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The retail sector (consisting of establishments such as malls, shopping and entertainment properties) emerged as one of the hardest hit in the real estate market in the last six months due to the tough economic environment presented by the Covid-19 pandemic.

Prime rental rates decreased from $4.6 (Sh492) per square foot (sqft) per month to $4.2 (Sh450) per sqft per month.

The decline in rental rates was mainly attributed to the continued oversupply of retail space in certain locations, the current economic climate and reduced consumer spending due to a reduction in disposable income, the latest Knight Frank’s Kenya Market Update of the first half 2020 shows. 

Landlords over the review period provided concessions and incentives to retain and attract new occupiers, however, this was done on a case by case basis.

Occupancy levels for retail centres average 80 per cent with more established malls recording higher occupancy levels of 90 per cent.

The pandemic triggered oversupply of space in some sector continuing to exert pressure on  the retail as well as the residential, commercial, and hospitality real estate sectors. Phase two of the year also has little promise. 

The firm’s managing director Ben Woodhams said the second half of 2020 is anticipated to see reduced level of activity in the retail market.