Investing in Kenya’s warehousing industry

The demand for modern warehousing space in Nairobi, Kenya is on the rise, as highlighted in the 2016 Logistics Africa report by Knight Frank. In response to this growing need, Africa Logistics Properties (ALP) is investing in a 50,000 square meter warehousing complex at the Tatu Industrial Park, with the first phase offering 14,000 square meters of space. This project aims to establish Kenya's first modern international standard logistics and distribution center, setting a new benchmark for the industry in the region. Toby Selman, the CEO of ALP, explained that the current stock of warehousing in Nairobi is outdated and unable to meet the evolving requirements of businesses and consumers. Traditional go-down warehousing with low roofs and limited storage capacities is no longer sufficient for modern logistics needs. ALP's warehouses, on the other hand, boast high roofs, high pallet densities, and advanced inventory management systems, resulting in more efficient operations and lower overall costs for occupiers. Selman emphasized that despite the premium pricing associated with modern warehousing, consumers are willing to pay for the value it brings. By enabling higher stacking, efficient inventory management, and reduced labor and transport costs, ALP's warehouses actually lead to a 30% decrease in rent costs for occupiers. This cost-saving benefit makes the investment in modern warehousing economically viable and attractive to businesses in Kenya. Moreover, the establishment of a special enterprise zone at the Tatu Industrial Park offers additional incentives for companies setting up operations in the area. The zone provides tax advantages, including reduced corporate tax rates and VAT exemptions, which further sweeten the deal for potential occupiers. This initiative by the government aims to create a conducive environment for businesses to thrive and contribute to the economic development of the region. While Kenya remains a key hub for warehousing and manufacturing in East Africa, ALP is also exploring opportunities in other target cities like Uganda. Selman highlighted the importance of strategic positioning in Kenya as a supply chain node, attracting distributors, retailers, and logistics companies to base their operations in the country. ALP's focus on expanding to other East African cities reflects the region's growing demand for high-quality warehousing solutions. In comparing ALP's modern warehousing facilities to traditional go-downs in East Africa, Selman pointed out significant differences in design and functionality. ALP's warehouses are built to modern standards with high roof eaves, proper docks for quick truck transfers, and energy-efficient features like solar power and rainwater harvesting. By optimizing storage space, reducing truck movements, and utilizing sustainable practices, ALP's warehouses offer a more cost-effective and environmentally friendly solution for businesses. As the warehousing landscape in Nairobi undergoes a transformation with the introduction of ALP's innovative facilities, the future looks bright for businesses seeking efficient and modern storage solutions in Kenya. With a focus on quality, efficiency, and sustainability, ALP is paving the way for a new era of warehousing excellence in the region.