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Nairobi CBD skyline showing high-rise office buildings amid ongoing shifts in the city’s commercial property market. [File,Standard]
Nairobi’s office glut is shrinking after years of oversupply, driven by a steady shift by companies from ageing buildings into modern Grade A offices offering better amenities, lower operating costs and stronger environmental standards.
That transition is reshaping the city’s commercial property market, with premium developments recording stronger occupancy even as older office blocks continue to struggle with weak demand and prolonged vacancies.
The Nairobi Metropolitan Area ended 2025 with an office oversupply of 3.4 million square feet, down from 5.7 million square feet a year earlier, while vacancy rates fell to 15.3 per cent from 19.3 per cent, according to Cytonn Research.
The sharp decline marks the greatest improvement in years after nearly a decade of persistent oversupply driven by aggressive construction and weak tenant absorption.
But the recovery has largely favoured Grade A developments, as companies increasingly abandon older office blocks for modern buildings with lower operating costs, better amenities and environmental standards.
Prime office occupancy rose to 81.58 per cent by December 2025, supported by strong uptake in developments such as Purple Tower and The Mandrake, Knight Frank Kenya data shows.
Rental yields for prime assets remained stable at between 8 and 9 per cent despite years of oversupply pressure, while asking rents held at about $13 (Sh1,700) per square metre per month.
Knight Frank Kenya CEO Mark Dunford said tenants continue shifting toward high-quality office space while older stock struggles to remain competitive.
“The flight to quality is undeniable, with prime office spaces featuring environmental, social and governance credentials and modern amenities continuing to attract tenants while secondary stock struggles,” said Dunford in the firm’s H1 2025 market update.
Knight Frank projects prime office occupancy will continue rising in 2026 due to the limited supply of high-quality developments, particularly in Westlands and Upper Hill.
The broader market, however, remains tenant-friendly as landlords of older buildings continue offering discounts, flexible leases and refurbishment incentives to retain occupiers.
The trend mirrors patterns across Africa, where Knight Frank says top-tier office stock in more than half the markets it tracks now records occupancy levels above 90 per cent, while Grade B buildings face prolonged vacancies.
Despite the improving figures, Nairobi’s office pipeline remains substantial, with an estimated 2.5 million square feet under development expected to enter the market between 2027 and 2028.
That looming supply wave raises questions over whether the recovery can hold or whether developers risk recreating the same oversupply cycle that suppressed rents and occupancy for years.
The improved performance has nonetheless encouraged fresh investment, with the Gulf Group of Companies breaking ground on a Grade A office development in Lavington.
The project will house Gulf African Bank, GulfCap Investment Bank and GulfCap Real Estate under one complex, consolidating the group’s financial and investment operations into a single institutional base.
The development will comprise two five-storey office blocks built to international commercial standards, with the group positioning it as a long-term institutional investment rather than a speculative property venture in a still-oversupplied market.
Construction comes as developers increasingly shift toward owner-occupied Grade A offices, a trend driven by caution in the broader market where older commercial buildings continue to struggle with weak demand and prolonged vacancies.
“This development reflects our long-term confidence in Kenya’s economy and Nairobi’s position as a regional financial centre,” said Gulf Group Chairman Suleiman Shahbal.
“We are investing in infrastructure that supports institutional growth while creating a modern working environment that matches global standards,” he added.
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Nairobi CBD skyline showing high-rise office buildings amid ongoing shifts in the city’s commercial property market.
[File,Standard]
Nairobi’s office glut is shrinking after years of oversupply, driven by a steady shift by companies from ageing buildings into modern Grade A offices offering better amenities, lower operating costs and stronger environmental standards.
That transition is reshaping the city’s commercial property market, with premium developments recording stronger occupancy even as older office blocks continue to struggle with weak demand and prolonged vacancies.
The Nairobi Metropolitan Area ended 2025 with an office oversupply of 3.4 million square feet, down from 5.7 million square feet a year earlier, while vacancy rates fell to 15.3 per cent from 19.3 per cent, according to Cytonn Research.
The sharp decline marks the greatest improvement in years after nearly a decade of persistent oversupply driven by aggressive construction and weak tenant absorption.
But the recovery has largely favoured Grade A developments, as companies increasingly abandon older office blocks for modern buildings with lower operating costs, better amenities and environmental standards.
Prime office occupancy rose to 81.58 per cent by December 2025, supported by strong uptake in developments such as Purple Tower and The Mandrake, Knight Frank Kenya data shows.
Rental yields for prime assets remained stable at between 8 and 9 per cent despite years of oversupply pressure, while asking rents held at about $13 (Sh1,700) per square metre per month.
Knight Frank Kenya CEO Mark Dunford said tenants continue shifting toward high-quality office space while older stock struggles to remain competitive.
“The flight to quality is undeniable, with prime office spaces featuring environmental, social and governance credentials and modern amenities continuing to attract tenants while secondary stock struggles,” said Dunford in the firm’s H1 2025 market update.
Knight Frank projects prime office occupancy will continue rising in 2026 due to the limited supply of high-quality developments, particularly in Westlands and Upper Hill.
The broader market, however, remains tenant-friendly as landlords of older buildings continue offering discounts, flexible leases and refurbishment incentives to retain occupiers.
The trend mirrors patterns across Africa, where Knight Frank says top-tier office stock in more than half the markets it tracks now records occupancy levels above 90 per cent, while Grade B buildings face prolonged vacancies.
Despite the improving figures, Nairobi’s office pipeline remains substantial, with an estimated 2.5 million square feet under development expected to enter the market between 2027 and 2028.
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That looming supply wave raises questions over whether the recovery can hold or whether developers risk recreating the same oversupply cycle that suppressed rents and occupancy for years.
The improved performance has nonetheless encouraged fresh investment, with the Gulf Group of Companies breaking ground on a Grade A office development in Lavington.
The project will house Gulf African Bank, GulfCap Investment Bank and GulfCap Real Estate under one complex, consolidating the group’s financial and investment operations into a single institutional base.
The development will comprise two five-storey office blocks built to international commercial standards, with the group positioning it as a long-term institutional investment rather than a speculative property venture in a still-oversupplied market.
Construction comes as developers increasingly shift toward owner-occupied Grade A offices, a trend driven by caution in the broader market where older commercial buildings continue to struggle with weak demand and prolonged vacancies.
“This development reflects our long-term confidence in Kenya’s economy and Nairobi’s position as a regional financial centre,” said Gulf Group Chairman Suleiman Shahbal.
“We are investing in infrastructure that supports institutional growth while creating a modern working environment that matches global standards,” he added.
By David Njaaga