The literature views many African cities as dysfunctional with a hodgepodge of land uses and poor “connectivity.” One driver of inefficient land uses is construction decisions for highly durable buildings made under weak institutions. In a novel approach, we model the dynamics of urban land use with both formal and slum dwellings and ongoing urban redevelopment to higher building heights in the formal sector as a city grows. We analyze the evolution of Nairobi using a unique high–spatial resolution data set. The analysis suggests insufficient building volume through most of the city and large slum areas with low housing volumes near the center, where corrupted institutions deter conversion to formal sector usage.