NAIROBI, Kenya, Sep 22-Knight Frank says that more businesses in Nairobi are now seeking offices with the levels of enquiries and activity among businesses that had previously put office searches on hold due to the COVID-19 pandemic reactivating their searches.
The Knight Frank’s Q2 2021 Africa Office Market Dashboard noted that the city has continued to see a gradual return in business confidence reflected by the increased number of business entities registered.
According to the Registrar of Companies, there was a 25 per cent month on month change with 8,483 companies registered in July 2021 compared to 6,786 companies registered in June 2021.
The share of new office space requirements in Nairobi in the second quarter of 2021. was dominated by the financial services sector.
The sector took up 31 per cent of office space followed by the industrial and logistics sector with 23 per cent, NGOs at 15 per cent and business and professional services, construction and telcom sectors each taking up 8percent of office space in the city.
Anthony Havelock, Head of Agency, Knight Frank Kenya said the future of the office is certainly not dead and we are seeing contrary signs of a push to return to the office both from organisations but also led by employees.
“This has been evident in the number of enquiries that we are receiving plus the active requirements with key sectors such as financial services and NGO’s driving demand. We continue to see the trend of Nairobi being the regional focus as multinationals confidence returns and they look to either enter the market here for the first time or expand their existing operations,” he said.
The firm said that over the same period, landlords became more flexible, allowed for discounted rents and lease concessions in order t to attract and retain new occupiers.
“This increased office market activity has underscored the flight to quality trend with businesses taking advantage of more affordable rental levels plus the chance to occupy better quality office accommodation with improved facilities placing employee wellbeing at the forefront,” the firm said.
Across the 28 African cities Knight Frank monitors, prime headline office rents remained relatively resilient with 16 out of the 28 cities tracked experiencing rental stability during Q2 2021.
Nigeria for example recorded increased occupier activity in the market driven by office relocations from the CBD to the suburbs, as occupiers gravitate to locations offering both better quality accommodation, as well as more affordable occupational costs.
In addition, in locations such as Tanzania, Knight Frank anticipates the prime office market will recover underpinned by renewed investor confidence fuelled by the new leadership.
However, markets such as South Africa continue to see increased vacancy rates and downward pressure on prime rents against the backdrop of the pandemic and existing supply glut prompting landlords to offer incentives and discounts.
“The overarching trend across Africa’s office market has been the flight to quality. Occupiers remain intent on occupying flexible spaces that place employee wellbeing above all else but also with favourable lease terms. As such, tenant released space has been a key concern to landlords in Grade B buildings in some of the countries,” Tilda Mwai, Senior Researcher Knight Frank Africa added.
