Governance Challenges Amid Post-Pandemic Office Market Disruption: Unpacking the Drivers of High Vacancy Rates in Commercial Office Spaces

The post-pandemic disruption of commercial office markets presents significant governance and policy-making challenges for urban authorities, particularly in rapidly growing cities managing land use, infrastructure, and investment risks. This study investigates how post-pandemic economic, spatial, behavioral, and financial factors influence office space vacancy rates, testing the hypothesis that structural and behavioral drivers outweigh traditional macroeconomic determinants. The study draws on a survey of 385 Grade A and B commercial office buildings conducted in 2023 in Nairobi, Kenya, using a stratified random sampling approach. A multiple regression model was applied, with survey data analysed using STATA to assess the drivers of high commercial office vacancy. The results indicate that remote and hybrid working arrangements significantly reduce office occupancy, while buildings with adequate parking, smart access infrastructure, and virtual office services achieve higher occupancy levels. In contrast, macroeconomic indicators such as GDP growth were not statistically significant, despite Nairobi’s role as a regional business hub. Overall occupancy declined to 71.5 percent, alongside an estimated oversupply exceeding 8 million square feet, revealing deep structural imbalances in the market. These findings highlight the need for adaptive policy-making and governance approaches that prioritise flexible leasing frameworks, smart building standards, and integrated urban accessibility policies to strengthen post-pandemic commercial real estate resilience.