Nairobi Is The Best Performing City In Africa In Prime Industrial Rents

Nairobi has emerged as the best performing market over the past three years in the prime industrial sector across Africa.

Nairobi recorded the highest increase in rents (28%) between 2018 and 2021, according to the latest Knight Frank Africa Industrial and Logistics Report.

The city also recorded stellar growth in warehousing development with purpose-built warehousing developers delivering over 170,000 sqm of speculative prime warehousing over the last five years with a further 400,000 sqm expected to come onto the market by 2024.

Demand for good quality, large, modern facilities remains good with prime warehousing recording absorption rates of up to 80% in H1 2021. This demand continues to be fuelled by the agriculture, e-commerce, and FMCG sectors as well as the record infrastructure developments witnessed across the country.

Anthony Havelock, Head of Occupier Services and Commercial Agency, Knight Frank Kenya, said: “As a key regional hub, Nairobi’s position in driving East African trade cannot be underestimated. With key infrastructure projects being delivered, we anticipate demand for best-in-class warehousing will continue to grow as this sector continues to mature.”

Overall, East African cities have remained top performers with both Nairobi and Kampala recording prime rents at USD 6 per sqm while Dar Es Salaam recorded at prime rents at USD 7 per sqm.

Across the 29 African cities monitored by Knight Frank, a huge disparity in rents continues to exist largely driven by supply.

At USD 10 per sqm and USD 9.80, Kinshasa and Dakar, for example, rank as the most expensive cities for prime warehouses in Africa, while Blantyre (USD 2.50 per sqm) is the cheapest.

Luanda, on the other hand, experienced the most substantial fall in average warehouse lease rates, which currently stand at USD 5.50 per sqm; down from USD 10 per sqm at the end of 2018.

Tilda Mwai, Senior Analyst- Africa, Knight Frank said, “Appetite for industrial stock across Africa remains strong, with investors attracted to the sector’s strong income profile and positive market fundamentals such as rising urbanization levels. Nairobi is expected to continue driving this sector across the continent as evidenced by its growing development pipeline, high absorption rates, and ease of doing business.”