Africa Logistics Properties (ALP), an East Africa grade-A warehouse operator has fast tracked the construction of it’s phase one warehouse facility in Nairobi to make it operational by October this year to meet a sudden surge in demand for warehousing due to disruption in the supply chain caused by the new Covid 19 pandemic.
Importers of raw materials and finished goods have since May this year increased rations of their inputs to last them for a longer period than before to avoid running out of crucial supplies due to huge interruption Covid 19 has brought in logistics, hence the increasing warehousing demand.
ALP West facility is being built on a 49-acres plot located about 25 kilometres from the city along the Nairobi-Nakuru highway. The facility, according to ALP Chief Executive Officer (CEO) Richard Hough is currently at 70 percent complete.
“We are looking forward to having the warehouse facility ready for use in October, which is earlier we had initially projected,” Hough said.
The move signifies the emergence of Nairobi as the region’s logistics hub following the completion of the Mombasa-Nairobi Standard Gauge Railway (SGR) line and its recent extension to Naivasha, which Hough said has also a huge potential for warehousing once the vital supportive infrastructure is put in place.
Roy Mwanthi, Kenya International Freight and Warehousing Association (KIFWA) National Chairman attributes the increased demand of warehousing on the shift of logistics from Mombasa to Nairobi area.
Since the entire Nairobi bound cargo started moving on SGR, there has been a high demand for warehousing in the city. Previously, the importers had tailor made arrangements with Container Freight Station (CFSs) operators in Mombasa, where the cargo would stay for up to 60 days, with the facilities serving as distributive centres.
The CFSs were then clearing about 80 percent of domestic cargo and when the SGR came into play, the convenience they offered importers was completely disrupted.
ALP West will accommodate regional and medium-sized local companies looking for distribution centers to expand their business locally and across the East Africa region.
There has been a huge local warehouse demand in recent months forcing the company to also accommodate tenants on short terms leases, especially in the wake of Covid 19.
“With the challenges brought about by Covid 19, shippers now need longer warehousing period of up to six months as opposed to 3 months previously, to ensure continued production and supply, which comes at an extra cost,” Shippers Council of East Africa (SCEA) Chief Executive Officer Mr Gilbert Langat told a recent virtual meeting convened by ALP to discuss logistics industry in the new normal.
ALP West is located at Tilisi development, which is 2 minutes away from Nairobi-Nakuru highway.
“The expansion of the six lane highway will ease transportation and make the Africa Logistics Properties (ALP) development an excellent distribution centre within Nairobi CBD and neighbouring countries like Uganda, Rwanda and the Democratic Republic of Congo,” Hough said.
The facility, once complete, will measure a total of one million square feet and will be constructed in phases. Phase one, dubbed “the courtyard”, comprises smaller units from 5,300sqftsqm, which will allow growing distributors and manufactures in various sectors to reduce their cost of storage, enhance and improve their supply chain and operations efficiency respectively.
We continue to engage various companies seeking quality, yet affordable warehouses for their growing businesses, said Hough. Phase two will comprise grade A warehouses similar to ALP North facility that is in Ruiru.
In 2018, the ALP North facility was completed. The facility is situated within the Tatu Industrial Park, Ruiru, about 22km north of Westlands or 3 km from the Northern and Eastern bypass junctions.
This facility measures 50,000 Square Metres (538,196sqft) and comprises modern grade-A international standard warehouses and its occupancy has now reached over 75%.
The decision for ALP to venture in Kenya, according to Hough, was informed by lack of grade-A warehousing in Nairobi. It is estimated that there is a demand of over 1.8 million square metres of A-grade warehousing in Nairobi alone.
Nairobi and the rest of Sub Saharan Africa industrialists have historically owned their core real estate assets, which is slowly shifting to changing business trends.
Owning the facilities yield lower returns compared with when one puts this capital in their core business.
“If this capital could be invested into the core business, it produces a much higher yield but unfortunately, many industrialists have emotive attraction to owning these real estate assets that locks up the capital and hampers growth,” Hough said.
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.
“We see huge growth potential in their business. It’s only a matter of time before the big players are driven out if they will be left behind in embracing modern warehouses,” Hough said.
The ALP management team has developed over 1.5 million square metres of modern warehousing in emerging markets over the last 10 years. The company is currently working with multinational and regional companies across Africa to develop modern grade-A logistics and distribution warehousing infrastructure.
For more information visit – https://africawarehouses.com/
