Why the Nairobi CBD has lost its allure

It’s fast becoming fashionable to avoid Nairobi’s Central Business District (CBD).

Individuals, corporates, multinationals, top hotels and even some government agencies are happy to exit the CBD which is now chaotic and bursting at the seams.

“African CBDs tend to decay,” noted Knight Frank Kenya managing director Ben Woodhams.

He observes that factors such as perceived insecurity, traffic congestion, parking challenges and inaccessibility have led to the migration from the CBD.

“A lot of these towers (city buildings) were built in the 1960s and 1970s. Then, only CEOs would drive to work. That has since changed and now even their secretaries drive to work,” said Woodhams.

Emergence of Westlands, Upperhill

These are some of the reasons which led to the emergence of Upperhill and Westlands as prime office nodes.

However, Westlands has become more popular with high-end corporates, especially multinationals.

“You only needed to have a traffic jam on Ngong Road and Uhuru Highway and you couldn’t get in and out of Upperhill whereas, in Westlands, it didn’t matter where the traffic was as it porous and there are many ways to access it,” he said.

Woodhams also adds that if on an office in Waiyaki way one can market it on a billboard and its easily visible to many which is an added advantage.

However, he notes that the new infrastructure in Upperhill on account of the Expressway creates a link road through to Mbagathi which eases access to the hub.

Westlands still charges a premium over Upperhill, about 10 per cent more.

CBD still remains a valuable space, particularly the ground floor of buildings which is very attractive to the retail market as rents on the upper floors have stagnated.

The CBD has become a marketplace of sorts. Big offices have moved and landlords are sub-dividing those spaces to host M-Pesa agents.

CBD landlords are also chasing away large retailers in favour of stalls which seem to bring in more money and are easy to fill.

Woodhams explains that the mass transit might turn around the CBD. The presence of matatus and boda bodas have also added chaos to the CBD.

Railway City Masterplan

In 2019, the Government released draft plans for the Sh28 billion “Railway City” that will see the expansion of Nairobi’s Central Business District (CBD).

Dubbed the Railway City Masterplan, the 425-acre project is expected to be completed in the next 20 years in three phases.

Aside from the main station, it will also contain a residential area and business hubs.

Railway infrastructure will gobble a huge chunk of the project at Sh17.5 billion followed by water supply and construction of roads and pavements that will take Sh3.9 billion and Sh2 billion respectively.

The draft plans describe it as a “multi-modal” hub in the CBD that will guarantee “seamless connection” among commuter rail, three Bus Rapid Transits, airport limousine city buses and non-motorised transport such as bicycles.

“The Nairobi Railway City will include multi-modal transit stations, mixed-use or commercial buildings, international offices, small and medium enterprise clusters and high tech industry buildings,” said Transport Principal Secretary Charles Hinga.

Other facilities will include residential buildings, community and government buildings, open space and plazas, and powerful non-motorised and pedestrian walkways.

“Such a diverse urban programme will generate a 24-hour dynamic city,” added the PS.

The project expects to ease congestion on Uhuru Highway, Haile Selassie Avenue and Landhies Road.

However, it’s still yet to break ground.

 

 Hotel exits

Recently, high-end hotel Hilton announced plans to exit the CBD after 53 years. This followed the closure of the Intercontinental Hotel.

Though their woes are much deeper, they are victims of the CBD’s chaotic expansion that is forcing such businesses to move out.

This is compounded by growing competition from high-end establishments on the outskirts of the CBD.

Top tier lender I&M Bank recently moved its headquarters from the CBD’s Banda Street to the upmarket Parklands area.

The location has a big impact on the success of any business, explained the lender’s Chief Executive Maina Kihara.

 “You want your clients to reach you without a lot of difficulties, hence some of these relocations that you have been seeing,” said Mr Maina.

Besides the need to escape the city’s chaos, especially traffic and the problem of parking spaces for clients, other businesses might have outgrown their current premises, he pointed out.

“There are several corporations setting up new headquarters outside the city. That has also been driven by other considerations,” said Mr Maina.

The last few years have seen most organisations shift from the CBD, creating ‘extensions’ full of skyscrapers in areas such as Westlands, Kilimani, Parklands and Riverside.

Described as “secondary business districts” in market lingo, the new zones were previously low-density residential areas, but are now full of offices that are preferred by NGOs and multinational companies.

Commercial real estate is classified into three grades – A, B and C. This is according to age, aesthetics, amenities or infrastructure.

The CBD now seems to be Grade C - the bottom tier market.

This is as small businesses and informal traders such as hawkers slowly take over.

Hawking menace

Hawking has been one of the biggest headaches for the city’s administrators. And it turns out it has been so since independence.

The first African Mayor of Nairobi Charles Rubia unsuccessfully dared to tame them only to come up with a confession: “There is no reason to say no hawking will be allowed.”

This was after an intended clean up of the city.

Mr Rubia explained that a sub-committee had been formed to bring in hawkers to the table to try to streamline a situation that was “topsy-turvy.”

In a previous interview with this writer, the former Director of Operations at the City Inspectorate Department Peter Mbaya said that eliminating hawkers from the city is close to impossible.

According to him, the city’s main aim now was to reduce hawkers in the CBD to a “sizeable” number through mass arrests.

He said that the city had come up with a work plan with three strategies meant to restore sanity in the city.

Firstly it would tame hawkers, then remove street children and finally streamline the matatu industry.

They had arrested thousands of hawkers and he explained that the fines hawkers will be slapped with will be a deterrent lesson to the others.

He estimated that there are 15,000 hawkers operating in the CBD.

There have been calls from some quarters to shift the capital city as it’s already full to the brim.

Also, currently, Nairobi is suffering from a property oversupply, especially in the commercial offices market.

Woodhams was there when Nairobi boomed and explains the last 14 years since he took over the job as Knight Frank Kenya managing director.  

“In 2003, you had to go to Johannesburg if you want to go to Central Africa. Back in those days, the whole of sub-Saharan Africa was running out of Johannesburg. From 2003, big corporates realised they needed a regional headquarters to service East Africa and that was Nairobi.”

This saw Nairobi grow strength to strength, says the man who inspired the boom of malls and large retail centres.

He explains that Nairobi is inflated by this regional role it plays over and above its role as a capital city.

Woodhams talks of property cycles that go up and down over seven years, Nairobi is suffering from such now.

“The market went to oversupply and this is normal … that’s why I talk about a 7-year cycle in the property market. I think if you went back to 2003 you probably would have seen the same thing if you looked at the data carefully enough but it was probably masked by the general economic growth.”