Garden City Business Park and Pam Golding Commercial have today released the first annual Commercial Office Real Estate Market Report 2020, assessing the performance of commercial property in the real estate sector over the last five years and offering projections for 2020 and beyond.
The report features summaries of building activity in Nairobi, supply and take-up levels, comparative rental rates and delivery by office grade, and gives readers a snapshot of the market outlook.
The report highlights that competition is becoming fierce, rental levels have continued to soften, incremental take up and absorption levels have been lower than expected, whilst a reduction in the delivery of new product is taking time to respond.
As a result, recently completed buildings are facing challenges with low occupancy levels. But it’s also important to compare like for like (Grade A offices vs Grade B) as well as location, quality and commercial terms. The older office nodes are increasingly being avoided due to congestion and age of the buildings, suffering from poor asset management, limited car parking and lack of nearby amenities being factors that encourage businesses to move out to more modern and cost-effective options.
Neha Sahi, Pam Golding Commercial Property Consultant commented, “Over the past 10 years, while the office market was experiencing an undersupply, many companies relied on opinions of key industry players for their market intelligence and evaluation.Data collection or more quantifiable market analysis was not needed, and therefore not conducted in such detail”.
Garden City CEO, Chris Coulson said, “Our research shows that 2019 was a challenging year for the office sector and we believe the market is continuing to bottom out in terms of depressed rents and low absorption rates. Now is definitely the time to consider renting, negotiating good commercial terms and looking around for well-priced, modern Grade A space”.
“We don’t expect these conditions to prevail, with a positive outlook for the medium term with improved rental levels to good quality office product, ” he added.