What is the % commission on a lease for a retail office?

In Leasing Property - Asked by KIRENIA B. - Feb 5, 2011
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Davide P.
Pinole, CA

Commission rates are never set. Commonly you see a flat percentage (i.e. 3% per agent of the total lease) or a yearly step rate (i.e. 5% of year one, 4% of year two, 3% for each other year thereafter).

Feb 5, 2011
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Rob B.
Chandler, AZ

Kirenia.... Davide's answer was correct. In addition there is always a question about whether commissions are to be paid on the NNN portion of a triple net lease and whether commissions are due for options that are extended in the future of the lease. In the case of NNN amounts, As an property owner, I would negotiate that commissions will not be paid; since all triple net income is strictly a pass through of expenses and the owner makes nothing on these charges. However, a counter-case can be made for the fact that in a gross lease the commissions are not paid on NOI, but on the gross rental income from the lease, which includes the normal NNN charges.
With regard to whether commissions will be paid on the exercise of options, some preprinted leases do call for such an event at "X" percentage, which is usually much lower than the average percentage from the initial lease. However, I will usually give on this in requirement in my commission negotiations, since it is often hard to follow whether such options have been exercised and to collect from the current owner, whomever it may be at the time of the option extension. The exception to this would be a National Credit Tenant that is almost surely going to pay their rent without default and very likely exercise their options at the extended rental amount at the time of the option choice. For residual professional income this can be a real plus. You will see by my answer that there are many factors to consider in your commission negotiations. The more skilled you are in the dynamics of a lease, the better negotiator you will become. Good luck Kirenia..... Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: rob@capratecommercial.com

Feb 6, 2011
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Cynthia B.
Bradenton, FL

Commission rates vary widely and can depend on the usual habit of a geographical areas. It may be influenced by whether there is the involvement of a oartucuoatubg third party broker who may be eligible to a referral fee recognized by both sides. This is usually covered out of the sellering/leasing broker's fee though sometimes by the buyer agent if the sell side won't cover it.
C. Bishop
Bradenton, FL

Feb 8, 2011
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Justin W.
Orlando, FL

You set the commissions, but in my market 4% to the broker who brought the tenant and 2% to the landlord rep is our standard asking fee

Feb 10, 2011
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