How green certification is driving regional demand for warehouses

Demand for warehouses is now being driven by purpose-built industrial facilities and green building certification as tenants shy away from older facilities.

 An analysis by real estate consultancy firm Knight Frank shows this is the case across key markets on the continent, among them Kenya.

 The analysis that covers the second half of 2025 shows Leadership in Energy and Environmental Design (LEED) and Excellence in Design for Greater Efficiencies (EDGE) certifications are driving demand in some markets. This is especially the case for multi-national clients.

 LEED is arguably the world's most adopted green building certification according to its developer, the United States Green Building Council.

 It rates buildings, among them industrial facilities, for health outcomes, cost effectiveness and efficiency.

 On the other hand, EDGE is a certification created by the International Finance Corporation (IFC), a development finance institution and a member of the World Bank Group.

 It enables developers and builders to identify the most cost-effective strategies to reduce the use of water, energy and embodied carbon in materials.

 In the publication, Knight Frank details how these new trends are dictating demand for industrial and logistics warehousing amid the formalisation of the supply chain sector in different economies.

 The publication titled, The Africa Industrial Market Dashboard H2 2025, notes that across most African markets, modern, purpose-built industrial and logistics facilities continue to outperform older stock.

 “Vacancy rates have tightened in several markets, including South Africa (five per cent), Botswana (modern warehouse occupancy) improving to 83 per cent from 75 per cent year-on-year, and Zambia (prime logistics occupancies exceeding 75 per cent),” says Knight Frank.

 It adds that in contrast, older facilities characterised by low eave heights, limited yard depths, and inefficient loading infrastructure have experienced declining occupancy levels.

  “Tenant requirements are increasingly standardised,” says the consultant.

 An example is given of Uganda, where demand is centred on seven to 10 metre eaves, reinforced concrete floors capable of supporting high racking loads, multiple loading bays, and adequate truck circulation.

 “Proximity to suppliers, customers, and arterial routes linking central business districts to regional logistics corridors remains a critical site-selection criterion,” says Knight Frank in the publication.

 The publication documents how energy requirements and related sustainability considerations are becoming selling points for both occupiers and investors.

 “Across Egypt, Kenya, and Nigeria, occupiers increasingly favour facilities with solar-ready roofs, energy-efficient systems, and ESG-aligned design,” the publication says.

 According to Knight Frank, rising energy costs, tighter sustainability requirements, and corporate decarbonisation targets are accelerating the shift towards energy-efficient warehouses that incorporate solar-ready roofs, LED lighting, smart energy management systems, EV charging infrastructure, and enhanced waste-control measures.

  “Multi-national tenants are actively prioritising LEED- and EDGE-certified assets, accelerating the refurbishment and repositioning of older industrial stock or development of higher-specification industrial assets to remain competitive,” says Knight Frank in the publication.

 The consultancy explains that while prime warehouse rents in Tanzania have remained largely stable at approximately Sh650 ($5) per square metre per month, reflecting the scarcity of high-specification space relative to demand.

  “Older, secondary warehouses primarily compete on pricing rather than quality, highlighting the market’s increasing polarisation between modern and legacy assets. Average occupancies across the sector are currently 70 per cent, while prime yields remain attractive at 10 per cent, indicating steady investor appetite,” the publication says.

  In Uganda, the publication says, a new development activity is being witnessed on the supply side in Nalukolongo and Namanve, responding to sustained demand for compliant, modern warehousing and light manufacturing space.

  “At the same time, the market is experiencing a growing stock of obsolete industrial assets, characterised by low eave heights (below five metres), limited loading infrastructure, and functional inefficiencies,” it says.

 “This divergence has created a tenant’s market for older stock, while reinforcing rental and occupancy premiums for modern facilities.”

 The report notes that Africa’s industrial and logistics sector continues to demonstrate resilience underpinned by e-commerce, infrastructure investment, and the increasing formalisation of supply chains.

 “E-commerce remains a dominant demand driver,” it says, citing Egypt, where the e-commerce market reached about Sh1.3 trillion ($10.2 billion) in 2025 and is forecast to grow at a compounded annual rate of 13 to 14 per cent.

 Nigeria's B2C e-commerce sales are projected to exceed Sh4.3 trillion ($33 billion) by 2026, while South Africa’s market is valued at Sh5.4 trillion ($41.9 billion) in 2026.

 Industrial rental rates across the markets we track remain broadly stable, reflecting balanced demand–supply dynamics.

 Prime industrial rents range between Sh390 – Sh910 ($3 to 7) per sqm per month in East Africa, Sh520 – Sh845 ($4–6.5) per sqm in Nigeria’s premium logistics nodes, and Sh650 – Sh715 ($5–5.5) per sqm in South Africa and Tanzania.

 It adds that industrial activity is concentrated within SEZs, free zones, and logistics corridors, supported by public infrastructure investment and fiscal incentives.

 Key nodes include SCZONE (Egypt); Tatu City and Vipingo SEZ (Kenya); Lekki Free Zone (Nigeria); Namanve Industrial Park (Uganda); and Lusaka’s Multi-Facility Economic Zones in Zambia.

  “Most of these locations offer serviced land, enhanced connectivity, and regulatory advantages, positioning them as focal points for manufacturing, logistics, and export-oriented operations,” the publication says.