13pc drop in Commercial office rents in 2020’s Second half

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The prime commercial office rents in Nairobi, Kenya dropped by 13.8 percent during the second half of 2020 as a result of reduced demand. The Covid-19 pandemic hurt the market as the adoption of the work-from-home policy to fight the spread of the virus.

The industry data from Knight Frank Kenya indicate that the rental cost for a square foot decreased from $1.3 (Sh142) per square foot per month to $1.12 (Sh122.75) in the June-December 2020 period.

According to the survey, the absorption of Grade A and B office space dropped by 50 percent in the second half of 2020 a contrast to a similar period in 2019. Generally, the absorption for the year 2020 declined by 47 percent.

However, the prime retail rents stood at a constant $4.2 (Sh460) per square foot per month.

“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,” Knight Frank Kenya stated in the report.

During the first half of the year, the commercial real estate market was negatively affected by the strict Covid-19 measures that were put in place.

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Anthony Kiratu is the Founder of Finsolutions. He is a financial analyst with over 5 years experience in research, investment advisory, valuation and financial modelling. Anthony is a member of the Institute of Certified Investment and Financial Analysts and Institute of Certified Public Accountants of Kenya. He is passionate about development of African Capital Markets through training of investors and dissemination of information for sound financial and investment decision making process. He is also a part-time lecturer in the Certified Investment and Financial Analyst course in the subjects of International Finance, Portfolio Management, Equity Investment Analysis, and Fixed Income Securities. Email: anthony@finsolutions.co.ke Contact: +254 780216631

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