What Kenya’s Mall Developers Must Do to Win Tenants

For the past few years, developers have spent billions of shillings to put up show-stopping malls in Kenyan cities to meet the rising demand for international retail brands expanding into the country.

This has left the capital Nairobi with 391,000 square metres of existing mall space with an additional 470,000 square metres in the pipeline, according to Knight Frank’s “2016 sub-Saharan Shopping Centre Development Trends”.

While this can be described as a booming market, the shopping mall business itself is struggling to make money.

Although the mall culture is gaining popularity among residents, many retailers are complaining that the footfalls (shoppers) are not getting converted into business.

Residents of Nairobi and other major cities and towns where stunning malls have been erected throng the facilities on weekends – spending cash on bites at food courts – but are very reluctant to shop at the malls, especially at expensive outlets.

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Poorly performing retailers are exiting malls midway through their lease contracts forcing landlords to find creative ways such as scrapping goodwill charges to woo tenants.

These strategies are, however, short-lived and mall owners must come up with well-thought-out strategies to remain in business.

One such strategy is the stratification of mall spaces to accommodate small and medium-sized enterprises at lower grade levels.

The trick here lies in carefully segmenting a shopping mall’s targeted tenants and strategically attracting the right mix of customers.

PETER MWANIKI is a property developer.

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