NAIROBI – An oversupply of office space is looming in Upperhill, Nairobi’s emerging business district, a new report warns, projecting that there is likely to be too much space for the available renters in two years’ time.
In its February 2014 Commercial Office Market Report, Mentor Management Limited (MML) says by 2016 more office space will have been added in the city. MML’s CEO James Hoddell said lower demand for offices on Mombasa Road is due to traffic congestion leading to high vacancies and depressed rental incomes.
The report outlines the prevailing status and outlook for the city’s seven office nodes, which include Mombasa Road, Kilimani-Karen, Upperhill, Waiyaki Way, Westlands-Parklands, Gigiri and the Central Business District(CBD). It analyses the potential for Thika Road as an eighth office node.
MML predicts that opening of the Southern Bypass linking Mombasa Road to Kikuyu aimed at loosening the city’s traffic will in the next three to five years lead to improved take up for Mombasa Road offices. The other imminent cause of office saturation is Upperhill where occupancy of “Grade A” offices has been at an exceptionally high of 95 per cent with an additional 2.28 million square feet of office space projected in the next two years.
This is good news for potential tenants of Upperhill who would pay less. Shortages of space are currently more acute along Waiyaki Way and Westlands based on current planning permits and buildings under way. These shortages are set to worsen through 2014 and 2015 according to the report. This comes as the country’s economy grows steadily, attracting more investors eyeing innovative premises.
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