Business Daily
Date: 09.01.2017
Page 16,17
Article size: 545 cm2
ColumnCM: 121.11
AVE: 230111.11
Warning of retail space
oversupply as developers
make beeline for Nairobi
BY QUEEN MUNGUTI
Real estate developers are staying put
in their ride of the nearly a decade of
buzz around Nairobi's standing as one
of Africa's most robust commercial property
markets with the opening of new malls despite
emerging signs of oversupply.
NextGen Mall in Nairobi's South C is the lat­
est retail outlet to open its doors to the public
— its developers encouraged by recent reports
that have identified the city as the top sub­Sa­
haran destination for retail developers.
"Nairobi is the leading destination in Sub­
Saharan Africa for developers setting up shop­
ping centres. It is the largest market by existing
shopping centre floor space (391,000 square
meters) and it has the biggest development
pipeline (470,000 square metres)," said property
manager Knight Frank in a recently published
report titled 2016 Shop Africa.
Kenneth Kaniu, the Britam Assets Manag­
er CEO, has however cautioned that the city
could face an oversupply in retail space, even
as it moves into an equation faced by other
countries of consumers choosing to use other
"convenient" means to buy such as online shop­
ping, which has, elsewhere, led to the closing
of retail spaces.
"Beyond the Two Rivers mall, expected to
open in the next few months, no further retail
space will be required in Nairobi, as there will
be oversupply," he told delegates at last year's
East Africa Property Investment Summit.
In the US, where online shopping has
grown exponentially, retail analysts predict
that one­third of shopping malls will shut
down in coming years as foot traffic dips from
35 million in 2010, to 17 million in 2013. That
decline has already led to the closure of mall's
anchor stores.
"On an apples­to­apples basis, we have twice
as much per­capita retail space as any other
country in the world. The estimated square feet
of retail space per citizen is 48 square feet and
the footprint is poised to decline. Four hundred
of the 1,100 enclosed malls will fail in the com­
ing years," said US retail analyst, Jan Kniffen,
A section of the
in an interview with business news television
line shopping
channel CNBC.
has grown exp
Experiential marketing
nentially, retai
analysts predic
Two Rivers mal
in Nairobi­In th
US, where on­
However, the malls that have already closed
that one­third o
in the US have often been renovated and re­
shopping malls
made into hospitals, schools, churches and
colleges.
An example in Austin Texas is Highland Mall
that officially closed in 2015 and was bought by
the Austin Community College and currently
has 604 computer stations, 200,000 square
feet of instructional space, a library, and of­
fices. However, the Knight Frank report noted
will shut down
coming years a
foot traffic dro
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya
Business Daily
Date: 09.01.2017
Page 16,17
Article size: 545 cm2
ColumnCM: 121.11
AVE: 230111.11
that there is still room for more shopping malls
in Nairobi, especially in neighbourhoods where
ctioflofthe
Rivers mall
airobf­lnthe
residents have to board vehicles in order to visit
where on­
the retail centres.
shopping
"Despite the high levels of recent construction
activity, there are still opportunities for the de­
velopment of well­located, well­positioned malls
across Nairobi. Several neighbourhoods remain
under­supplied for shopping centre space and
retail demand will continue to be driven by the
growth of Nairobi's consumer classes."
Also, unlike shopping malls in the US, retail
centres in the country have incorporated experi­
grown expo­
tially, retail
lysts predict
tone­third of
ppinf malls
shut down in
ming years as
t traffic drops.
ON NJAU
ential marketing to attract millennial consumers
who are seeking memorable experiences from their
shopping, a factor that has been identified as one of
future of retail fulfillment is no longer just about
more stores or shopping centres. Americans are
increasingly choosing to spend on technology and
experiences like vacations, leaving less money for
apparel," according to a report by US real­estate
research firm Cushman and Wakefield.
In Kenya's case, the shopping malls are being
developed as city hubs, where people can live,
work shop and play at the same time; thus ap­
pealing to consumers at a wider level.
"Among the new projects for Nairobi's new
malls there is a clear trend towards mixed­use,
rather than pure retail, development as office,
residential and leisure facilities have been in­
corporated into the schemes," said the Knight
Frank report.
the reasons for the demise of America's malls. "The
shift is in how people are shopping, this means the
­AFRICAN LAUGHTER
Ipsos Kenya ­ Acorn House,97 James Gichuru Road ­ Lavington ­ Nairobi ­ Kenya