Markets & Finance
Depots leasing cost up 5pc as uptake grows on Covid-19 ease
Friday February 10 2023
Knight Frank chief executive officer Mark Dunford with Absa Bank Kenya Head of Asset Management Elizabeth Irungu (L) and Absa Bank Kenya Head of Premier and Liabilities Simon Gachahi (R) during the residential property outlook roundtable by Absa Bank Kenya in partnership with Knight Frank at the Capitol Club on February 9, 2023. PHOTO | DIANA NGILA | NMG
The cost of leasing warehouses has risen five percent to Sh70 per square foot as the removal of the Covid-19 pandemic restrictions helped the industrial sector to grow.
A Knight Frank report shows that in the second half of last year, rent per square foot of a warehouse rose to Sh70 from Sh67 a year earlier.
“Over the review period, prime monthly industrial rents stabilised at circa Sh70 per square foot –a five per cent increase compared to a similar period in 2021,” read the report.
“The slight improvement was mainly attributed to easing of mobility restrictions which propelled recovery in the industrial sector.”
Read: Modern warehousing key for firms’ efficiency
At a round table with Absa Bank Kenya and property stakeholders on Thursday, Knight Frank said strong demand for warehousing and storage facilities is expected to continue this year.
“The Covid-19 pandemic hit home the need for warehousing and markets like Kenya are very undersupplied and as our disposable income and spending from the middle class continues to grow there is more demand for online shopping and distribution of goods,” said Mr Mark Dunford, the chief executive of Knight Frank.
E-commerce is expected to grow in the coming years on the back of rising incomes and increased access to the internet, with more retail businesses being established that only sell their merchandise via virtual shops.
This has led to more demand for warehouses that serve as storage and fulfilment centres.
In the report, Knight Frank said investors building modern facilities are set to benefit going forward as clients become more selective.
“There is a rising demand for quality industrial facilities (Grade A) since an overwhelming number of the existing stock is outdated and does not meet the threshold standards for modern warehouses,” said the realtor.
Read: Kenya grants permit to private warehouse receipt operator
“This existing market niche is currently being exploited by Africa Logistics Properties (ALP), the developers of ALP North and ALP West.”
