High-End Serviced Offices a Hit with Kenyan Techies

Nairobi is witnessing a rising demand for serviced offices from technology start-ups, SMEs, and large corporate occupiers, as part of major changes in the Kenyan office market where flexible working spaces are experiencing rapid growth.

According to property agent Knight Frank, the rapid growth of the serviced office sector is attributable to the emergence of new shared workspace providers racing to meet the growing demand from businesses, mostly tech start-ups.

“The increased interest is due to the flexibility that comes with serviced offices compared to traditional offices,” Knight Frank says in its H1 2019 market update.

A serviced office is a workplace or building fully equipped and managed by a facility management firm (office provider), which then rents individual workstations or floors to other businesses.

These facilities allow businesses to have flexible lease treaties and office spaces, and the opportunity to operate inexpensively in a prime address.

Thanks to this flexibility, several providers opened new facilities in the first half of 2019 – with the trend spilling into the last half of the year.

In January 2019, local co-working space provider Workable opened a 12,000-square-foot serviced office space at Sanlam Towers in Westlands.

A month later, Nairobi Garage opened its third co-working space – 14,000 square feet – at The Watermark Business Park in Karen, Nairobi. The firm also operates workspaces at Pine Tree in Kilimani and The Mirage Towers in Westlands.

More recently, Kofisi, a provider of flexible office workspace across Africa opened a new office site in Karen.

RELATED: Nairobi Landlords Struggle with Empty Office Spaces

Promoters of serviced offices believe that the niche market will continue to grow over the next couple of years as more companies seek to eliminate non-core office setups.   

“The flexible workspace model is disruptive because it tracks the future trends of the workplace that focus on creating environments that are highly desirable for future talents,” says Kofisi CEO Michael Aldridge.

He adds that Kenya presents a steady growth curve for serviced offices due to the little penetration of the model in the local market.

“Cities like New York and London are already at 15 to 20 per cent growth of co-working business models versus traditional spaces. On the other hand, Nairobi has a one per cent penetration rate,” Mr Aldridge says.

Daniel Ojijo, chairman of Homes Universal, warns that the serviced offices model needs careful consideration to align with companies’ long-term goals.

“I don’t see much disruption on the market by this new trend of flexible offices as they mostly appeal to individuals and firms with short-term goals,” Ojijo told the Standard in a recent interview.

“It might not be economical for some firms that need independence to commit long-term occupancy in the new furnished offices.”

Join 15,000+ pros getting our weekly digest of news and insights.