects a positive outlook mainly due to improvement in the economy, which is anticipated to boost the consumer spending power,” notes Knight Frank Kenya’s Kenya Market Update – 1st Half 2018.

On the other hand, retail statistics from the Kenya National Bureau of Statistics (KNBS)  showed buoyancy  in the First Quarter, 2018  Gross Domestic Product Report that “Provisional estimates of Gross Domestic Product (GDP) indicate that the economy expanded by 5.7 per cent during the first quarter of 2018,” as a result of  ‘A boost in business and consumer confidence after the conclusion of general elections in 2017’.

“Growth was mainly driven by a recovery in activities of Agriculture as well as improved output in the Wholesale and Retail Trade, Manufacturing, and Real Estate sectors.”

Knight Frank Kenya’s report collaborates Cytonn Investments H1’2018 Markets Review report that “Witnessed an increase in activities in the retail sector in Nairobi with a number of retailers, both local and international expanding.” 

Cytonn observed that the retail sector performance improved, recording an average rental yield of 9.7%, a 0.1%-point increase from 9.6% in FY’2017. The occupancy rates as well increased by 0.9% points, while the rental charges increased by 2.9% in H1’2018.
Stores are employing different tactics to offer services and experiences associated with products and the brands because consumers are not just buying, but looking for a shopping experience.

“The aggressive expansion by the retailers is being driven by the increased prudent marketing methods employed by mainstream retailers to attract clientele and enhance footfall, and increased preference for international brands by the consumers,” according to an analysis by Cytonn Investments.

According to Knight Frank Kenya, in January, Naivas took over retail space at Development House on Moi Avenue previously occupied by Nakumatt, as well as at Capital Centre in April, which was previously occupied by Uchumi. 

This increased the retailer’s total outlets across the country to 45. 

French retail chain Carrefour opened at Sarit Centre in April, taking over space vacated by Uchumi. Carrefour will operate in the space temporarily and shift operations to the new wing of Sarit Centre upon completion by the end of the year. It will also open its sixth store at Galleria Shopping Mall in July, taking over space previously occupied by Nakumatt. 

Botswana-based retailer Choppies is in talks with the owners of Nanyuki Mall to take over the anchor tenant space vacated by Nakumatt in January. 

South Africa-based retailer Shoprite took up anchor tenant space left by Nakumatt at Westgate and Garden City Mall. Both branches are expected to open within the second half of the year. 

Game announced it will open the second outlet at The Waterfront Karen, replacing Nakumatt which was initially set to be the mall’s anchor tenant.

Other developments in the sector include the expansion of select international brands in the first half of the year. 

LC Waikiki opened its doors at City Mall Nyali, while Japanese lifestyle brand Miniso opened three new stores at The Junction, Southfield Mall, and Thika Road Mall, with an additional store set to open at The Hub Karen during the second half of 2018.

Choppies supermarket opened at Southfield Mall in Embakasi while Tuskys Supermarket took up 35,000 square feet at Diamond Plaza II. 

French sports retailer Decathlon is expected to enter the Kenyan market by opening its first branch at The Hub Karen during the second half of 2018.

David Indeje is Khusoko’s Digital Editor, covering East African markets.

In my role as Community Engagement Editor For Khusoko, I care about our audience. engaging them, getting news delivered to them across a variety of platforms, and expanding the diversity of voices on our website.

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