Tenants in malls, industrial buildings and offices are demanding lower rent as footfall drops following tough economic times.
Stanlib Income- Real Estate Investments Trust saw its rental income decline from Sh135 million to Sh132 million.
This depressed net profits by 16 per cent from Sh78 million in the first six months of 2017 to Sh65 million by June this year.
The firm, which owns Greenspan Mall, Bay Holdings and Highway House, says reduced rent income was only mitigated by a one-month booking of new property, Starling park properties, in Lavington for Sh850 million.
“Rental income has come slightly under pressure due to temporary increase in vacancies coupled with some tenants bargaining for reduced rentals upon renewal of leases,” Stanlib said.
“The reduction of rental income was partly offset by one month contribution of rental income by the newly acquired property,” Stanlib said.
Last year, Tenants at the Point-Mall in Buru Buru vowed to close their shops for two days to protest high rents as businesses struggle in lean times.
Realtors are already being squeezed by new tenants who are asking for discounted rates, reduced service charge against a demand to scrap goodwill, hire interior designers to spruce up the buildings, set up indoor entertainment spots and offer freebies.
The developers and their realtors argue that they cannot reduce prices since they incur additional costs of marketing and support infrastructure which they do not pass on to their tenants.
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For instance, Stanlib, the only listed Real Estate trust is now constructing a 3-screen cinema with 100 seats each at Greenspan Mall that will be complete in December to increase foot traffic in order to boost existing tenant customers and increase rental incomes.