Nairobi office landlords shift to revenue-sharing deals as vacancies hit older buildings
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Nairobi landlords are increasingly leasing vacant office space to flexible workspace operators through revenue-sharing partnerships, as older buildings lose tenants to modern Grade A developments, a Knight Frank report shows.
Nairobi's office property market is shifting from traditional fixed-rent leases to revenue-sharing arrangements, as landlords look for new ways to generate income from vacant commercial space, according to an analysis by The Kenya Times of Knight Frank's Africa Offices Market Dashboard for the first half of 2026.
The report highlights "a notable emerging trend in this market": the growing adoption of profit-sharing partnerships between flexible workspace operators and owners of Grade B offices that have experienced prolonged vacancies. Under the model, building owners improve occupancy while reducing losses linked to vacant space, while workspace operators expand their footprint with lower upfront capital commitments.
"Rather than relying solely on conventional lease structures, landlords are now increasingly collaborating with workspace operators to lease office space through revenue-sharing arrangements," the report states. The partnerships are becoming more common as landlords seek alternatives to conventional leasing for ageing, lower-grade office properties.
The trend reflects a market that is increasingly divided between modern and older buildings. Knight Frank's dashboard shows Nairobi's prime office market strengthened in the first half of 2026, with Grade A office occupancy rising from 82 per cent in December 2025 to 85 per cent by June 2026, helped by continued demand for high-quality space and limited new supply.
Prime office rents remained stable at about US$13 (KSh1,680) per square metre per month. The report describes a "distinct two-tier separation, characterised by an undersupply of true Grade A offices alongside an oversupply of lower-grade offices", leaving older office stock facing increased vacancy rates and greater competition for tenants.