At the Galleria Shopping Mall, in the upscale Karen neighborhood of Nairobi, security is certainly tight — no one enters unless the guards first perform a handheld-detector scan, and the security presence in the parking lot is equally heavy. Indeed, security has become de rigueur in Nairobi shopping malls since the 2013 terrorist attack at the Westgate shopping center, in which nearly 70 were killed.
The Westgate reopened in July, fortunately with many of its key stores in place, including the anchor supermarket, Nakumatt. Traffic was very busy that first weekend, according to Lucy Githinji, head of East Africa corporate solutions at Jones Lang LaSalle Kenya. “Maybe it was the curiosity effect, but the numbers were amazing,” Githinji said. “Getting the same stores to reopen was a plus.”
Despite the brutal and regrettable attack, the Nairobi retail scene managed to recover relatively quickly. “There was a period of reduced activity and little footfall at the malls, but that was for a short period of time,” Githinji said. “Within a month, traffic to malls came back.” If there was any lasting impact, that involves the added security, which has become common in Nairobi, even in the older malls. Among the factors behind the rebound: an improved economy; better roads and other infrastructure; an urban population increase; the growth of the middle class; and Nairobi’s becoming the venue of choice for international companies seeking to open offices or plants in East Africa.
Three major projects are or were part of the city’s pipeline of shopping center activity. Garden City, a 50,000-square-meter (about 538,000 square feet) development on Thika Road, opened in May. Two Rivers is a mixed-use project in Gigiri with 62,000 square meters of retail space and an opening date set for this month. Built on a 100-acre site, Two Rivers will total some 870,000 square meters in total. And the 29,000-square-meter Hub, in Karen, is slated for completion next month.
The previous dearth of adequate retail supply is a key reason for the new development, according to JLL. Foreign brands have been eyeing Nairobi, but they want modernized space, Githinji says. Among the international brands that have opened there recently, or are about to, are Carrefour and Virgin Active. North American brands have been mostly eatery chains such as Cold Stone Creamery, Domino’s Pizza, KFC and Subway, none of which had any presence in the city as of two years ago.
Even with this new construction, the older malls are showing a 95 percent occupancy rate, while the newer malls are mainly fully let, Githinji says. Good occupancies -generally mean strong lease rates, and rental levels currently average $370 per square meter, although premium locations are fetching as high as $400 per square meter, according to JLL.
“Rents are rapidly going up for retail,” Githinji said. “The structure of our leases includes annual rent increases of at least 10 percent per annum.
