A new Knight Frank report indicates that changing tenant preferences are making it harder for older office buildings in Nairobi to compete for occupants.
According to the Knight Frank Africa Offices Dashboard H1 2026, businesses are increasingly opting for newer office developments that offer modern facilities, better amenities and more flexible workspace solutions.
The shift is creating a divide in Nairobi’s commercial property market, with Grade A office buildings attracting stronger demand while older and lower-grade properties struggle to retain tenants.
Although Nairobi’s office market performed better in the first half of 2026, the gains have not been shared evenly across the sector.
Grade A Offices Gain as Demand for Quality Space Rises
Knight Frank says demand for Grade A office space remained strong, with occupancy rising from 82 per cent in December 2025 to 85 per cent in June 2026.
The improvement places Nairobi among the stronger-performing office markets in Africa and points to increased confidence among businesses seeking high-quality workspaces.
Demand for modern offices has also remained strong because relatively little new Grade A supply has entered the market.
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During the review period, only one major Grade A office development, the approximately 70,000-square-foot 277 Brookside project in Westlands, was completed.
Limited new supply, combined with sustained demand, has helped keep prime office rents at approximately $13 per square metre per month.
However, the stronger performance of Grade A buildings is also highlighting the challenges facing older office properties.
According to Knight Frank, demand for modern Grade A offices continues to outpace supply, while many older office buildings face rising vacancies.
“The market is exhibiting a distinct two-tier separation, characterised by an undersupply of true Grade A offices alongside an oversupply of lower-grade offices,” the report states.
Knight Frank Reveals Businesses Prioritise Modern Facilities
For businesses looking for office space, location is no longer the only consideration.
Companies are assessing buildings based on factors such as modern specifications, reliable electricity supply, adequate parking, professional property management and work environments that support employee productivity.
As organisations reassess how much office space they need and how their employees use it, many are favouring buildings that provide greater operational efficiency and a better workplace experience.
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This is putting additional pressure on older office blocks that may not have the facilities or specifications today’s tenants demand.
The changing preferences have also contributed to the expansion of flexible workspaces and serviced offices in Nairobi.
Knight Frank says businesses that do not want to commit to traditional long-term leases are increasingly turning to operators offering flexible terms and office space that can be expanded or reduced as needed.
Global workspace provider IWG opened three new centres in Nairobi during the first half of 2026.
The centres include Nairobi Business Park along Ngong Road, 1 Park Avenue in Parklands and I&M Tower in the Central Business District.
Older Buildings Forced to Rethink Leasing Strategies
Knight Frank states that the changing tenant preferences are forcing owners of older office buildings to reconsider how they compete in Nairobi’s increasingly divided property market.
Instead of relying solely on traditional leases, some landlords are exploring partnerships with flexible workspace operators to increase occupancy and generate income from vacant space.
Knight Frank notes that profit-sharing agreements are becoming increasingly common, particularly among Grade B buildings facing persistent vacancies.
“Profit-sharing agreements are becoming increasingly common, particularly among Grade B buildings facing persistent vacancies,” Knight Frank states.
Under the arrangements, landlords provide the office space while flexible workspace operators manage and lease the premises to businesses, with the two parties sharing the revenue generated.
The model lets landlords generate income from underutilised buildings while enabling workspace operators to expand their portfolios without making substantial investments in property acquisition.
The growing use of such partnerships illustrates the pressure facing older office buildings as businesses increasingly favour modern developments.
For Nairobi’s commercial property market, the challenge is therefore shifting from simply finding tenants to meeting changing occupier expectations.
While the overall office market is showing signs of recovery, Knight Frank’s findings suggest the recovery increasingly favours modern, high-quality buildings.
Owners of older properties may therefore need to invest in upgrades, reposition their buildings, or adopt alternative leasing models to retain tenants and remain competitive.
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