The government is seeking to lease posh offices in upscale Nairobi neighbourhoods for its workers and top officials, including Cabinet secretaries.
The multi-billion shilling deal that is being closed next week by the government’s Housing Department comes in the middle of a much-touted austerity drive by the William Ruto administration.
The State Department for Housing and Urban Development has invited property owners in some of Nairobi’s upmarket commercial and leafy districts to offer spacious and air-conditioned buildings by January 9 for leasing for the State officials.
“The State Department hereby invites eligible property owners or their authorised agents for the leasing of office space in Westlands, the CBD, Community or Upper Hill, Hurlingham, Kilimani and Milimani areas, to express their interest in providing office space,” said a notice seen by The Standard.
The department says all offices must have CCTV surveillance system and 24-hour security (internally and externally). Bidders are to indicate availability of C-Suite and ordinary suites in the buildings.
“Prospective bidder(s) should indicate tenancy rates, service charge and parking rates. Bidders may also indicate fit-out rates and furnishing rates,” says the notice.
Rents in the affluent areas being sought by the Housing Department are some of the highest amid high demand from multinationals. These most expensive office locations offer property developers lucrative returns. A spotcheck by The Standard yesterday shows the asking price for an A grade building in Upper hill as sought by the government goes for Sh120 per square feet.
The ideal 20,000-60,000 Square feet for a government agency would consequently see taxpayers fork about between Sh2.4 million and Sh7.2 million a month.
Office spaces in the premium addresses attract additional maintenance costs. This ranks Upperhill as one of the most expensive premium office markets not only in Kenya but the region according to one rent tracking agency.
Property owners have been adjusting rent prices in these affluent areas upwards to match the demand and also mirror inflation that has led to the cost of building the houses and also providing other amenities.
A diverse array of tenants occupy these premium office space. They include banking and finance companies. The new office deal comes amid President Ruto’s recent push for austerity that seeks to shave Sh300 billion from the national budget.
Some of the areas tapped for the leasing plan attract the most lucrative rental packages due to their preference by blue chip companies and multinationals that boast of multi-billion-shilling operation budgets. Demand for office space in Nairobi has been on the rise as more international firms seek to set up regional hubs in the city. Upper Hill and Westlands have been attractive to businesses looking to avoid human and traffic congestion in the central business district, but the former has in recent years also faced congestion. Despite losing its shine, however, Upper Hill remains a prime area and hosts the World Bank country offices and headquarters of Britam, Equity Bank, Commercial Bank of Africa and the Teachers Service Commission, among others.
The National Treasury plans to reduce spending by about Sh300 billion in the current fiscal year that started on July 1, an indication of deeper austerity measures for ministries, departments and state agencies, which have already been slapped with restrictions on non-essential expenditure.
Hoteliers, traders in goods such as stationery and consultants in various fields will be among the hardest hit as the Treasury moves to execute the austerity measures.
Treasury also directed State departments to scrap some emoluments often accrued by workers in their line of duty.
“Further to the discussions held between the National Treasury and MDAs (ministries, departments and agencies), the government will control expenditures by initiating austerity measures on the provisions for the operations and maintenance,” said Treasury Cabinet Secretary Njuguna Ndung’u in a memorandum to heads of departments dated November 7.
“These measures will be undertaken in all MDAs, including semi-autonomous government agencies.”
The restriction on hospitality services will hit hoteliers, who supply food and products such as bouquets and garlands for State functions. Official meetings must be held in government boardrooms and not hotels, according to the directive. Hoteliers have warned that they might resort to job cuts if the directive is not rescinded.
The government is the largest purchaser of consumer goods and services, offering livelihoods to millions of suppliers and small businesses across the country, according to official data.