Africa Logistics Properties Warehousing Facility is 75pc Pre-leased
Africa Logistics Properties has unveiled its first 49,000 sqm of modern Grade A warehousing facility at Tatu City.
The Ksh 10 billion investment which targets large logistics and distribution firms is 75 percent pre-leased.
“The near-complete uptake of ALP North prior to launch speaks to the scale of the warehousing shortage in Kenya. But it also demonstrates that real estate requires developers to concentrate on the genuine areas of market need,” said Toby Selman, CEO of ALP.
During the event, Susie Kitchens, British Deputy High Commissioner, Kenya welcomed the investment “Your vision, to create a Pan-African portfolio of modern warehouses that provides world-class supply chain infrastructure, will enable more international investment in Kenya to thrive.”
The demand for grade-A warehousing, which delivers significant cost savings and efficiency for users, currently far exceeds supply in the country, with warehouse users reporting that finding suitable facilities is frequently impossible, according to recent research by Tilisi Developments.
The oversupply of commercial space in Nairobi reached 4.7m sqft in 2017, while retail space oversupply reached 3.7 m sq ft.
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Meanwhile, the supply of mall space rose by 41.6 percent last year, even as demand stagnated.
As a result, according to Knight Frank’s 2018 Kenya Market Update report, the occupancy rate for new retail centres is now running at between 60 and 75 percent.
This shifting balance of supply and demand has also changed relative investment yields, with commercial and retail yields falling from 11 percent three years ago to eight percent by 2017, while residential property yields are now running at 5.6 percent.
This has moved warehousing yields to pole position within real estate, at 8.5 percent.
“The proportion of pre-leasing has also been driven by the quality of the warehousing, which just does not exist elsewhere in Kenya and East Africa at the moment,” said Selman.