CRE commission calculator
Total commission on a commercial lease or sale, with tiered lease rates and a listing/co-broker split — plug in your own negotiated terms.
Total lease value
$1,750,000
Total commission
$90,000
Listing / other side
$45,000 / $45,000
Commission rates and splits vary widely by market and brokerage — these are reference figures to plug in your own negotiated terms, not a standard rate.
The formula
A worked example
A 10,000 SF space leases at $25/SF/yr for 7 years — $1,750,000 in total lease value. At 6% commission on the first 5 years and 3% on the remaining 2 years: $250,000/yr × 5 × 6% = $75,000, plus $250,000/yr × 2 × 3% = $15,000, for $90,000 total commission. Split 50/50 between the listing broker and the tenant-rep broker, each earns $45,000.
Why lease commission is tiered
A broker's work — finding the deal, negotiating terms, handling the paperwork — happens almost entirely at signing, regardless of whether the lease runs 5 years or 15. Charging the same percentage across an entire long-term lease would pay a broker disproportionately more for identical work just because the tenant signed a longer term. Tiering the rate down after an initial period (commonly the first five years) is the market's way of aligning commission more closely with actual broker effort.
What the commission is calculated on
A lease commission is a percentage of the rent the tenant will pay over the term. Four details decide how big that base is, and each one is worth a line in the commission agreement.
- Base rent or gross rent. Commission is normally figured on base rent. Operating expense pass-throughs such as CAM, taxes and insurance are usually left out, so a triple-net lease is measured on the base rent portion alone.
- Escalations. Contractual annual increases are part of the rent the tenant will pay, so they generally raise the base. A flat $25 and a $25 with 3% bumps are different commission bases.
- Free rent. Many agreements calculate on rent actually payable, which excludes abated months. Some calculate on gross rent before abatement. The wording decides, and the difference is real money.
- Renewals, extensions and expansions. These are often paid at a reduced rate, or not at all, if the tenant exercises them later. If the agreement is silent, expect a dispute.
Worked example: escalations and free rent
Start from the calculator's default deal: 10,000 SF at $25 per SF for 7 years, with a commission of 6% on years 1 to 5 and 3% on years 6 and 7. With flat rent that is $90,000. Now add 3% annual escalations.
| Year | Rent per SF | Annual rent | Commission rate |
|---|---|---|---|
| 1 | $25.00 | $250,000 | 6% |
| 2 | $25.75 | $257,500 | 6% |
| 3 | $26.52 | $265,225 | 6% |
| 4 | $27.32 | $273,182 | 6% |
| 5 | $28.14 | $281,377 | 6% |
| 6 | $28.98 | $289,819 | 3% |
| 7 | $29.85 | $298,513 | 3% |
Total base rent over the term is $1,915,616. Years 1 to 5 add up to $1,327,284, and 6% of that is $79,637. Years 6 and 7 add up to $588,332, and 3% of that is $17,650. The commission is $97,287, which is $7,287 more than the $90,000 on flat rent. Escalations lifted the commission by about 8%.
Now suppose the tenant gets 3 months of free rent at the start, and the agreement calculates on rent actually payable. Three months of year-one rent is $62,500, so the first five years drop to $1,264,784. At 6% that is $75,887, and with the $17,650 from years 6 and 7 the commission becomes $93,537. The abated months cut the commission by $3,750.
Who pays and how the commission is split
In most commercial leases the landlord pays the commission, under a listing agreement with the landlord's broker. If the tenant has its own broker, the listing agreement usually says how much of the total commission goes to the tenant's broker. The tenant does not write a separate check in the typical structure, although the cost is built into the landlord's rent and concessions.
A 50/50 split between the two brokerages is common, but it is negotiated and set in the agreement. On the $93,537 commission above, a 50/50 split pays each brokerage $46,768.
There is a second split inside each brokerage: what the individual broker keeps and what the firm keeps. One industry source describes a 60/40 split between broker and firm as typical. On the $46,768 above, a broker on a 60% split earns $28,061 and the firm keeps $18,707. Splits often move up with production, so a top producer may keep more. The calculator handles the first split (listing versus tenant-rep). Apply your own firm split on top.
Sale commissions: flat rate or sliding scale
Sale commissions are usually a percentage of the price. A flat rate is simplest: 5% of a $2,000,000 sale is $100,000. Larger deals often use a sliding scale in which the percentage falls as the price climbs.
| Price band | Amount in band | Rate | Commission |
|---|---|---|---|
| First $1,000,000 | $1,000,000 | 6% | $60,000 |
| Next $2,000,000 | $2,000,000 | 4% | $80,000 |
| Remainder | $2,000,000 | 2% | $40,000 |
| Total | $5,000,000 | 3.6% effective | $180,000 |
Illustrative sliding scale on a $5,000,000 sale
A flat 5% on the same sale would be $250,000, so the sliding scale saves the seller $70,000. That is the reason very large deals often carry lower effective rates: the work of finding a buyer and closing does not grow in proportion to the price. If your deal has a scale, enter the blended effective rate in the calculator, or compute each band separately as above.
When the commission is paid
Timing is set in the agreement, and a common structure splits the payment: part when the lease is signed and the rest when the tenant takes occupancy or starts paying rent. Sales usually pay at closing.
Three clauses deserve attention. First, contingencies: if the lease depends on financing, permits or a landlord approval, the commission may not be due until they clear. Second, early termination: some agreements let the landlord claw back part of the commission if the tenant defaults or leaves early. Third, holdover and tail periods: a broker may be owed commission on a deal signed with a prospect shortly after the listing ends. Read these clauses before you rely on a payout date.
Commission per square foot and as a share of rent
Two ratios help you sense-check a result. On the $93,537 commission, the cost is $93,537 ÷ 10,000 SF = $9.35 per square foot. As a share of rent, it is 5.05% of the $1,853,116 the tenant will actually pay, and 37.4% of the first year's rent of $250,000.
Put in per-year terms over a 7-year lease, the commission adds about $1.34 per square foot per year to the landlord's cost of the deal ($93,537 ÷ 10,000 SF ÷ 7). That number matters when the landlord decides how much rent or free rent it can offer.
How commission affects the tenant
Landlords count the commission as one of the costs of getting a tenant, alongside free rent and the tenant improvement allowance. Together they reduce the net effective rent, the true return from a lease once concessions are spread across the term.
For a tenant, this explains negotiating room. A landlord who is paying a large commission has less to give on rent or concessions, and one who saves on commission, for instance by dealing directly with a tenant who has no broker, may have more. Ask what the landlord's total concessions are, not just the headline rate. The NNN lease calculator shows the full occupancy cost, which is the number the tenant lives with.
Renewals and expansions: a numbers example
Suppose the tenant later renews for 5 years at $28 per SF on the same 10,000 SF. The new rent is $28 × 10,000 × 5 = $1,400,000. If the agreement pays 3% on renewals, the commission is $42,000. If it pays nothing on renewals, the broker earns nothing for a deal that keeps the tenant in place.
An expansion works the same way. Adding 2,000 SF at $27 for the remaining 3 years is $162,000 of rent, and at 3% the commission is $4,860. These amounts look small next to the original deal, but they add up over a portfolio, and they are the items most often left out of an agreement and argued over later. Write the renewal and expansion rates into the listing agreement when you sign it.
Common mistakes
- Ignoring escalations. Flat rent understates the commission on almost any long lease. In the example the difference was $7,287.
- Including operating expenses in the base. Pass-throughs are normally excluded. Adding them overstates the commission.
- Leaving out the free-rent treatment. Whether abated months count changes the result. Check the wording.
- Applying one rate to the whole term. Where the agreement tiers the rate, a single rate can be off by thousands of dollars.
- Forgetting the second split. The brokerage share is not the individual broker's pay. Apply the firm split to see what one person earns.
- Treating a quoted rate as fixed. Commission rates are negotiated. A range from a market survey is a starting point, and the agreement in front of you is the final word.
Frequently asked questions
Commercial lease commissions are commonly a percentage of the total lease value (square footage × rent × term), often tiered — a higher rate on the first several years, a lower rate on any years beyond that. The tiered structure reflects that a broker's work is front-loaded at signing, regardless of how long the lease ultimately runs.
Typically a flat percentage of the sale price, negotiated between the seller and their broker. Unlike lease commissions, sale commissions aren't usually tiered by holding period, since there's no equivalent multi-year term to split.
There's no fixed standard — rates vary by market, property type, deal size, and brokerage, and are always negotiable. Commonly cited reference ranges run roughly 4-6% on smaller deals and can run lower on very large transactions, but the only reliable number for a specific deal is the one actually negotiated.
When a listing (landlord- or seller-side) broker and a tenant-rep or buyer-side broker are both involved, the total commission is typically split between them, commonly but not always 50/50. The split percentage is negotiated as part of the listing agreement, not fixed by any rule.
Almost always base rent only. CAM, property tax, and insurance are pass-through operating costs, not economic value the landlord captures, so brokers typically calculate commission on the base rent portion of a lease, not the full NNN occupancy cost.
In the typical structure the landlord pays it under a listing agreement, and a tenant's broker is paid out of the landlord's commission by the split in that agreement. The cost is still reflected in the rent and concessions the landlord can offer.
Usually, yes. Contractual rent increases are part of the rent the tenant will pay, so they raise the base. In the example, 3% annual escalations lifted the commission from $90,000 to $97,287.
The agreement wording decides. Many agreements calculate on rent actually payable, which excludes free months. If they calculate on gross rent before abatement, free rent does not reduce the commission. In the example, 3 free months changed the commission by $3,750.
A flat commission applies one percentage to the whole price. A sliding scale applies a lower rate to each higher band of price. On a $5,000,000 sale, a scale of 6%, 4% and 2% by band gives $180,000, an effective rate of 3.6%, against $250,000 at a flat 5%.
It is set in the agreement. A common structure pays part at lease signing and the rest at occupancy or rent commencement, and sales usually pay at closing. Contingencies and clawback clauses can delay or reduce the payment.
Calculate your own commission above, free, or see the full occupancy cost on the NNN lease calculator.
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