Nairobi’s commercial property market is undergoing a structural shift as investors increasingly favour refurbishing existing office buildings over constructing new developments, reflecting the growing influence of environmental, social and governance (ESG) considerations on capital allocation in Kenya’s real estate sector. According to the Knight Frank Kenya Wealth & Investment Trends Report 2026, landlords are investing in energy-efficient upgrades, renewable energy systems and smart building technologies to improve the competitiveness of ageing commercial properties while responding to changing occupier expectations and investor demand for sustainable assets.
The findings illustrate how sustainability has moved beyond corporate responsibility to become a financial and strategic consideration within one of East Africa’s largest commercial property markets. Rather than pursuing new construction, investors are increasingly seeking to enhance the value of existing assets through refurbishment, a trend that aligns with broader efforts to reduce operational costs, improve resource efficiency and extend the economic life of commercial buildings.
According to the report, 38% of respondents indicated that their clients are targeting underperforming commercial properties for refurbishment while maintaining their existing use, signalling a growing preference for asset optimisation over redevelopment. The strategy reflects changing market dynamics in which long-term value is increasingly associated with operational efficiency, environmental performance and the ability to meet evolving tenant requirements.
Boniface Abudho, Research Analyst at Knight Frank Africa, said the commercial property market is entering a new investment cycle where refurbishment has become a principal driver of asset value creation. According to Abudho, investors increasingly recognise that improving the environmental performance of existing buildings extends their useful life while strengthening their competitiveness in a market where occupiers are demanding higher-quality, more efficient office space.
The report identifies renewable energy integration as the most significant ESG consideration influencing commercial property acquisitions, with 75% of respondents highlighting it as a priority when evaluating investment opportunities. Green building certifications followed closely, cited by 62.5% of respondents, while 43.75% said biodiversity considerations also influence investment decisions. Energy efficiency ratings, electric vehicle charging infrastructure, enhanced occupier amenities and wider community impact were also identified as increasingly important factors shaping investment strategies.
These findings reflect a broader shift occurring across global commercial real estate markets, where sustainability credentials increasingly influence both financing conditions and asset valuations. Buildings with stronger environmental performance often benefit from lower operating costs, improved tenant retention and greater resilience against tightening regulatory requirements, making them more attractive to institutional investors and lenders.
The report further found that 44% of respondents said their clients primarily invest in high-quality sustainable or prime-grade commercial assets. Another 38% reported increasing allocations towards renewable energy projects, carbon sequestration initiatives and selective land acquisitions as part of broader ESG investment strategies. Meanwhile, 31% indicated that investors are prepared to dispose of assets with poor ESG performance, while 25% expressed interest in acquiring underperforming buildings with the intention of repositioning or repurposing them.
The investment trend demonstrates how ESG considerations are becoming integrated into portfolio management decisions rather than being treated as standalone sustainability initiatives. Investors are increasingly viewing environmental performance as a determinant of long-term financial returns, particularly as occupiers seek office space that supports corporate sustainability commitments and reduces operating expenses.
According to Mark Dunford, Chief Executive Officer of Knight Frank Kenya, refurbishment has evolved beyond cosmetic improvements and is increasingly centred on improving operational efficiency and strengthening market competitiveness. He noted that reducing operating costs through energy efficiency measures has become a central objective for landlords seeking to maintain occupancy levels while preserving long-term asset value.
The report suggests that owners of older commercial buildings have an opportunity to future-proof their investments by upgrading energy systems, integrating smart building technologies and improving occupier amenities. Such improvements not only enhance building performance but also position assets to meet the growing demand for flexible, sustainable and technology-enabled workplaces.
The shift carries broader implications for Kenya’s urban development and climate objectives. The building sector accounts for a significant share of global energy consumption and greenhouse gas emissions, making improvements to existing commercial buildings an increasingly important component of national decarbonisation efforts. Refurbishing existing structures can also reduce the embodied carbon associated with demolition and new construction while preserving valuable urban infrastructure.
For Kenya, where Nairobi continues to serve as a regional financial and commercial hub, improving the sustainability of existing office stock may strengthen the city’s competitiveness in attracting multinational corporations, financial institutions and international investors that increasingly incorporate ESG performance into location and investment decisions.
The findings also highlight the growing intersection between sustainable finance and commercial real estate. As lenders and investors place greater emphasis on climate risk, resource efficiency and governance standards, commercial property owners may increasingly find that access to financing is linked to measurable sustainability performance. Buildings capable of demonstrating lower energy consumption and stronger ESG credentials are likely to be better positioned within evolving capital markets.
The transition towards refurbishment-led investment reflects a wider maturation of Kenya’s commercial property sector, where long-term value creation increasingly depends on operational resilience rather than expansion alone. As sustainability expectations continue to influence occupiers, financiers and regulators, upgrading existing buildings may prove more economically viable than developing new commercial stock in an increasingly competitive market.
The Knight Frank report suggests that Nairobi’s commercial property market is entering a period in which environmental performance, technological efficiency and asset resilience will become defining characteristics of investment quality. For investors, landlords and policymakers alike, the findings reinforce that the future competitiveness of African commercial real estate will depend not only on the buildings constructed, but increasingly on how existing assets are adapted to meet the economic and environmental demands of a low-carbon future.
