Colliers International Indonesia has been appointed to assist in an office lease acquisition project for Asia’s largest homegrown snack and ice cream producer.
The Challenges
The company previously occupied a home-office in South Jakarta. They had to relocate because their next-door tenant needed additional space to expand. Having been in South Jakarta for a long time, they preferred to relocate within the same area, but into an office building.
Note that the rental rate for a home-office is typically calculated as a lump sum per year and is payable in advance, while the rental rate for an office building is calculated per square metre per month, and is payable either quarterly or semi-annually in advance. Additionally, office buildings require the payment of a service charge. These factors resulted in a significant rental rate difference, and the company had to adjust its budget accordingly.
Finding a suitable office building in the South Jakarta area that was within their budget was quite a challenge.
The Strategy
With quite specific requests related to the location and their budget concern, our Office Tenant Representation expert Julianti Istanto used several strategies to overcome the challenges:
• Find options in both the CBD and the T.B. Simatupang area within the client’s budget. This would educate the client about rental rates for various office buildings versus the buildings’ qualities, facilities and locations.
• Prepare a detailed financial and non-financial comparison to help the client understand the difference between renting a home-office versus an office space in a high-rise office building.
• Utilise the present market condition to obtain best rental package.
• Negotiate with the landlord for a rental reduction in exchange for the occupier paying the base rent all in advance.
We didn’t see it as an impossible assignment, but rather as an opportunity to assist our client in shaping their future workplace strategy.
The Result
Through a rigorous negotiation process with the landlord, our expert, Julianti Istanto, was able to secure a five-year lease on a new office for the client in one of the best office buildings in the T.B Simatupang area.
In terms of rental rates, Julianti found a space that was within our client’s budget and up to twice the size of the previous office.
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