Buildings offering space with a work-from-home environment have experienced growth in their occupancy levels through the Covid-19 period, even as demand for commercial space plummets for many developers.
Even as tenants vacate offices opting to work remotely, a situation that has left many buildings almost empty, buildings whose services limit chances for their tenants and clients contracting the Covid-19 pandemic have been resilient, with their tenants staying on.
Commercial real estate developers say even though the overall impact is that demand for office space reduced largely since last year, for buildings whose amenities minimised risks of contracting Covid-19 witnessed growth.
One of the buildings is Kings’ Prims Towers, located along Ngong Avenue in Nairobi’s Upperhill. The building, known for its stylish appearance resembling prisms stuck on each other and the glass-walled façade all round, had suffered low tenancy levels until the onset of Covid-19.
“Currently we have tenants and about half of the building is already occupied. Yes, we are looking for and we would like to have all sorts of tenants whether its multinationals, local companies and a restaurant, but tenancy levels have increased greatly since last year,” said Mr Abdulqadir Hassanali, director of Kings Developers.
Tenancy levels grow
He noted that even though Prism Towers had initially suffered low tenancy levels — around 10 per cent occupancy of the building by 2019 — the levels have grown to about half currently, due to increased number of tenants who are seeking spaces that will not risk their health in regard to Covid-19.
Mr Hassanali said most of the tenants who have taken up space in the building made the decision after knowing of the services offered such as amenities including a gymnasium, sauna, a heated swimming pool and security features that include a security clearance system for any visitor to access any of the 28 office floors.
Kings Developers Ltd, who are the owners of Kings’ Prism Towers, and who are engaged in both residential and commercial space developments, note that commercial space in the country continues to be slow compared to residential investments.
“2020 is when we had a lot of enquiries and even this year they have been increasing. Many people are finaliaing rental space application processes with us. We are hoping that by the end of next year, the building will be about 75 per cent occupied,” Mr Hassanali said.
Supply more than demand
But the developers also note that commercial space in Kenya currently is in a state where supply is more than demand, particularly in areas such as Westlands where there are a lot of vacant office spaces.
Real estate managers Knight Frank early this year indicated that take-up of office space dropped by 47 per cent due to the Covid-19 pandemic last year, with absorption of Grade A and B office spaces continuing to perform below potential.
Knight Frank has also indicated that an oversupply of office space has been the reason many buildings are lacking tenants, with those offering customised services now emerging resilient.
“There have been questions raised about the future of the office market with everybody working from home and commercial buildings staying empty, but I don’t think this is the case,” Knight Frank CEO Ben Woodhams said last year when the pandemic had struck the sector most.
The realtors also reported in June that monthly office rent for offices in Nairobi’s prime areas dropped by Sh19.40 per square foot in the year to March 2021 — from Sh140.11 to Sh120.71 — with landlords continuing to offer discounts to retain tenants.
Developers argue that other factors such as traffic levels and movements of people in an area are influencing the current commercial space choices by tenants, with areas which are already congested witnessing low business.
“With a commercial building, it’s difficult to get 100 per cent occupancy levels because there is always someone entering and another leaving. Even if you get about 80 to 85 per cent occupancy, that is as good as full occupancy,” says the director. BY DAILY NATION