Nairobi posted a lower yield on prime warehouse rents in the first half of 2025 compared to its rivals Kampala in Uganda and Dar es Salaam in Tanzania, according to new tracker data highlighting the varying fortunes for investors.
Analysis of the industrial property segment by real estate firm Knight Frank shows that the average yield on rent of a prime warehouse in Nairobi stood at 9.5 percent in the first half of the year, compared to 13 percent in Kampala and 10 percent in Dar es Salaam.
Despite relatively similar charges, the yields on rent varied, with warehouse owners in Uganda demanding an average of Sh904.33 ($7), Nairobi Sh775.08 ($6), and Dar es Salaam Sh645.95 ($5).
The tracker shows that rental charges for prime warehouses in Nairobi have held steady year-on-year, buoyed by demand due to tightening supplies of Grade A facilities and the repositioning of logistics networks around the Kenyan capital and other key economic corridors.
“Special Economic Zones (SEZs) and Export Processing Zones (EPZs) continue to drive industrial growth. A significant development during the review period was Emirates Logistics’ entry into the Kenyan market, with plans to construct a state-of-the-art logistics hub at Tatu City SEZ,” Mark Dunford, CEO of Knight Frank Kenya, said.
He added that sustainability has become a defining feature of new industrial developments in Nairobi, pointing out a facility by Cold Solutions Kenya, whose temperature-controlled warehouse at Tatu City became the first facility in Africa to attain LEED Gold certification from the US Green Building Council.
“This designation reinforces the trend of occupiers seeking ESG-compliant spaces that offer operational efficiencies and reduced energy consumption. Developers are increasingly responding to this shift by incorporating green design principles into both speculative and build-to-suit projects,” Mr Dunford added.
Kampala demand
The tracker showed that Kampala’s industrial sector remained resilient in the first half of 2025, fuelled by sustained demand from key growth sectors, with occupancy rates exceeding 80 percent, particularly in Grade A warehouse facilities. This reflects constrained supply and consistent tenant absorption.
“Rental values remained stable, with average asking rents ranging between $3–7 psm (per square metre) per month, depending on location and specification. The traditional industrial area commanded the highest monthly rents ($5–7psm), followed by Ntinda–Nakawa ($4.5–6.5psm) and Kampala,” said Judy Rugasira Kyanda, CEO of Knight Frank Uganda.
Charges within the Industrial Business Park (Namanve) ranged between $3 and $4.5 per sqm, positioning it as the most cost-competitive hub in Kampala.
“Leasing activity was driven predominantly by small to mid-sized occupiers, with units between 300–1,000 sqm accounting for the bulk of transactions. While take-up of larger industrial spaces (>1,000 sqm) remained relatively subdued, demand was robust across agro-processing, coffee export, manufacturing, and FMCG (fast-moving-consumer goods) sectors,” Ms Kyanda said.
“The occupiers seek modern facilities with specific requirements, such as cold storage, high eaves, reinforced flooring, and proximity to arterial transport routes. Notably, warehouse-showroom hybrids and flexible leasing models gained traction among SMEs, aligning with their operational and cost-efficiency goals,” she added.
Dar corridors
The tracker showed that in Dar es Salaam, strategic corridors, including Nyerere Road, Pugu Road, Mandela Road, and Mikocheni, have emerged as key industrial hotspots, fuelled by rising demand for modern warehousing and logistics infrastructure.
“This surge is driven by the rapid expansion of e-commerce, manufacturing activity, and cross-border trade. The sector is also benefiting from Tanzania’s agricultural transformation agenda,” said Ahaad Meskiri, Knight Frank managing director in Tanzania.
“A notable shift in transaction practices is observed, with the majority of lease and sale agreements now denominated in Tanzanian shillings, reflecting a deliberate alignment with government policy to stabilise the local currency and reduce foreign exchange exposure,” he added.
