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Nairobi’s leafy suburbs mutate in office boom

By - LYDIA LIMBE | Published Thu, July 4th 2013 at 00:00, Updated July 9th 2013 at 11:02 GMT +3

Areas previously designated as residential zones are now mixed-user districts, spotting stylish office parks, modern shopping malls and arcades — all amidst highrise residential buildings, writes LYDIA LIMBE

Leafy suburbs, as they are fondly called, continue to be the choice office space locations for Kenya’s blue chip companies and multi-national corporations.

Kilimani, Westlands, Karen and Upper Hill areas are increasingly becoming the commercial space of choice, driven by a number of factors.

According to Nairobi office property market survey released recently by Mentor Management, these areas are the office space of choice because of accessibility of parking spaces, high quality grade A finishing as well as improving road network.

It is projected that three-quarters of all the 1.7 million square feet of commercial space being delivered every year in Nairobi is in Kilimani and Karen areas. This figure is based on the number of construction projects approved, as well as the proposed completion dates.

Demand

These areas were previously designated by the now defunct City Council of Nairobi as residential areas, a zoning that has since changed in tandem with the current demand.

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“As planners, when we see that there is increased demand for mixed developments, and is viable, we re-zone them into mixed-user districts. That is why you now find many areas with residential housing, shopping malls, as well as offices,” says Patrick Adolwa, deputy director, Urban Development Department, Nairobi County.

Nairobi’s last master plan was drawn in 1973, and it expired in the year 2000. The department of Urban Development is currently working on another master plan for Nairobi.

In comparison to the Nairobi Central Business District (NCBD) and Mombasa Road, the leafy suburbs consist of 90 per cent of grade A offices, which have high quality finish to international standards, and attract multinational corporations like the World Bank and General Electric, making Nairobi the second capital of Africa, after Cape Town, South Africa.

Mombasa Road, despite the availability of office space, features low on the choice of office space, majorly because of traffic jam, and the perception that it is a purely industrial and warehousing space zone.

“Sameer Business Park, for example, was built with the warehousing space to let in mind, and as a result, we are about 50 per cent let out, almost two years since its completion,” says Anthony Havelock of Knight Frank.

People are increasingly moving out of the NCBD due to insecurity, incessant traffic congestion, as well as lack of adequate parking.

This exodus of corporates from the NCBD, however, has proved to be an opportunity for the universities, who are now taking advantage of the now low letting rates, as well as easy access to public transport for their student population, the Mentor Management report says.

Aside from the universities, demand for current offices in the Central Business District is expected to rise with the Government set to purchase some of the buildings — Hazina Tower, View Park Tower and Harambee Sacco Plaza — to cater for the expanded workforce brought about by the Constitution.

Driving forces

The Mentor Management report findings, echoed by CB Richard Ellis findings, points out that uptake of office space on Mombasa Road is set to rise after the completion of the Southern by-pass that will cut across Lang’ata Road, dual carriageway on Ngong’ Road through to Kikuyu, to the Nairobi-Narok Highway.

But Havelock says it is a wait-and see scenario. “Mombasa Road is not 100 per cent perceived as an office location, but more of an industrial, warehousing and showroom location. Once the bypass is complete, there could be offices coming up along those roads; we cannot predict for sure if Mombasa Road will pick up as an office destination.”

There has also been modest infrastructure expansion to cater for the rising needs that these developments bring. “Nairobi is an excellent example of primacy — where a city seems to be growing faster than other cities in one country. With this comes the challenges of infrastructure not coping at the same rate as developments,” Adolwa points out.

“In Kenya, we have looked at concepts to help cope with these issues, like the infrastructure levy whose intention was to enable the local government upgrade the infrastructure to cope with the additional needs brought about by the new developments. Unfortunately, it was greatly resisted by the private sector, hence the overload on current infrastructure,” he adds.

Fortunately, there has been roads upgrade in Upper Hill, Kileleshwa and Kilimani, easing traffic congestion that has been characteristic of these areas.

In Upper Hill, the first phase of the road upgrade will cover Elgon, Kilimanjaro, Hospital, Mara, and Upper Hill roads. The second phase is expected to commence in 2014.

Also expected to improve is accessibility of Nairobi by public transport. According to the National Urban Transport Improvement Programme Kenya Mega Projects, public transport upgrade, funded by World Bank will be two fold: Construction of an overhead tram system between Jomo Kenyatta International Airport and Museum Hill-Rironi Road, with stops on Uhuru Highway. The second phase will be implementation of a rapid bus transit system within the metro area.

The reports say that the commercial office rental rates have been growing for the last five years at about 7.5 per cent.


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