If you’re walking into a commercial real estate deal thinking it works like buying a house, you’re in for a massive shock. In residential, you see "6%" everywhere. It’s almost a rule. But in the world of warehouses, storefronts, and office towers, the math is a lot more "wild west." People always ask me about the standard commission for a commercial lease, and honestly? There isn't a single "standard" number. It’s all a negotiation.
Basically, the commission is a moving target. It shifts based on whether you're in a skyscraper in Manhattan or a strip mall in suburban Ohio.
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Most people assume it’s just a flat fee. It’s not. It’s usually a percentage of the total lease value. If you sign a five-year deal, the broker is looking at the sum of every single check you’ll write over those 60 months. That’s the pot they're taking their cut from.
How the standard commission for a commercial lease actually works
So, let's talk numbers. Generally, you’re looking at a range between 4% and 6% of the total lease value.
That sounds simple, right? It never is.
If there are two brokers involved—one for the landlord and one for the tenant—they usually split that. A common setup is the landlord's broker taking 3% and the tenant’s broker taking 3%. But I've seen deals where it’s a 5% total, and I've seen complex ones that scale up to 8% if the property is a nightmare to lease.
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Landlords are the ones who usually cut the check. Tenants often think they’re getting a free ride because they aren't paying the broker directly. But let’s be real. The landlord isn't a charity. They bake that commission cost right into your "triple net" or your base rent. You’re paying it; you just don't see the line item.
The Math: A Real-World Example
Imagine a small tech firm takes 3,000 square feet of office space.
- Rent: $30 per square foot.
- Annual Rent: $90,000.
- Lease Term: 5 years.
- Total Lease Value: $450,000.
If the negotiated commission is 5%, the landlord pays out $22,500. Usually, they pay half when the lease is signed and the other half when the tenant actually moves in and starts paying. This keeps the broker motivated to make sure the deal doesn't fall apart at the finish line.
Why the property type changes everything
Different buildings require different amounts of hustle. A "plug and play" office space is easy. A specialized chemical manufacturing plant? That’s a headache.
- Office Space: Often follows the 4-6% rule. However, in cities like Chicago or D.C., where office vacancy is still a bit weird in 2026, landlords might offer "bonus" commissions to tenant reps just to get bodies in the building.
- Retail: This is where things get "kinda" pricey. Retail brokers often do more than just find space; they look at foot traffic data, demographics, and co-tenancy. You might see commissions closer to 6-7% here.
- Industrial: Warehouse deals are often huge in terms of square footage but simpler in terms of build-out. Because the deal sizes are so large—think millions of dollars—the percentage might actually drop to 3-4% because the raw dollar amount is already massive.
The Tiered Structure: The Pro Move
Smart landlords and big-time brokers sometimes use a "graduated" or tiered scale. They don't just pick a flat 5%. They might agree to something like 6% on the first year's rent, 5% on the second, and then 2% for every year after that.
Why do this? It protects the landlord if the tenant signs a 10-year lease but the market is volatile. It also front-loads the cash for the broker.
Expert Note: Always check if there is a "renewal commission" in the contract. If a tenant stays for another five years after the first term ends, some brokers have it written in that they get another check. Landlords hate this, but it’s common in many markets.
Who is actually paying the bill?
In 90% of cases, the landlord pays. It’s considered a cost of doing business, like painting the walls or fixing the HVAC.
However, if you are a tenant and you hire a high-end "tenant rep" broker to find you something extremely specific—like a data center with massive power requirements—and the landlord refuses to pay a commission, you might be on the hook. This is rare, but it happens. You’ve gotta read the representation agreement before you start touring buildings.
Also, be aware of the "dual agency" trap. If one broker represents both the landlord and the tenant, they’re keeping the whole 6%. Does that mean they’re fighting for your best interest? Probably not. They’re fighting for the deal to close so they can buy a new boat.
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Factors that push the rate up or down
- Market Tightness: In a "landlord's market" (low vacancy), they might only offer 4%. They know the building leases itself.
- Tenant Credit: If the tenant is a Fortune 500 company, the risk is zero. The commission might be lower. If it’s a "mom and pop" cupcake shop, the broker has to work twice as hard to prove they won't go bust.
- Lease Length: Short-term deals (1-2 years) often have higher percentage commissions because the administrative work is the same as a 10-year deal.
- The "Work" Involved: If the broker is also acting as a project manager for the build-out, they're going to want more.
Actionable Steps for Landlords and Tenants
If you are a landlord, don't just agree to the first number a broker throws at you. Ask for a tiered structure. If the lease is over five years, suggest a lower percentage for the "out years." Also, make sure the commission is only paid on "base rent." Don't pay a commission on the property taxes or insurance costs (the NNN charges) that the tenant is reimbursing you for. That’s just throwing money away.
If you are a tenant, get your own broker. Seriously. Since the landlord is likely paying the fee anyway, you might as well have someone in your corner. If you go in without a broker, the landlord's agent just keeps the "double side" of the commission. You don't save any money, and you lose your leverage.
Finally, keep an eye on the 2026 market trends. With interest rates stabilizing, we’re seeing more "creative" fee structures. Some boutique firms are moving toward flat-fee consulting rather than percentages, especially for smaller 1,000-square-foot deals where a 5% commission wouldn't even cover the broker's gas money.
Next Steps:
- Audit your current lease to see if a renewal commission is lurking in the fine print.
- Request a "Commission Agreement" in writing before any property tours begin.
- Compare at least three brokers to see who is willing to be flexible on their fee structure for your specific property type.