Hope as operations at stalled Kisumu mall begin to take shape
Friday, May 7th, 2021 00:00 | 4 mins read
With virtually most of the nation’s shopping complexes closed from mid-March last year, retailers in these establishments classified as non-essential have taken a huge hit. Kisumu’s Lake Basin Mall wasn’t spared either, but there is steady growth of traffic slowly returning.
Lake Basin Mall, one of the leading malls in Kisumu town is gearing towards attracting steady business flow in the retail market segment years after it was opened for operation.
The multi-billion facility owned by Lake Basin Development Authority (LBDA) has struggled to get full occupancy nearly four years after it opened its doors for business.
The Sh4.2 billion worth shopping mall, according to its management is currently 35 per cent occupied.
Another estimated 70 per cent clientele has booked the facility and is yet to take up physical retail space.
The already rented out space is occupied by various individual entrepreneurs and State corporations.
Despite the current dwindling fortunes, the management is confident that the mall whose construction was completed in 2017 will sign its first anchor tenant in the coming months and eventually take off in business going forward.
Deniel Ogola, the mall business manager, attributes its longstanding tenancy challenge to failure to attract anchor tenants, such as supermarket chains to support stable business flow.
Consequently, Ogola says they have identified two possible anchor tenants; Naivas and Quickmart supermarket chains whom they are in negotiation with to take up retail space at the mall.
He says having an anchor tenant will pull crowds to the mall hence creating a business blueprint for its other tenants. This, he points out, will ultimately enhance rental revenue inflow.
Ordinarily, major retailers are the anchor tenants in most malls. They draw shoppers to the buildings and eventually smaller businesses in the facilities benefit from the numbers.
So far, the manager says 35 per cent of the facility is actively operational, with premises including some retail shops, commercial offices, a three-star hotel and a tyre centre up and running.
“We hope to bring in anchor tenants to the mall, which will increase human traffic leading to a thriving business,” Ogola says.
Similarly, he points at the poor state of the main road around the facility as another reason for delayed tenancy.
Ogola says most people who have booked spaces are not able to take their positions citing bad sections of the road leading to the mall.
“We have quite a number of our shops booked, but because of the poor road connection tenants have not taken the physical occupation,” he adds.
The manager states that the current economic disruptions in the country occasioned by ravaging Covid-19 pandemic has also contributed to slowed tenancy uptake at the mall.
Measures put in place by the Ministry of Health to contain the spread of coronavirus, such as social distancing and reduced hours of operation by restaurants and bars have resulted in corresponding reduction in malls human traffic.
The ripple effects has further impacted on small businesses at the malls. “We anticipate gradual recovery in coming months and with this, the mall occupancy is likely to improve translating to high rental yields,” states Ogola.
He is hopeful that the completion of road constructions and upcoming amenities, especially around Mamboleo area will inspire business at the mall.
For instance, he says earmarked construction of Muhoroni-Mamboleo-Kisumu airport road is also expected to ease movement to the facility.
Further, Ogola expects other social amenities, such as the ongoing construction of Jomo Kenyatta International Sports Complex at Mamboleo ASK showground and planned establishment of Mamboleo bus terminus will also stimulate business at the mega shopping mall.
“People visiting the facilities will have the opportunity to do their shopping in a less crowded area,” he says.
LBDA Chairman Calvince Odoyo Owidi says the mall is beginning to recoup in business after years of struggling for a breakthrough.
Allegations of orruption
Averagely, Owidi reveals that the mall is able to generate over Sh2 million as monthly rental income in the midst of the glaring tenancy challenge.
He cites the recent much hyped investigations around corruption in the mall and the incomplete section of Kisumu-Kakamega road as some of the reasons why the facility had not attained full occupancy years after it was completed.
Owidi regrets that controversies that surrounded the mall had direct effects on its operations as it scared away potential clients from taking business space. As a result, he says business at the facility delayed in taking off, even as it struggled to get its anchor tenants.
The controversies revolved around Sh4.1 billion fraud where it was reported that the cost of the mall had been inflated from an initial figure of Sh2.5 billion to 4.1 billion in violation of procurement laws and contrary to the Anti-Corruption and Economic Crimes Act Consequently.
Several suspects, including former Kisumu county assembly Onyango Oloo, who also formerly served at LBDA as chairman, former LBDA managi g director Peter Abok among other LBDA officials (board members, tender committee members and contractors).
Other suspects charged were Bobasi Member of Parliament Innocent Momanyi, Edermann Properties Limited directors Zhang Jing and John Zeyun Yang.
The suspects were charged with conspiracy to defraud, wilful failure to comply with procurement law, abuse of office, failure to disclose private interest among other charges.
From the series of court proceedings it is not yet clear who among the suspects has been cleared though the Director of Public Prosecutions (DPP) had hinted charges against some of the accused persons were to be dropped.
“A delay in clearing the mall pending the corruption case investigations derailed business at the facility.
But things seem to be beginning to go in our favour this year after the mall incidentally went through a lot of hiccups,” says Owidi.
According to the LBDA chairman, completion of construction of the road next to the mall is expected to come as an impetus to the facility’s business.
He says an improved road network around the mall will enhance its accessibility and visibility.
“We expect the ongoing road development to facilitate easy movement around the mall.
Most of the supermarket chains were complaining of inability of shoppers to drive in and out with the bad sections of the road,” he said, adding,
“With the completion of the other roads, we will have a mall that is placed at a road junction, which is easy to access from all dimensions.”
Owidi points out that the development of residential hub towards Kisumu-Kakamega road puts the mall at an advantage point of attracting new tenants.
The 60,000 square metre, five-floor mall is the largest in Western Kenya and hosts about 140 shops, commercial offices, a three-star hotel, showrooms, a doctors plaza, recreational park and a tyre centre.