what is the typical commissions on gross office rents vs nnn rents?

In Leasing Property - Asked by Melissa L. - Apr 21, 2011
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Answer(s)

Rob B.
Chandler, AZ

Melissa....
Your question is interesting. I must start with the standard caveat, "commissions are always negotiable". Now I can address the question. Generally, commission rates will be the same for gross office rents as they are for nnn rents. This will range somewhere in the neighborhood of 3% per side on five year leases. A higher amount is often charged for shorter leases. The commission schedule can be presented in several variations but in the end will work out to about that amount for a five-year term. We always hope for more and measure our clients by the opportunity, the quality of the property, the location and the costs of representation to arrive at a negotiated amount.
There is often an unfairness in a gross office lease and a nnn lease commissions, in that the owner on an nnn lease, usually wants to pay the commission based on the value base rent and not the pass through costs for nnn. In the gross lease these costs are in the total rent charged and unless the owner is really sophisticated there will not be an adjustment on the commission to NOI.
Onward and upward Melissa..... Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: rob@capratecommercial.com

Apr 21, 2011
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NATHAN B.
Broker/Agent
Ontario, CA

Many brokers will charge more for a NNN lease to compensate for the lower base rent amount vs a gross lease, both a gross lease and a NNN lease require the same amount of work. Also on a modified or industrial gross CAM fees are not added int to the basis for commissions. Typically only the base rents are subject to commission because NNN fees are expenses not rents. It also depends on the type of lease, everything is negotiable. Make sure you are very clear and specific on commission agreements especially when there are Tenant Improvements involved. As brokers our first consideration is doing the right thing for the client and then of course getting our fees for services. All information was obtained from sources believed to be reliable but it is not guaranteed. Nathan Bragg, Senior Vice President, Broker RE/MAX Commercial. nathanbragg@remax.net

Apr 21, 2011
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Chris R.
Broker/Agent
Denton, TX

The first answer - as Rob has already stated - is that real estate commissions are entirely negotiable between the parties involved. That being said - commissions will vary from market to market. Prevailing commissions in the DFW area typically would be 4.5% to the agent bringing the deal to the table and 2.25% to the listing agent - or - 4.5% to the listing agent if no other agent is involved. Large SF deals might have some sliding amounts involved - again - varies and is always negotiable. Typically the commission would be figured on the whole amount of the gross lease but would not include the NNN amount. Again - varies from market to market area.

Apr 23, 2011
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Michael F.
Broker/Agent
Boynton Beach, FL

All markets are different. In South Florida, typical commissions on office lease deals are 4% of the gross rent over the lease term, or 5% of the NNN base rent over the lease term; both include scheduled rent increases. You can get a good idea of commissions in your market by consulting local brokers, such as the two who answered, or by calling on various properties where your client may be interested in leasing, and asking each what commission they are offering. Best of luck!

Apr 24, 2011
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Joseph L.
Broker/Agent
Lakeland, FL

Great question and we are always careful here not to make any effort to fix prices. However, the question deserves an answer. All real estate fees are negotiable. It is my personal opinion that net rent and pass through cost are all considered rent. Certainly, the State of Florida considers CAM additional rent and therefore sales tax is charged on this aspect of the rental component. Therefore, commissions should be paid on any amount of "rent" base rent or additional rent imposed in the Lease. The percentage is negotiable.

Jun 16, 2015
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