Is It Time to Decentralize Kenya's Capital?

A Look Through the Lens of Commercial Real Estate In Kenya

Nairobi has long been the nerve center of Kenya’s economy, government, innovation, and culture. But in 2023, the dominance of the capital reached new heights in the commercial real estate space—raising a pressing question: Is it time to decentralize?

🏢 What Are Commercial Properties?

Commercial properties refer to real estate used exclusively for business-related purposes. These include office spaces, retail shops, hotels, warehouses, factories, and mixed-use buildings that combine commercial and sometimes residential units. Unlike residential properties, their primary goal is to generate income—through rent, operations, or capital gains.

According to recent data from the 2023–24 Real Estate Survey Report by KNBS, this concentration isn’t just a number—it’s reflected in the skyline and street-level dynamics of Nairobi. In 2023, Nairobi dominated Kenya’s commercial property market, accounting for 74.1% of all properties sold or listed, such as prime office spaces in Westlands, retail shops in the CBD, warehouses along Mombasa Road, and mixed-use developments in Kilimani.

This real estate activity underscores the city’s gravitational pull on investors, developers, and businesses alike—often at the expense of other emerging urban centers. The next closest county, Kiambu, registered just 7.2%, followed by Mombasa (6.5%) and Machakos (3.6%). The rest of the counties—collectively shared less than 9% of the market.

Let's Explore this in a chart ....

This hyper-concentration of commercial activity in Nairobi is not just a statistic. It’s a symptom of structural centralization that has shaped infrastructure development, job distribution, and investment flows for decades.

🏗️ Real Estate as a Mirror of Economic Planning

When we shift focus to rental property types, offices dominate at 63.3%, signaling the capital’s continued grip on formal employment and organizational headquarters. Retail spaces trail at 16.1%, while industrial and mixed-use properties remain modest in share. These figures paint a clear picture: Nairobi is where business lives, breathes, and builds.

But should it stay that way?

🌍 The Case for Decentralization

1. Urban Strain in Nairobi Traffic congestion, rising rent, overburdened infrastructure, and stretched public services are signs that the city is buckling under its own weight.

2. Untapped Potential in Other Counties Cities like Kisumu, Eldoret, Nyeri, Nakuru, and Mombasa have shown potential for growth but continue to be underutilized due to policy and investment inertia.

3. Inclusive Growth & Job Creation Spreading commercial development across counties can spark job creation, local entrepreneurship, and regional equity—especially for youth and MSMEs outside the capital.

4. Boosting County Autonomy & Innovation Counties given the right infrastructure and support can specialize in sectors like tourism, manufacturing, agriculture, and logistics, diversifying Kenya’s economy in a sustainable way.

   
   

🛤️ What Would It Take?

Decentralization isn’t just about moving offices. It’s about:

1. Incentivizing private investment in secondary cities.

2. Improving infrastructure (roads, internet, power) in regional hubs.

3. Rethinking policy and zoning to support business growth outside Nairobi.

4. Investing in education and talent development in every county.

   
   

🚀 Nairobi Can Still Thrive—But Not Alone

A thriving Nairobi is good for Kenya—but a Kenya that thrives beyond Nairobi is even better. This isn’t about abandoning the capital, but about sharing the load and the opportunities.

The commercial property data is a signal: Now is the time to reimagine our urban future. Decentralization isn’t just policy—it’s progress.