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ON THE RISE

Warehouse demand soars as retailers seek quality facilities

Food and beverage companies generally build their own facilities, while retailers prefer to lease warehouses.

In Summary

• The city is home to Kenya's largest solar installation.

• Tatu Industrial Park is zoned for light industries.

An aerial view of Dormans Coffee global headquarters at Tatu City industrial Park
An aerial view of Dormans Coffee global headquarters at Tatu City industrial Park
Image: courtesy

Demand for large, centralised warehouses is on the rise as the country’s formal retail sector continues to experience rapid transformation.

A Knight Frank Africa Horizons inaugural report has observed that as international retailers such as Shoprite and Carrefour enter the Kenya market, they are largely lacking storage facilities as they have to make use of small storage facilities for their goods.

It continues to note that food and beverage companies generally build their own facilities, while retailers prefer to lease warehouses.

“Continued expansion of international and Kenyan companies is expected to generate demand for increasingly sophisticated logistics properties, particularly around Nairobi,” it reads in part.

The report foresees a continued shift in activity from the existing industrial area in Nairobi’s eastlands areas to emerging hubs such as the Northlands Ruiru areas.

The highest grade storage facilities, the A-grade warehousing, fetches rentals of Sh600 per square metre, almost double the predominant current stock of older units.

The old facilities lack modern design features such as cross-docking and intermodal facilities, while high cost of land in the city and poor infrastructure have made investment in industrial areas seek sites outside the city.

The report singles out Tatu City as hosting the most significant logistics and light manufacturing developments with the 457-acre Tatu Industrial Park attracting investors such as Unilever, Kimfay, Dormans, Chandaria Industries and Africa Logistics Properties (ALP), which is funded partly by the Commonwealth Development Corporation and the International Finance Corporation.

Last September, ALP launched its 49,000 sq m Grade A warehousing park ALP North in Tatu City. It was 75 per cent pre-let, signifying an increased demand for top quality warehousing.

The warehouse’s second project, ALP West, will sit on its 49-acre site at the Tilisi Logistics Park along the Nairobi- Nakuru highway.

Other developments include the Nairobi Gate Industrial Park by Improvon Group, who in partnership with private equity fund Actis, has announced the launch of a 204,386 metres squared warehousing development worth estimated Sh11 billion. It will sit on 103 acres off the eastern bypass.

Nairobi’s improved logistics facilities and infrastructure, combined with improved links with the port of Mombasa, will open up further opportunities in the wider Great Lakes region, which includes landlocked countries such as Uganda, Rwanda and South Sudan.