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Case Study: ORIFLAME Office Renewal

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Colliers International Indonesia has been appointed by PT. ORINDO ALAM AYU, also known as ORIFLAME, which is a multi-level marketing (MLM) company from Sweden that sells primarily beauty and personal care products.

The Challenges

ORIFLAME had clear instructions from their headquarters to conduct cost-savings on their space.

They were occupying the ground floor and 2nd floor of the Podium building and wanted to reduce the space specifically on the ground floor lobby area. As a company engaged in the MLM field with many resellers, the traffic in their office is quite high, and having an office on the ground floor lobby area helps them to be able to facilitate visitors who visit and pick up their products.

ORIFLAME's office on the ground floor lobby area needs to be reduced in size so that it is in line with the company regulations by which every reseller who picks up ORIFLAME products no longer picks them up at the office but from a new designated place and ORIFLAME must renovate it according to the instructions given.
In addition, ORIFLAME itself has occupied the Podium building of Menara Standard Chartered for about 10 years, and their lease period will also be over soon. Meanwhile, they are looking for ways to save the cost of their OPEX.

The Strategy

Considering so much needs to be done at one time, Suryo Wibowo and Tasha Kirana from Colliers International Indonesia Office Tenant Representation team see a good opportunity to provide a solution and what could be done to help ORIFLAME with their lease situation and cost-saving strategy. The strategies that they offered are two different services but with the same goal, which is to be more feasible financially for ORIFLAME. Therefore, the strategies are:

• Due to the tenant’s market situation, Colliers suggested to exercise stay vs. relocation method.
• Find options in the surrounding area of ORIFLAME’s current office with comparable budget and quality.
• Prepare a very detailed financial and non-financial comparison to make sure that ORIFLAME will obtain the most efficient cost-saving solution.
• In parallel, Colliers negotiates the rent price with the current landlord and provides data of the market trend to the landlord to justify the best renewal rent.
• Let ORIFLAME consider moving the 2nd floor office in the Podium building to the main office tower and maintain the ground floor with a reduced size, as Colliers sees it would be more financially efficient for their client.
• Advises ORIFLAME to pay their rent two years in advance to further lower the renewal rent.

The Result

What sets us apart is not what we do, but how we do it. Suryo Wibowo and Tasha Kirana are able to offer a solution that is unique, uncommon and customised for their clients. By educating both landlord and occupier, they see that the solutions offered by Colliers provide good benefits for both parties.

Based on financial analysis calculations run by Colliers and considering how the strategies offered can also be implemented according to the specified timeline, ORIFLAME finally agreed to renew their lease for another three-year term with a significantly lower rental rate and occupy a slightly larger area on another floor.

As for the landlords, they see that accepting two years’ upfront payment will benefit them compared to the three months’ payment that is more common.

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Suryo Wibowo

Senior Associate Director

Office Services - Tenant Representation

Jakarta

Suryo Wibowo is currently an Associate Director in the Office Tenant Representation Services division. In his role, Suryo representing tenant and investors in order to fulfill their real estate requirements.  He has handled a variety number of corporate accounts and received some recommendation letters from his corporate clients who were very satisfied with his works.

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Tasha Kirana

Senior Account Manager

Office Services - Tenant Representation

Jakarta

As an office property consultant, Tasha's main job is to help multinational companies, investors, and local companies for leasing or purchasing office space in Jakarta, Indonesia. Her scope of service is including of office space searching, assisting negotiation process with the landlord, generate financial and non-financial analysis, and help reviewing lease agreement.

 

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