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Demand for office space weakened last year as construction remains sluggish, a market update report by Knight Frank has revealed.
The report released Tuesday analyses office, residential, retail, hotel and tourism sectors, as well as industrial property and redevelopment land for the period July to December 2015.
In the office segment, a reduced supply of prime Grade A offices saw a five per cent dip in absorption of space in the niche in the second half, compared to the first half of 2015.
The decline in absorption of office space was attributed to the dip is supply of prime Grade A offices, coupled by the fact that some multinationals are downsizing operations in Kenya, particularly in the oil sector.
In addition, Government agencies, which were major takers of space, are equally devolving their functions at the counties.
A number of multinationals, particularly in the oil industry, expressed intention to downsize operations, and government agencies such as the Constitutional Commissions – which had been major takers of office space in the recent past – no longer, require much space.
However, headline rents for prime offices (the most expensive) remained stable in the period at US$21 per square metre per month, and were above asking rents for the overall market.