Convenient retail stores will play a huge role in Kenya’s real estate sector in the wake of the current oversupply in retail space, Fusion Capital predicts.
“Fusion believes the future of retail investment in Nairobi is in the local adaption and development of convenience retail outlets,” the firm said in a report.
The real estate developer and private equity firm said that convenience stores - which offer either proximity to work, ample parking, extended business hours and short checkout lines- are better suited to cater for the Kenyan consumer.
Fusion Capital noted that consumer shopping habits are adversely changing as shoppers increasingly forgo weekly trips to major stores in favour of daily shopping.
In the September Fusion African Monitor, the report showed that empty prime retail space was becoming a common site in both old and new malls as anchor tenants were opting to scale back operations.
The firm attributed the increase in vacant retail space to the slowdown in economic growth due to the prolonged drought, elections and a slowdown in private sector lending as well as the oversupply of similar products.
“Developers have failed to supply the market with anything new in the retail sector. Each mall offers a premium shopping experience, a wide variety of line shops, and both high-end and affordable food outlets,” the firm stated.
The report urged developers to take advantage of the need for convenience stores adding that they are easy to plan, build and require significantly less capital than standard malls.
“They also usually have lower electricity costs, maintenance costs, rates and taxes and require less labour allowing rents to be lower and savings to be passed down to customers,” the report stated.