Commerical Leasing Agent Commissions

[Adam G.]

I'm in the process of acquiring class A office space and have been comparing leasing agents proposals to market and lease the space. I've encountered something that I'm finding odd and I'm wanting to see other markets and investors are paying. 

I'm getting proposals from professional commercial leasing agents in the range of 6%-8% of the gross lease (including estimated CAMs) along with ALL renewals. I've always used professional commercial brokers in my class B properties but the commissions were a fixed 6% of the gross lease and zero commissions for tenant renewals. 

Is it standard course of business for brokers to expect a commission on tenant renewals now? 

[Joel Owens]

I don't do leasing but see what commercial brokers charge. I stay on the transacting side. There is the leasing and ongoing management which are separate fees and issues.

For my clients I will not allow a 1 year contract for PM work. We have an out clause so the PM has to keep performing or can lose the contract.

For leasing commissions we never agree to renewals to pay a commission. They try to throw in the kitchen sink but you have to say no,no,no. If you want to sell down the road having leases loaded with fees that reduce the owners return will make a buyer either not want to buy your property or want a huge credit for the difference.