Retail Co-broker leasing commission
Hi All- I work with a developer in south Florida and we're going to start leasing retail space in a new multifamily development. We are speaking with a major firm that charges 4% and 6% with co-broker., on total net effective rent. They also want to include a clause in the listing agreement to ensure they always receive 50% of the total commission in case the co-broker charges an above-market rate. In other words- if the co-broker charges 4% the main broker would receive this too- so 8% total! I am inclined to remove this clause as it seems out of line with the market. Has anyone seen this? Thank you for your input!
You are right to want to remove that provision. If the tenant rep broker wants 4 points, your broker needs to push back for a 3/3 split or concede and take 2 points. The total should not exceed 6 points.
thank you for your comment.
On larger deal does that change? Like if it's a $250/sf lease in NYC 10,000 sf for 15 years = that's $37.5mm without bumps.
If landlord has an in house broker and an outside broker brings a tenant - are in house really seeing 2-3% ($750k to $1.125mm)?
On broker side if they did get say $750k 40-50% is going to the house right?
Yes, there is a waterfall on large deals. Completely dictated by the Brokerage and Landlord for overall percentage points. Same is true for internal splits at the brokerage. 50/50, 60/40, 70/30 are all seen at different shops.
Sometimes you'll get 4% on a $16mm lease, other times they will start cutting .50% per $5mm and any number of rubrics.
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