Why you need to engage a Broker to lease your space

From time to time we will receive a floor call from an individual asking one question: how do we charge brokerage fees to lease space.

I explain that our typical fee would be calculated based on five percent of the total net rental amount over first five years of the lease term and, if applicable, three percent on the balance (plus taxes).

In many cases the conversation ends there.

Why does the conversation end?

They probably perform a quick calculation in their head and deem the number to be too expensive.

Quite frankly if I wasn’t experienced in the field and didn’t understand the full value-add I may very well frame it the same way.

On the surface the number can seem like a lot; we get paid well for what we do.

The simple fact is that we would not be in business (with many repeat clients) if that value was not substantial.

If given time to explain they might see it differently

I am speaking in generalities but on average, a typical brokerage fee will be equal to two months gross rent.

Any experienced commercial property owner knows that once a retail, office or industrial rental unit goes vacant, it can sit for many months before securing a tenant.

Has the Landlord considered the marketing time and cost to fully expose the properly to the market?

What are some of the services included in that amount?

Services can include but are not limited to: market analysis and valuation including comparable lease data and current competition, customized marketing package, professional photographs, drone video footage, commercial signage, website listing with national exposure, social media marketing, print advertising and cold calling prospective tenants.

Our Brokers are trained to qualify prospective tenants and facilitate property tours to highlight the features and benefits of a space.

Because we have hundreds of lease signs spread throughout our market we draw a solid stream of interest from prospective tenants.

If a Landlord does not possess a formal lease document, we will prepare the industry specific ICR lease and negotiate the terms on their behalf.

We are accustomed to educating tenants on a variety of topics such as tenant improvements and how the offer process unfolds.

The challenge we have is packing our value-add story into a short telephone conversation!

Our expertise in getting a property leased can also extend to renewals, from either side of the negotiation table.

Posted by Barry Stuart


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