Nairobi Landlords Are Ditching Fixed Rent for Profit-Sharing Deals
A growing number of property owners are negotiating revenue-share arrangements with tenants rather than fighting over unpaid rent.
INFINITY254 MEDIA
Columnist · 8 September 2026, 4:00 PM EAT
The rent arrears letter used to be a landlord's most reliable tool. Send it, wait, call the lawyer, file the notice to vacate. The system worked when commercial tenants were stable businesses with predictable revenues. Post-2024, in a Nairobi market where retail vacancies in some malls exceed 35 percent and where hospitality businesses are still recovering, the old tools are simply not producing outcomes.
A growing cohort of Nairobi property owners — particularly those with commercial space in second-tier malls and mixed-use developments where anchor tenants have departed — are instead approaching tenants with a different proposition: pay us a percentage of your turnover rather than a fixed monthly figure, and we share both the upside and the downside of your business performance.
"We approached three potential tenants in Q1 who all said the fixed rent was too high. Two walked away. The third we did a turnover deal with — 12 percent of gross revenue. Three months in, we are earning more than the fixed rent would have been because their business is performing better than they projected," said one Westlands property owner who asked not to be identified by name.
The arrangement requires sophisticated lease documentation and regular financial transparency from tenants — both elements that Kenya's commercial real estate market has historically resisted. But property consultancies say the model is spreading, particularly in the food and beverage sector where margins are thin, seasonality is real and landlord-tenant relationships have become adversarial over arrears disputes.
For tenants, the appeal is clear. "Fixed rent is a fixed cost regardless of what happens in your market. A turnover deal means the building owner has skin in your game. They become an investor in your success rather than a creditor who calls every month," said Grace Mwangi, who runs a three-outlet restaurant chain in Nairobi and has transitioned all three locations to turnover arrangements.