Does tenant improvement allowance affect the amount or way leasing commissions are calculated?

In Leasing Property - Asked by Kerry C. - May 8, 2012
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Answer(s)

Jessica M G.
Broker/Agent
Bethel, CT

No. Commisions are calculated from the aggregate base rental rate

May 8, 2012
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Rob B.
Chandler, AZ

Kerry...
In addition to Norman's answer, I can add that some agents make a case for collecting on the basis of projected NNN charges as well, since if the lease were a gross lease, rather than NNN, the leasing agent would be collecting on the gross amount and not the net amount. However, this is a tough sale to an owner that wants to pay the least amount possible for the leasing services.
Onwad and Upward!
Rob Baird, rob@capratecommercial.com

May 8, 2012
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Dede M.
Broker/Agent
Memphis, TN

In our market the tenant improvement allowance rarely affects the leasing commission unless tenant improvements are amortized into the rental rate. For instance, if your TI allowance is $10.00/s.f. and your total TI cost is $20/s.f. sometimes the Landlord will amortize the extra $10 into the rental rate. Obviously that increases the rental rate and thus increases the commission.

May 12, 2012
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jazz a.
Appraiser
Miami, FL

As the tenant, you have the security of a long lease but also the obligation to pay the rent for the entire period of the lease even if you leave the premises. Often the lease will give the tenant the right to renew the lease for a further set period when the initial period ends.

Jul 5, 2012
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