Trends in the sale of commercial space are quickly catching up with those in high-end apartments, offering buyers the option of owning a portion of the property, and even sub-leasing to other tenants.
Property sellers are today putting for sale entire floors in new office and retail spaces entering the market, to remain attractive to buyers even as prices shoot through the roof in the real estate sector.
Market analysts reckon that the sky-rocketing land and property prices have discouraged small and medium-sized enterprises, who are the main buyers of commercial space, from investing in their own office blocks.
But it is the rate of value appreciation that is the real driver for the new trend, where buyers are not only ditching their landlords with their pricey rental spaces but also investing in valuable assets for possible capital gains.
In other words, instead of merely renting space as has been the practice, sellers are now offering for sale whole floors.
9West, the stylish building in the prime Westlands business district is among the newest new office blocks in Nairobi, where the minimum space on offer is 10,000 square feet for which the sellers are asking Sh150 million.
The building is 11 storeys high.
Ben Woodhams, the managing director at KnightFrank – a leading commercial property management firm says that buyers of commercial property are mainly companies looking for investment opportunities in real estate but may not have the money to build their own office blocks. For such companies, buying a floor or several floors is the option.
“The target buyers are companies seeking to invest in prime commercial space both for the rental returns and capital gains,” said Woodhams, whose firm is the selling agent for 9West.
He noted that property developers were also becoming selective on who they eventually sell to in order to ease the management of the office block.
A selling agent at the office block says that the developers’ demands that the space is only sold on a per floor basis has discouraged smaller firms because they found it unaffordable, yet they were fine with the prevailing pricing had they been allowed to take smaller spaces.
Only commercial space is however available for sale in the office block, because the project’s proponents have chosen to retain the ground and first floor to be let out as retail spaces, perhaps because the two levels are the most prime.
Timothy Mutisya, who heads the commercial space division at Lloyd Masika another property management and valuation firm, says that medium-sized enterprises are presenting new demand for office space.
“Medium-sized companies are the main buyers of office space because they do not have the funds to construct their own but their revenues can support acquisition of whole floors through mortgage,” said Mutisya.
“The regulatory environment has evolved to allow sub-leases on portions of office parks,” he added noting that the government is now offering ownership certificates for any size of commercial space.
“Buyers can now get long-term leaseholds on a portion of commercial property just like apartments for up to 99 years,” he explained.
Before this, property buyers would have to purchase the whole building or pay for space on a graduated scale whose pricing was dependent on how prime the location is.
The going rates for a square foot of commercial spaces has shot up to Sh13,000 from Sh8000 just three years back, according to Lloyd Masika, and the shortfall in the market could push the prices even higher.
Though, several office blocks are still selling space per square foot, Mr Woodhams says the trend of selling entire floor spaces is a significant development in the real estate sector.
Five good reasons to hire an architect when you remodel your home
Homeowners will at one time want to give their house a remodeling to fit the changing times or just to change from an old look.
Because of attachments that we develop for the familiar and knowledge that one will have to live with whatever changes are made for a long time, renovating a house and getting professional help to do so is probably one of the most difficult decisions to make.
Whatever your dream, all major remodelling can benefit from expert help.
Many homeowners shy away from these professionals because of the misconception that it costs an arm and a leg to hire them.
The truth is, that there are a number of reasons why it is wise to hire an architect:
1. To see the big picture
An architect has the training and skill to produce a detailed design based on your particular needs and desires — a design that is sensitive to the architecture of your existing home and scaled to the proper proportions.
However, what truly makes an architect valuable is the ability to develop and refine a vision of the completed project that you can see and understand.
It is important for the architect to spell out in advance what each set of drawings will include.
Do not be concerned if the preliminary drawings seem lacking, because each subsequent set will contain more and more detail, including written specifications.
In fact, ask the architect to show you a final set of drawings from a recently completed job, just to give you an idea of what to expect at the end of the design phase.
But before you settle on a candidate, carefully consider the firm’s past designs and gauge whether its vision for your house meshes with your own.
2.To handle the paperwork
When most of us think of an architect-designed project, we envision the aesthetics of the building, its size, shape and finished surfaces. But behind the pretty face are the bones of the building.
It is the architect’s job to design the project to satisfy building codes and meet specific structural demands. And striking that balance between aesthetic beauty and structural safety is no easy feat — it requires a vast knowledge of various building materials and construction techniques.
3. To hire the muscle
No one understands the design of your project better than the architect, which is why he or she is the perfect person to coordinate the various construction professionals before the work starts in earnest.
For example, an architect will meet with structural and mechanical engineers prior to construction to discuss the design, answer questions and ensure everyone knows their job.
The architect’s plans make all the difference in translating your dreams to the details a contractor needs.
Should a problem arise, which often happens, the plans will act as a record of what should have been done.
4. To oversee the job
Once the design phase is completed, you can decide how involved the architect is in the actual day-to-day construction of the project — if at all.
You can hire an architect just to design the project and create all the necessary drawings, and that is it. He or she then has no further involvement.
However, for an additional fee, some architects will manage the project by hiring subcontractors, establishing the work schedule and confirming that all work is done properly and according to the final plan.
A third level of supervision is available through design-build firms.
These one-stop shops will design and build your project, providing supervision throughout every phase of construction, including hiring subcontractors.
This option also saves you the trouble of negotiating and signing two contracts — one with an architect and another with the contractor
5. To go green
More and more architects are starting to design buildings that are environmentally sensitive to both the planet and the homeowner.
Considering sustainability in concept and construction will ensure your investment lasts a long time, limits its consumption and saves you money through efficient design.
The options available vary widely depending on the experience of the architectural firm and the circumstances of your project.
Consider using recycled and nontoxic materials, solar or passive water heaters, efficient insulation and a trustworthy thermostat.
Reproduced with permission from AAK. www.aak-architects.or.ke