Office space absorption across Nairobi in 2020 stood at m US$1.3 per square foot (sq. ft) per month to US$1.12 per sq. ft per month in the second half of 2020 amid the global pandemic that severely impacted business activities across sectors.
Absorption of Grade A and B office space decreased by 50% in the review period compared to a similar period in 2019, with overall absorption for the year 2020 declining by 47%, said property consultancy firm Knight Frank Kenya.
These factors also affected sale prices of prime residential properties in Nairobi, which decreased by 3.9% in 2020, compared to 4% in 2019.
Ben Woodhams, Managing Director at Knight Frank Kenya, said: “Although there’s been a downward trend of prime rents and sale prices, there was increased market activity in the second half of 2020, as landlords, developers and sellers, aware of the economic situation, became more flexible and were willing to negotiate lower prices with potential buyers and tenants.”
According to its Kenya Market Update – 2nd Half 2020 report, “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.”
Average occupancy rates across commercial buildings at the end of the year were at circa 72%.
However, the absorption of Grade A and B office space increased by 13% in the second half of 2020 compared to the first half of 2020 due to the lifting of lockdown measures and the gradual re-opening of businesses.
The report says the trend is expected to continue in the first half of 2021 from both local and international tenants as the economy fully reopens, the Covid-19 vaccine is rolled out and the expected rebound of the Kenyan economy.
