•The Kenya Market Update report says that prime retail properties attracted a rent of $5.00 (Sh625) per square foot per month in 2022.
•Knight frank foresees a scenario where a further reduction in e commerce is expected to spike the rents for the premises housing retail outlets.
A majority of Kenyans are slowly shaking off the Covid-19 fear and adopting physical shopping, a shift away from the online shopping that characterised the retail sector from 2020, when the pandemic struck.
The trend has renewed the appetite for retail outlets and driven up the occupancy of the premises according to the latest report by Knight Frank.
The Kenya Market Update report says that prime retail properties attracted a rent of $5.00 (Sh625) per square foot per month in 2022.
Knight frank foresees a scenario where a further reduction in e-commerce is expected to spike the rents for the premises housing retail outlets.
“Prime retail destinations in Kenya are characterised by malls and whose occupancy rates in H2, 2022 were over 90 percent for most established malls,” Senior Research analyst at Knight Charles Macharia told the Star.
However, as much as the location of retail properties is very critical, tenant placement strategies, which investors often overlook leading to poor performance of such retail outlets, are indispensable – hence the need for mall owners to hire professional managers as early as during the design stages.
Supermarket chains in Kenya have had contrasting fortunes with Naivas, Quickmart, Chandarana, and Carrefour continuing to expand, while Uchumi, Tuskys, Nakumatt, Shoprite, Game Stores, and Choppies shutting down either through bankruptcy or exiting the market.
Knight Frank Kenya CEO Mark Dunford notes that this may perhaps be attributed to the low penetration of modern retail in Kenya.
A report by Boston Consulting Group (BCG) noted that 77 per cent of retail sales are made in traditional retailers (commonly known as duka).
This depicts the existence of a large consumer base for supermarket chains to target as the number of middle-income earners continues to increase.
Following the collapsing and exiting of some foreign retailers, the remaining outlets intensified their expansion drives to meet the rising need.
Over the review period, Carrefour opened three branches - Kilimani, Valley Arcade, and Nairobi CBD - to increase its total branches to 19.
Naivas on the other hand opened seven stores – Elgon View mall in Eldoret, Naivas Nairobi West, Naivas Express Uthiru, Greenwood mall in Meru, and Naivas Foodmarket Ojijo at Broadwalk mall, Westlands – to take its total stores to 91 and strengthening its position as Kenya’s retail leader.
Chandarana Foodplus, a family-owned retail chain, opened their latest of 26 stores at Azalea Square along General Mathenge in Westlands.
In the second half of last year, the major malls that opened in time for the festive season were Broadwalk, a mixed-use development along Ojijo Road in Westlands, and Greenwood Mall in Meru, with both malls being anchored by Naivas.
The other completion was Kilele mall in Murang’a County that is anchored by a local upcoming supermarket chain Magunas Supermarkets.
The general performance and supply of malls in Kenya have been on the decline, with the focus shifting to convenience centres that are closer to residential neighbourhoods.
Major upcoming malls include Business Bay Square in Eastleigh with Carrefour planned to anchor it and Promenade Mall in Nyali, Mombasa