Nairobi’s commercial real estate market is undergoing one of its most significant structural adjustments in decades, with vacancy rates in grade-A office buildings reaching 31 per cent in the second quarter of 2026 — a figure that property analysts say reflects not a temporary demand dip but an enduring reconfiguration of how companies use physical space in the post-pandemic, hybrid-work era.
The latest data from Knight Frank Kenya shows that of Nairobi’s approximately 580,000 square metres of grade-A office supply concentrated in Westlands, Upper Hill, and Kilimani, around 180,000 square metres sit vacant. This represents a significant deterioration from the 22 per cent vacancy rate recorded in 2022 and an even sharper fall from the 11 per cent vacancy of pre-2020 Nairobi.
Who Is Vacating and Why
The vacancy trend is not uniform across sectors. Technology companies, international NGOs, and professional services firms — particularly consultancies and law firms — have been the most aggressive in reducing their Nairobi office footprints, typically moving from dedicated large floors to smaller, flexible arrangements. Several multinational corporations that maintained East Africa regional headquarters in Nairobi have consolidated to hot-desking arrangements accommodating less than half their previous headcount of regular on-site workers.
Knight Frank Kenya Head of Commercial Agency Ben Woodhams told ZaKenya.com that the lease renewal cycle of 2025-2026 was proving decisive. “Companies whose leases signed in 2020 and 2021 — when they were locked into pre-pandemic space commitments — are now coming up for renewal, and very few of them are renewing at the same square meterage,” he said. “The typical downsize on renewal is between 30 and 45 per cent of the previous floor space.”
Safaricom, the country’s largest private employer, announced in early 2026 that it was reducing its Westlands headquarters footprint by approximately 14,000 square metres following a review of workspace utilisation data that showed average daily office occupancy running at below 40 per cent on any given day. The telecoms giant, which has been a bellwether for Nairobi’s employment culture, has formalised a hybrid work policy under which most corporate employees are expected on-site two or three days per week.
Developers Under Pressure
The vacancy surge is compressing returns for commercial property developers and landlords. Grade-A asking rents in Westlands and Upper Hill, which peaked at approximately US$ 1.20 per square foot per month in 2019, have declined to an effective US$ 0.80-0.90 in the current market, with landlords increasingly offering rent-free periods of up to six months to attract tenants willing to commit to multi-year leases.
Several high-profile commercial developments that broke ground between 2020 and 2023 — when demand projections were still based on pre-hybrid-work assumptions — are now struggling to attract anchor tenants. At least three Upper Hill towers completed in 2025 remain less than 20 per cent occupied, a situation that is creating stress in the debt structures that financed their construction.
Kenya’s pension funds, which have significant commercial real estate exposure through property funds and direct ownership, are monitoring the situation closely. The Retirement Benefits Authority has not yet flagged commercial property as a systemic risk, but private actuarial assessments seen by ZaKenya.com suggest that some funds’ property valuations have not been marked to market to reflect current leasing realities.
Repurposing and Adaptation
The most strategically interesting response to the vacancy problem is repurposing. Several Nairobi landlords are in active conversations with residential developers about converting underperforming commercial floors to apartments, serviced units, or mixed-use space. The Nairobi City County Building Code, which previously made such conversion complex and expensive, has been under review at the county government’s request; proposed amendments that would streamline change-of-use applications are expected before the county assembly in August.
Co-working operators have been another growth area. Pasha Spaces, Nairobi Garage, and iHub’s workspace arm have all expanded their footprints in 2025 and 2026, absorbing space that conventional tenants have vacated and reselling it on flexible daily, weekly, or monthly terms. The model serves the growing freelance economy, tech startups, and the diaspora returnees who are choosing Nairobi as a base but lack local employer connections.
Beyond the balance sheets, the office vacancy story has implications for Nairobi’s urban geography. Lower weekday office occupancy means quieter Central Business District streets, reduced lunchtime foot traffic for restaurants and kiosks, and a rethinking of transit infrastructure priorities that were planned around peak commute patterns. The city the 2030 Vision planners imagined was a dense, formal, nine-to-five Nairobi. The city that is emerging is something more diffuse — and developers, planners, and coffee shop owners are all adjusting accordingly.
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