Kenya: Landlords Feel Pinch of Empty Buildings

19 September 2021

Tucked in the heart of Upper Hill, Geomaps Centre is a construction beauty that blends well into the skyscrapers dominating the skylines in this part of Nairobi. The squarely shaped building - sitting off Matumbato and Mawensi roads junction -- is attractively glass-walled from corner-to-corner, reflecting the skies to earn the sea blue colour. It is a seven-floor office block that, no doubt, must be housing offices of some of the best-performing companies in the city.

But walk close and the beauty starts fading away as views of broken glasses on the ground floor, and bored guards welcome you. There is not much activity here. As one enters, they are hit by emptiness. There are only two tenants currently, on the fourth and fifth floors.

"We have a lot of space, it only depends on the size you want. We can even offer you an entire floor or two," says the building's caretaker as he walks us through a hall on the fourth floor that was recently vacated.

Our visit to the building on September 13 as we posed as potential tenants revealed that almost the entire building is vacant, with five of the seven floors empty. The office partitioning marks left by previous tenants cry for occupancy. The building has two office types of sizes 2,634 square feet and 3,272 square feet, whose monthly rent is Sh276,570 and Sh343,560 respectively.

Low tenancy

"It is a good place. If you see someone has stayed here for a long period, there has to be a reason," the caretaker, in his marketing language, encouraged.

Resigning to the heavy weight of low tenancy, like dozens of other buildings across Upper Hill, Geomaps Center through its management company, Tysons, has been forced to seriously advertise for space and even joined other landlords in reducing rent charges for remaining clients to avoid losing all of them, cutting rent by about 40 per cent.

The building charges rent at Sh80 per square foot per month, together with Sh25 service charge per square foot. First time tenants have to also pay a three-month deposit.

Yet Geomaps Center's case is not unique in any way in this side of the city that is dotted with dozens of buildings suffering low tenancy levels, particularly since the onset of Covid-19 pandemic that forced many companies to ditch rented offices to work from home. Just a distance from the premises stands Kings Prism Tower in its zig-zag posture, an engineering marvel whose result was a wonder and an optically aesthetic delicacy. But the building along Third Ngong Avenue, a stone throw from Valley Road, is possibly the loneliest in Nairobi, advertising for tenants to take up space three years since it was officially opened in 2018.

Upper Hill

Real estate managers marketing the building indicate it charges Sh120 rent per square foot, plus Sh25 service charge per square foot. Around Upper Hill, many buildings - although beautifully constructed and with capacity to house some of the best offices - have remained vacant, as developers fail to attract enough clients.

The low tenancy levels have also affected other areas of Nairobi including the CBD and Westlands where many buildings have been vacated.

"There is a general low tenancy level especially for retail spaces since the Covid-19 started," said Ms Edna Fenandes, the General Manager at Yaya Centre, as held back on commenting on the performance of the shopping mall.

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