Now is the time to consider renting, negotiating good commercial terms and looking around for well-priced, modern Grade A space, new research shows.
Investors in the real estate industry are experiencing dwindling fortunes with intense competition and continuous softening of rental levels, the inaugural Commercial Office Real Estate Market Report indicates.
Uptake and absorption of space is also lower than projected, according to the joint study by Garden City Business Park and Pam Golding Commercial released on March 2.
Grade B offices, which are the older, less desirable and less often renovated offices, are being vacated by occupants as they look for newer spaces with better access to facilities, more parking space and better asset management.
“The real estate boom started to slowly deflate from 2016 and this research shows the market correction, which a lot of commercial developers have had to accept,” said Pam Golding Commercial Property Consultant Neha Sahi.
“We thought it was important to understand how the market adjusted, and why, and to shine a light on the quality and quantity of actual commercial stock available.”
But while some developers are stuck with an avalanche of unoccupied space, another has identified a niche for retailers.
Real estate developer Myspace Properties is planning to partner with an undisclosed investor to bring goods and services closer to high density settlements.
The company says it will invest Sh20 billion in construction of mini shopping malls that will serve people in low-income areas.
The project that targets 50 strip malls is expected to ride on the government’s Big Four agenda on affordable housing.
“As the government builds houses for people to live in, we will be helping them by bringing markets closer to homes. For healthy living, people need to work, live and play,” said Myspace Properties Chief Executives Mwenda Thuranira.
“This is part of our strategy to come up with properties that will accommodate various clients, especially the lower middle class who are unable to pay huge rents in high end malls.”
According to the Pam Golding research, Grade A offices were experiencing vacancy rates of between 50 and 70 per cent. The study noted an 11 per cent decline in the uptake of Grade A office spaces from 2016, in spite of them remaining the most attractive for tenants.
This was necessitated by the market correction that followed the pre-2016 real-estate boom.
Source: The standard Newspaper