Fees paid to real estate agents in connection with leasing space at a property. Leasing commissions may be due to a “tenant rep” which is an agent representing a tenant, or to a “landlord rep” which is an agent representing the property or landlord, or both.
Leasing commissions are typically calculated as a percentage of the total base rent a tenant will pay over their lease term or as a dollar per square foot per year figure. The full amount of the leasing commission is typically payable at the start of a new lease or at renewal of an existing lease, though the commission rates for renewals are typically less than those for new leases.
As an example calculation, a tenant rep may receive a leasing commission of 6.0%. If the tenant she represents leases 8,000 square feet at a rate of $12.00 per square foot for five years, the agent may be due $28,800 (8,000 square times $12.00 per square foot times 5 years times 6.0%).
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Hypothetical example(s) are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment.
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