Why Nairobi Landlords Are Ditching Rent for Profit-Sharing Partnerships

Nairobi’s office property market is shifting from traditional fixed-rent leases to revenue-sharing arrangements as landlords look for new ways to generate income from vacant commercial spaces.

Knight Frank’s Africa Offices Market Dashboard H1 2026 says landlords the increasingly collaborating with workspace operators to lease office space through revenue-sharing arrangements rather than relying solely on conventional lease structures.

“A notable emerging trend in this market is the growing adoption of profit-sharing partnerships between flexible workspace operators and owners of Grade B offices which have experienced prolonged vacancies,” the report states.

Nairobi Landlords Find New Way to Turn Empty Offices Into Income

Under the model, building owners can improve occupancy while reducing losses linked to vacant office space. Flexible workspace operators, meanwhile, can expand their footprint with lower upfront capital commitments.

The report says the partnerships are becoming more common as landlords seek alternatives to conventional leasing arrangements for ageing, lower-grade office properties.

“Rather than relying solely on conventional lease structures, landlords are now increasingly collaborating with workspace operators to lease office space through revenue-sharing arrangements.”

Revenue-sharing arrangements allow landlords to work with flexible workspace operators to put vacant office space into use while sharing income generated from the space.

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For workspace operators, the model provides opportunities to increase their presence in the market without the same level of upfront capital commitment required under conventional arrangements.

Nairobi office market splits between modern and ageing buildings

Older office buildings in Nairobi are struggling to attract and retain tenants as companies increasingly move into modern Grade A developments offering better facilities, reliable services and flexible workspace options.

Knight Frank’s Africa Offices Market Dashboard H1 2026 shows that Nairobi’s prime office market strengthened in the first half of 2026, with Grade A office occupancy rising from 82 per cent in December 2025 to 85 per cent by June 2026.

The improvement was attributed to continued demand for high-quality office space and limited supply of new Grade A developments. This has helped keep prime office rents stable at about US$13 (KSh1,680) per square metre per month.

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According to the report, Nairobi’s office market is increasingly divided between modern Grade A buildings and older, lower-grade properties.

“The market is exhibiting a distinct two-tier separation, characterised by an undersupply of true Grade A offices alongside an oversupply of lower-grade offices,” the report states.

This imbalance has supported higher occupancy in newer buildings while leaving older office stock facing increased vacancy rates and greater competition for tenants.

Prime office rents across several African markets have also remained broadly stable despite ongoing macroeconomic headwinds, reflecting the balance between limited Grade A supply and cautious expansion by occupiers.

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