Things are looking up for the office market after the pandemic

Most companies have nearly all of their staff working entirely from the office. [iStockphoto]

Demand for offices in Nairobi is returning to pre-pandemic levels as employees begin to fully return to the office.

According to real estate services consultancy JLL, Nairobi and other East African gateway cities of Dar es Salaam, Kigali and Kampala have all seen an upturn in demand for space. offices, thanks to a gradual return of business confidence, which is expected to stimulate increased occupier activity throughout 2022.

The trend, according to JLL, highlights the importance of the physical office for businesses.

“While most companies now have their employees working from offices, as was the case before the pandemic, most of them have adopted a hybrid work strategy,” said Wayne Godwin of JLL, head of East Africa and the Indian Ocean at the 9th Annual East Africa Property Investment in Nairobi.

For several months since the first official case of Covid-19 was reported in Kenya, most companies have implemented a hybrid working system – allowing staff to go into the office on certain days and work from home during others.

Others allowed staff to work in shifts. But after the economy reopened, most businesses have almost all of their staff working entirely from the office, which has seen an increase in demand for office space.

“We are returning to full work from offices as work-from-home fatigue sets in,” said Shadrack Mella, JLL Senior Assessor, East Africa.

Empty office space. [iStockphoto]

Recent studies of the office market in Nairobi confirm this.

Cytonn’s Nairobi Metropolitan Commercial Office Report 2022 states that in the past year, the Nairobi Metropolitan Commercial Office Market has witnessed an improvement in the expansion activities of various companies and its overall performance compared to 2020.

The report attributes this to the reopening of the economy after the government removed Covid-19 lockdown measures. This resulted in a slight increase in overall commercial office sector occupancy rates, as well as overall rental yields, the report said.

“The remote or hybrid work model that continues to be adopted by some companies continues to weigh on overall office space occupancy rates and overall returns for landlords. Notably, however, the shift to a hybrid work model by companies that had adapted the full remote work model will help increase office occupancy rates,” it says.

Even during the pandemic, the supply of new office space in Nairobi has continued to increase with the addition of three more commercial buildings offering up to 500,000 square feet. New developments are the Global Trade Center (GTC) and Riverside Square – both in Westlands, and Karen Green in Karen.

“We expect the supply of office space to increase further in 2022 with the addition of other miscellaneous developments in the pipeline totaling 600,000 square feet of space,” the report said, citing some of the new developments. majors such as The Cube and Sandalwood, both located in Riverside and One Principal Place and the Piano – both located in Westlands.

According to Cytonn, the addition of office space over existing demand in Nairobi has resulted in an oversupply of 6.7 million square feet in 2021, in turn affecting overall building occupancy rates.

This has seen some developers halt their building plans pending the absorption of existing office space. An update report on Kenya by Knight Frank shows that the absorption of Class A and B office space increased by around 60% in the second half of 2021 compared to the first half of 2020.

Office space. [iStockphoto]

This dramatic increase was mainly attributed to the reopening of the economy and the deployment of Covid-19 vaccinations, which allowed employees to physically return to their offices.

The increase in uptake was also the result of pent-up demand from 2020, which was primarily for Grade A stock, according to the Knight Frank report.

However, the report indicates that the office sub-sector may soon slow down as more space is released in the market. “We expect occupancy rates to decline due to the large amount of space released to the market towards the end of 2022,” the report notes.

According to JLL’s Shadrack Mella, these trends are confirmation that office space is here to stay.

He cites a recent email from Tesla CEO Elon Musk ordering employees to be physically present in the office and to work a minimum of 40 hours per week.

“When you think of a huge global technology company like Tesla that wants its employees to work from the office, that kind of sums up the importance of the office. The way companies use office space will probably change, but the office Business will slowly return to normal – using offices,” he said.

Jose C. Birney