Commercial I…, Both Buyer and Seller in San Francisco, CA

What is the typical San Francisco commercial lease commission for brokers?

Asked by Commercial Investor, San Francisco, CA Wed May 7, 2008

My broker wants $1.50/sqft. per year to the lessee's agent and $0.75/sqft. per year for herself on a 10,000sqft. space. The commission rates end up to be 12% which I feel is outrageous. Am I being ripped off or are these the market rates in San Francisco? If I'm being ripped off, what is a more reasonable commission rate? Help!

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James’ answer
At the risk of redirecting your question, aren't we forgetting the most important part of this equation? Your Net! I'm an owner as well, and what is important to me is the value I'm getting. We all know there are some brokers that will work extremely cheaply...usually delivering extremely cheap results. A good broker shows you rent comparables to help you confirm that the lease rate you're getting represents at least market. If you're getting a premium over market, then why not pay a touch more commission--particularly if this is a repeat business situation where you want the broker very motivated to bring you more tenants.

If you could have gotten the same rent yourself, then it's not really worth paying commission. Is your broker adding value to the entire process? Helping you manage risks and liabilities? Making sure you start off on the right foot with this tenant? My guess is that if the broker were performing in all of these essential areas, you would not have posted this question. At a minimum, interview 3 more leasing agents for perspective.

I hope this helps!
0 votes Thank Flag Link Thu Oct 28, 2010
Dear Commercial,
Commercial lease commissions are negotiable, however,San Francisco is it's own market it's not unusual for commission to be 8-12% on a lease.
0 votes Thank Flag Link Fri Jan 15, 2010
The rates you quoted are what we pay as well for office space. Given the recent bad economy, maybe those rates will change. I think the problem is that if you negotiate a low rate, the brokers have less incentive to show your space versus a different space that is going to pay them more commission. The thing that sucks is that if you have like a 5 year lease, you will have paid all of the commission up front (unless you can negotiate otherwise) and the tenant could possibly bail on you after year 1. You would have lost all of that money on commission.
0 votes Thank Flag Link Mon Mar 2, 2009
All commissions are negotiable. If you feel "ripped of" counter.
0 votes Thank Flag Link Thu May 8, 2008
Jed Lane, Real Estate Pro in San Francisco, CA
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