Who Pays the Commission for an Office Broker?
While in residential brokerage, the tenant usually pays the broker fee that is not often the case in commercial real estate brokerage. When it comes to office space, the landlord usually pays the fee to both the broker representing the building AND the broker representing the tenant.
While the fee is most often paid by the landlord, the following are the more rare cases where the tenant may need to pay the commission
- The landlord is a smaller landlord that is not familiar with standards in the office space market and does not pay commissions to brokers.
- The landlord may only pay half of a broker's fee and the tenant's broker may request that the tenant pay the other half.
- The tenant elects a broker to represent her interests in negotiating a lease renewal where the landlord is not willing to pay a fee to the broker. The broker then requests a fee to be paid by the tenant.
These are just some examples of scenarios where the tenant may have to pay a brokerage fee for office space. Again, please note that most of the time, when a tenant is searching for a new office space in Manhattan, the landlord pays the fee.
In order to avoid any confusion, the tenant should have an upfront conversation in letting the broker know his/her thoughts in reference to paying the broker a fee in the event the landlord refuses to pay one.