The disruption of the traditional supply chains due to the global lock down in the wake of Covid-19 gives the country an opportunity to be innovative and rethink of its manufacturing sector, industry players have said.
The over reliance of the country on imports for many basic items has put the country into a major crisis as it seeks to meet a sudden growing demand of essentials.
All those involved in the logistics must change the way they operate in order for the emerging supply chain to be effective. Mr Richard Hough, the Chief Executive Officer of African Logistics Properties (ALP), A global Grade A warehouse developer said.
Following detection of Covid-19 in the country and partial lock down, the company has diversified its product offerings to cater for immediate market demand. Specifically, within the essential based sectors including retail, pharmaceutical and logistics.
“We have introduced 12 months lease arrangement as opposed to the normal longer period of about 5 years to cater for immediate needs by tenants seeking to supply essential commodities and looking for flexibility,” Hough said.
” A 5-year lease provides protection for both the landlord and the tenant but we remain committed to servicing the nation and offering short term solutions,” he added.
Multiple Many of our tenants, he added, has since started offering round the clock operations to cater for the heightened demand of the warehousing services.
Huntington Kibe, a Nairobi based investment consultant, said the country ‘s manufacturing sector is expected to grow in the coming months as the country seeks to meet basic items due to global chain constraints, shortage and increased demand. This, he said, will require the country to adjust its supply chain to create more new facilities.
“Who would have thought that the country could make an instant adjustment and manufacture such a vital items such as face masks? This is a time to rethink of ways we can be self-sustenance especially on the item we use frequently” he said.
However, there is need for the government to reduce the cost of input such as electricity, promote standardization, and create financial incentives to allow Small and Medium Enterprises (SME) to access the funds they need for investment.
The government should also enact necessary legislation to create incentives for foreign investment that can partner with local players for technology transfer, he added.
Demand for large, centralised warehouses is expected to rise as the country’s formal retail sector continues to experience rapid transformation. A Knight Frank Africa Horizons report done in last year observed that international retailers seeking Kenya’s market lacked storage facilities as they have to make use of small storage facilities for their goods.
“Continued expansion of international and Kenyan companies is expected to generate demand for increasingly sophisticated logistics properties, particularly around Nairobi,” the Knight Frank report noted.
Old facilities lack modern design features such as truck circulation and inter-modal facilities, while high cost of land in the city and poor infrastructure have made investment in industrial areas seek sites outside the city.
For instance, ALP has announced plans to develop a one-million square feet storage facility 35 minutes from Westlands, Nairobi. This expansion signifies Nairobi’s appeal as the region’s logistics hub following the completion of the Mombasa-Nairobi Standard Gauge Railway (SGR) line and its extension to Naivasha.
Hough said that the ALP West facility will be built on a 49-acres plot located about 25 kilometres from the city along the Nairobi-Nakuru highway. The facility will accommodate regional and medium-sized local companies looking for a distribution centre to expand their business locally and across the region.
“We have commenced with phase 1, the courtyard will measure 80,000 square feet, with a letting size of 5,000 square feet,” Hough said, adding that the entire development will be built in seven phases.
The Courtyard units are designed to incubate Small and Medium Enterprises (SME), coming at a time when the government is keen to promote the sub-sector to create new jobs.
In 2018, ALP, which specializes in integrated property investment and grade-A warehouses, completed another state of the art facility ALP North is situated within the Tatu Industrial Park, Ruiru, about 22km north of Westlands or 3 km from the Northern and Eastern bypass junctions.
“ALP North Development measures 50,000 Square Metres (538,196sqft) and comprises of modern grade-A international standard warehouses,” said Hough.
The new ALP-West is expected to benefit from the recently announced upgrading of Waiyaki Way and the Naivasha highway into a six-lane highway.
“We expect there to be greater demand for modern, high-specification warehousing but the focal areas of growth will be away from the historic industrial area to places on the outskirts of Nairobi such as Limuru and Ruiru,” Hough said.
Centralised and modern warehousing decreases operational costs such as security and transport and increases efficiencies. This drives the cost of production and storage down and ultimately the cost borne by the consumer.
Users operating out of a modern facility such as Copia Kenya, Hough said, have significantly increased operational efficiency; reduced stock loss; increased access to market; and increased market share considerably.
About Africa Logistics Properties (ALP)
Africa Logistics Properties (ALP) is a specialist integrated property investment company that develops, acquires and owns class-A industrial and logistics properties in principal cities across East Africa. ALP leverages its team throughout the region via a deep understanding of global customer and logistics demands, international best practices in warehousing design specifications, construction and property management along with local expertise in market dynamics, site selection and regulatory approvals. ALP is supported by global institutional shareholder investors.
Key services: Current projects for the rental warehousing market situated in ALP North (Ruiru) and ALP West (Limuru). Built to suit industrial developments or sale and leaseback transactions.
ALP PROJECTS:
ALP WEST
ALP West is strategically located being at Tilisi development which is 2 minutes away from Nairobi/Nakuru highway. The expansion of the six lane highway will ease transportation and make an excellent distribution network within Nairobi CBD and neighbouring countries like Uganda. ALP West logistics park measures 50 acres and will be constructed in phases. Phase one, the courtyard, will comprise of smaller units from 500sqm. The decision to start with 500sqm is to allow small scale distributors to reduce their cost of storage and improve their supply chain and operations efficiency. Phase two will comprise of grade A warehouses similar to ALP North completed facility in Ruiru. Other solutions we aim to provide at ALP West is the built to spec for businesses with specific needs/requirements.
ALP NORTH
ALP acquired 22.4 acres of industrial zoned land at Tatu Industrial Park situated 22km north from Westlands and the Nairobi CBD. The site is 3 km from the Northern and Eastern bypass junctions and 5 km from the Thika highway. ALP will be delivering up to 47,000 sqm of modern grade A international standard warehouse space at this location, the first modern distribution centre in Kenya. ALP North is designed as a multi-tenant facility with space available from 2,000sqm upwards.
ALP commenced warehouse construction in April 2017 and will deliver the first two warehouses of 28,000sqm by September 2018. The third warehouse of 19,600sqm will be delivered in April 2019. ALP North consists of three class-A distribution centres. The first two units comprise 13,634sqm each and one units of 19,661sqm. All units are designed as multi-tenant facilities.
ALP North Facility is 75% leased with leasing ongoing.
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