Nairobi Records The Highest Increase In Prime Industrial Rents

 Nairobi has emerged as the best performing market over the past three years in the prime industrial sector across Africa, recording the highest increase in rents (28 percent) between 2018 and 2021, according to the latest Knight Frank Africa Industrial and Logistics Report.

The city also recorded stellar growth in warehousing development with purpose-built warehousing developers delivering over 170,000 sqm of speculative prime warehousing over the last five years with a further 400,000 sqm expected to come onto the market by 2024.

Demand for good quality, large, modern facilities remains good with prime warehousing recording absorption rates of up to 80% in H1 2021. This demand continues to be fuelled by the agriculture, ecommerce and FMCG sectors as well as the record infrastructure developments witnessed across the country.

”As a key regional hub, Nairobi’s position in driving East African trade cannot be underestimated. With key infrastructure projects being delivered, we anticipate demand for best in class warehousing will continue to grow as this sector continues to mature. Although the new projects were initially slow to lease we have seen the sector gain momentum and the best developments are being occupied   indicating the emergence of a distinct two-tier market,” said Anthony Havelock, Head of Occupier Services and Commercial Agency, Knight Frank Kenya.

Overall, East African cities have remained top performers with both Nairobi and Kampala recording prime rents at USD 6 per sqm while Dar Es Salaam recorded at prime rents at USD 7 per sqm.

Across the 29 African cities monitored by Knight Frank, a huge disparity in rents continues to exist largely driven by supply. At USD 10 per sqm and USD 9.80, Kinshasa and Dakar, for example, rank as the most expensive cities for prime warehouses in Africa, while Blantyre (USD 2.50 per sqm) is the cheapest. Luanda, on the other hand, experienced the most substantial fall in average warehouse lease rates, which currently stand at USD 5.50 per sqm; down from USD 10 per sqm at the end of 2018.

“Appetite for industrial stock across Africa remains strong, with investors attracted to the sector’s strong income profile and positive market fundamentals such as rising urbanization levels. Nairobi is expected to continue driving this sector across the continent as evidenced by its growing development pipeline, high absorption rates and ease of doing business. With sectors such as e-commerce, agriculture and FMCG actively driving demand, we expect to see a vibrant industrial sector across the country in the near to medium term,” said Tilda Mwai, Senior Analyst- Africa, Knight Frank.

Read: Weakened Prime Office Rents Drive Up Appetite For New Office Space In Africa By 29PC

>>> Knight Frank: Idle money likely to be injected into the economy