Leasing Commissions for when I have already have a tenant

[Jason Mak]

Hello BP and all commercial guys

I own retail property and have been talking to potential tenants about a vacancy.  I'm considering to hire a leasing broker to help me navigate and negotiate the lease.  The leasing agent obviously doesn't have to spend the time marketing and showing the property but I would be leaning on his expertise and market knowledge to get the best least possible.

How much should I expect to pay the leasing broker to help me negotiate the deal?   

Any advice or experience on this would be helpful.  Thanks

[Joel Owens]

Jason if you do not want to use an attorney then some leasing brokers charge a consulting fee.

I would get requests years ago to come in mid transaction to consult on deals because the buyers found me later on. What I found is that I am doing all the transaction work for 1/10th of the money so I have not offered consulting work in a very long time on transactions. I have many clients buying directly so do not have time for it.

I am scratching my head wondering why you do not want to use the commercial retail attorney to negotiate the lease?

If say Starbucks has submitted to you directly with an LOI then you have language that the landlord and tenant both acknowledge that no leasing broker exists on either side and no fees are owed. If the LOI has a leasing broker in there for the tenant then you want them to get paid when the deposit goes hard on the lease. You want the leasing broker only to get paid on the primary term and not the option periods.

If it's a national tenant they tend to have forms slanted in their favor and high powered attorneys to use so takes more time and skill to negotiate with them. If it's a local to regional then usually you have more leverage especially if your location is good.

Say Starbucks is 80,000 a year rent. Primary term is 10 years. Tenant leasing broker gets 3%. 2,400 X 10 years is = 24,000

If there is no leasing broker and you use an attorney for the lease negotiation it should be much cheaper even if you went a consulting route with a leasing broker.

Maybe some are out there but if someone comes to me and wants a consult to do a transaction for 10,000 when I make 10 to 15 times that working directly with a client the answer would be a fast NO.

No legal advice given.