Investor · Jacksonville, FL · Member since 2015 · 63 posts · 39 votes
Pardon my ignorance as I have zero experience with commercial properties.
I'd like to know the typical fee's paid to realtors for finding commercial tenants.
I have a realtor friend that is negotiating a contract with a commercial building owner to lease out empty space in his building. What does compensation typically look like for a realtor that advertises and brings in a tenant? I'd like to know typical fee's if that realtor brings in a tenant that is not represented by another realtor along with the typical compensation if the deal has a listing realtor and a realtor that brings in the tenant? Hopefully this makes sense
I am not a realtor, but can tell you what I pay as an investor/owner.
- Everything is negotiable, sometimes I wont pay the lease fee to realtor immediately but pay in installments as the rent is received. Typically for high risk tenants.
- First of all the total amount the lease is worth for needs to be calculated = No of years * Yearly rent. For e.g. if yearly rent = 50K and the lease is for 5 years with one option to extend, then total value of the lease is 500K.
- The total lease fee is payable (split between leasing agent and clients agent) could range from 4-6%. More close to 6% if there are two agents or close to 4% if there is a single tenant.
- If the leasing agent also acts as the property manager, then they may be willing to reduce the % as well.
I am not a realtor, but can tell you what I pay as an investor/owner.
- Everything is negotiable, sometimes I wont pay the lease fee to realtor immediately but pay in installments as the rent is received. Typically for high risk tenants.
- First of all the total amount the lease is worth for needs to be calculated = No of years * Yearly rent. For e.g. if yearly rent = 50K and the lease is for 5 years with one option to extend, then total value of the lease is 500K.
- The total lease fee is payable (split between leasing agent and clients agent) could range from 4-6%. More close to 6% if there are two agents or close to 4% if there is a single tenant.
- If the leasing agent also acts as the property manager, then they may be willing to reduce the % as well.
We own office and retail space. For a 10 year lease, we pay $3 per square ft if our broker also represents the tenant. If the broker has their own representation, we pay $2 per sq ft to our broker and $2 per sq ft to their broker. For leases less than 10 years, it's negotiable.
I agree with Ganesh's statement. I work in the retail space, and a common commission is 6% of the lease value for the first five years, and 4% of the lease value for years 5 through 10.
Lease value is the number of years times the annual rent.
In retail, we don't often get paid commission on options or lease renewals. I know this is different from office space, where brokers often do get paid on renewals.
If the listing agent finds the tenant and double ends the deal, then the commission is sometimes reduced, to 5% for the first 5 years, and 3% for years 5 through 10.
These are just guidelines for a starting point Everything can be negotiable.