Demand for office space surges as companies abandon work-from-home model – Report

In the first six months of this year, more companies in the country abandoned the work-from-home model, increasing demand for office space.

The most recent market update research by real estate firm Knight Frank suggests a significant change away from the option of working from home, prompted by the Covid-19 outbreak, which compelled enterprises to opt for employees working from home.

"The trend of returning to physical office spaces has been prominent throughout the first half of 2024, with many organisations showing a preference of physical offices to the working-from-home model," the report reads.

"In turn, this has facilitated the continued expansion of the flexible workspaces market."

It adds that the sector generally showed resilience, with prime offices recording an occupancy rate of 77.2 per cent as of June 2024, an improvement from 76.5 per cent at the end of 2023, mainly driven by co-working operators and Business Process Outsourcing (BPO).

Coworking operators are known for running co-working spaces, and communal work environments that provide individuals with a shared space to work on their projects or businesses.

The spaces offer a variety of amenities such as Wi-Fi, printer access and a collaborative support environment.

Notably, the continued trend to completely shift from working from home to the home model has fuelled the ongoing expansion of the flexible workspace market in Nairobi.

Knight Frank Kenya's CEO, Mark Dunford said the expansion is exemplified by the opening of new offices by IWG, a global leader in flexible workspaces.

It opened new offices at Pramukh Towers, Westlands, under its HQ brand – occupying over 20,000 sqft, spread over four floors.

"Meanwhile, Kofisi, which operates 10 locations in Kenya, entered a partnership with Workshop17 to enhance connectivity for their 10,000 members distributed across 22 outlets, totalling a workspace area of 645,835 sqft," Dunford said.

He adds that the office sector in Nairobi remained stable in the period under review, with prime rents holding at $1.2 (Sh155) per square foot per month.

However, towards the end of H1 2024, the demonstrations that rocked Kenya, with Nairobi being the epicentre, affected the office market as most offices closed due to overall insecurity issues such as vandalism, forcing employees to revert to working from home on Tuesdays and Thursdays.

"This significantly created a non-conducive business environment," the report reads.

On the other hand, supply in the prime office market was noted to have remained limited, creating an opportunity for strategic investors.

According to the real estate firm, the considerable drop in prime office supply in 2024 has been offset by past oversupply.

Consequently, rent and occupancy rates are expected to remain stable in 2024.