Oil investors push up occupancy in office space

Office space in Kampala. Average rents in prime office buildings increased by 3 percent in the second half of 2022. PHOTO/FILE

What you need to know:

  • Occupancy rates in the office market increased by 8 percent in 2022 according to a Knight Frank report for the second half of 2022.

KAMPALA. Investments in the oil sector pushed up occupancy rates in the office market, where 12,800 square metres of rentable space accounted for an annual 8 percent increase in 2022 according to the Knight Frank report for the second half of 2022.

“This was mainly due to sectors such as oil and gas, financial services, and professional services,” the report shows. Additionally, more people are demanding for smaller office spaces (between 50 to 200 square metres).

Sharon Kamayangi, the head of occupier services and commercial agency at Knight Frank, says there is an increasing uptake of Grade A spaces; at 94 percent, more so by those in oil and gas as well as financial institutions.

“It will be ideal for landlords to upgrade the existing buildings from B and C grade to meet the growing demand. Additionally, developers should consider going into other suburbs as office space is still domiciled in areas such as Bugolobi, Kololo, Lugogo bypass, and Nakasero,” she says.

However, owing to bottlenecks and high costs of building materials caused by high inflation, construction completion currently takes three to four years from one year.

But the turbulent economic environment occassioned by double digit inflation at 10.2 percent in December 2022, forced some real estate investors to hold back on investments.

Consequently, average rents in prime office buildings increased by 3 percent in the second half of 2022.

About 50 bankable projects in agriculture and agri-processing, mining, manufacturing and value-added services, from Uganda and a dozen high-ticket public projects were pitched to local entrepreneurs, the Ugandan diaspora and foreign direct investors from EU member states.

Retail category
Maude Kaweesa, senior property manager - retail at Knight Frank, says there has been an improvement of footfall by 40 percent aided by the return of the Black Friday promotions.

“However, this is still below pre-pandemic numbers by 18 percent owing to high inflation rates,” she says.

Despite the gloomy economy, new retailers entered the market such as U-Home, and Optica while others opened up more stores such as Woolworths  and LC Waikiki.

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