New Offices Sit Empty as Upper Hill Loses Shine

Nairobi’s Upper Hill is feeling the pinch of oversupply as office vacancy rates remain relatively high, according to a report by commercial property services company Broll Kenya.

Upper Hill, the report says, is becoming increasingly unpopular due to the heavy congestion experienced in the area despite being the closest office node to the central business district.

This factor coupled with the high supply of offices in the area has forced landlords to lower rents and ease lease terms to maintain and attract tenants.

“Some A-grade buildings in Upper Hill are now charging the equivalent of B-grade rentals. There is a notable increased interest in the newer office nodes of Kilimani, Riverside, and Karen, where space offerings are mostly A-grade in nature,” Broll says in the report.

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Rental rates in the area vary by building grade: A-grade buildings average Sh126 per square foot (Sh1,365 per square metre) monthly, while B-grade buildings average Sh93 per square foot (Sh1,000 per square metre), excluding VAT and service charges.

According to a recent study by Broll Kenya, buildings completed within the last two years are particularly struggling to acquire tenants.

“This can be attributed to a poor pre-let uptake, additional stock available and delays in development,” the company said.

“These factors, in some cases, force many tenants to renew their current leases or to find alternative space options thus impacting upon occupancy levels.”

The report highlights an ongoing under-supply of pure A-grade offices in the country.

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