Logistics firm launches quality warehouse at Tatu City

Africa Logistics Properties (ALP) on September 17 launched a 49,000sqm Grade A warehouse facility in Tatu City, Nairobi North in the wake of a shortage of warehouses in Kenya.

Grade A warehouse refers to a business facility with ample storage and parking space, automated record keeping systems, mechanized loading conveyors, multiple loading docks and is located at a key transport route.

A report released by investments company Tilisi Development Limited, on September 2 revealed that Kenya does not have adequate warehousing facilities, a situation that has greatly affected business owners who move large quantities of goods.

In a statement, ALP CEO Toby Selman said that 75% of the facility was already pre-leased even before completion which means that business owners were keen to tie down the facility for their businesses for the long haul.

“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 Mr. Selman.

According to the CEO, the huge demand for warehouses comes at a time when other real estate markets including commercial, retail and residential are struggling to achieve total occupancy of 75%.

“The oversupply of commercial space in Nairobi reached 4.7m sqft in 2017, while retail space oversupply reached 3.7 m sqft. Meanwhile, the supply of mall space rose by 41.6 per cent last year, even as demand stagnated,” said Mr. Selman while quoting the Tilisi report.

Real Estate Agency, Knight Frank in its 2018 Kenya Update Market Report also pointed out the increased demand for warehouses.

“The shifting balance of supply and demand has also changed relative investment yields, with commercial and retail yields falling from 11 per cent three years ago to eight per cent by 2017, while residential property yields are now running at 5.6 per cent. This has moved warehousing yields to pole position within real estate, at 8.5 per cent,”