New office space requirements increased by 29% in Q2 2021 compared to Q1 across Africa according to a report by Knight Frank. This increased office market activity has been attributed to the flight to quality trend that has seen businesses taking advantage of weakened prime office rents.
Data from Knight Frank indicates that the share of new office space requirements across nine countries reviewed was dominated by Professional Services (29%), Industrial & Logistics (16%), Financial Services (14%), Healthcare 12% and NGOs (8%). The offices under review are located in Kenya, Uganda, Nigeria, Tanzania, Zambia, Zimbabwe, Malawi, Botswana and South Africa.
Knight Frank further observed that businesses that had previously put office requirements on hold due to the pandemic were reactivating their searches with landlords becoming more flexible.
Commenting on the latest report, Tilda Mwai, Senior Researcher Knight Frank Africa said, “The overarching trend across Africa’s office market is the continued flight to quality. Occupiers remain focused on occupying best-in-class offices that offer greater flexibility around lease terms. The desire to occupy the best office buildings is driving up tenant release space in some cities’ Grade B buildings, which is likely to fuel greater disparity between the performance of Grade A and Grade B office rents.”
Across the 28 African cities Knight Frank monitors, prime headline office rents remained relatively resilient with 16 out of the 28 cities tracked experiencing rental stability during the review period. In Nairobi for example, prime office rents dropped marginally by 1% q-o-q due to lockdown restrictions imposed at the onset of Q2 2021.
Nairobi has continued to see a gradual return in business confidence reflected by the increased number of business entities registered. According to the Registrar of Companies there was a 25% month on month change with 8,483 companies registered in July 2021 compared to 6,786 companies registered in June 2021. Knight Frank anticipates this will result in increased demand for offices later in the year.