Milliam Murigi and Alfayo Onyango
Construction of malls is the order of the day in Nairobi as space in the metropolitan decreases.
In Karen suburbs alone, the emergence of three major malls (The Hub, The Well and the new Karen Waterfront) means competition with two of the most attractive complexes in Nairobi, Galleria and Nakumatt Crossroads, will escalate. Along Limuru Road, the over two-decade strong mega complex, Village Market is fighting for business with the biggest mall in East Africa, Two Rivers as well as Roslyn Riviera.
In Westlands, Sarirt Centre is being expanded to accommodate more shops and bigger parking lots. Nearby is Westgate Mall, which has shaken off the impact of the 2013 terror attack and is drawing customers in droves.
On Kiambu Road, there is Ridgeways Mall, Caita City Mall and the new and upcoming Kiambu Mall. There are also several new malls in Eastlands and on Mombasa Road, such as South End Mall on Lang’ata Road, which was demolished on Wednesday on claims that it was built on riparian land.
The new kid on the block, Waterfront Karen Mall, which will be the second biggest mall after Two Rivers, is offering 200,000 square feet of retail space, well before its scheduled opening date next month. It recently hosted the Kenya Wedding Awards and plans to host more events over its expansive property.
The entry of foreign supermarket chains has helped push developers into a frenzy of constructing malls. These include Choppies of South Africa at Kiambu Mall and Carrefour of France, which is managed under franchise by Al Futtaim.
Carrefour launched operations in Kenya in 2016 and currently operates five stores — at The Hub in Karen, Two Rivers Mall, Thika Road Mall, The Junction and Sarit Centre. Once opened, the Village Market store under constructiion will be Carrefour’s sixth store in Kenya.
So, is Nairobi becoming one big shopping mall? And how sustainable are these malls? According to Knight Frank’s Kenya Market update for First Half 2018 report, occupancy levels remained high for established malls at 90 per cent, but between 60 and 70 per cent for new malls. “There is an oversupply of big malls and we don’t need more of these buildings. In future, we are going to experience emergenc of smaller malls in between bigger malls,” says the report.
A similar Cytonn Investments report says occupancy rates in the retail sector declined to 80.3 per cent in 2017 from 89.3 per cent in 2016 due to increased supply of retail space through the opening of malls such as Two Rivers and a tough environment due to elections.
Most shopping malls depend on supermarkets for anchor tenant spaces “Notably, 2017 witnessed the closure of several Nakumatt branches due to insolvency and cashflow challenges leading to increased foothold of international retailers such as Carrefour and Souk Bazaar and local retailers such as Tuskys and Naivas taking up space previously occupied by former leading retailer,” said Nancy Murule, a research analyst at Cytonn.
Though the second half of 2018 projects a positive outlook mainly due to improvements in the economy, which is anticipated to boost the consumer spending power, most malls have started looking into other areas to drive traffic, especially after the shuttered stores, thinning crowds, empty parking lots and some retailers filed for bankruptcy.
Many have embraced hosting of events and concerts. “Good traffic to the malls means that other tenants get good business, which translates into rent for the landlord. Hence malls have started employing different tactics,” says David Muguku, WaterFront Karen Director.
For instance, the Koroga Festival has moved to the Two Rivers Mall, while the Junction and the Hub have hosted different music concerts.