A commercial real estate broker is the expert intermediary between landlords and tenants. While they’re always working to get the best outcomes for their clients, the roles and priorities of brokers change depending on which side of the transaction they’re on.
For a commercial real estate broker working with a landlord to lease their property, the focus is on marketing the space, finding tenants, and negotiating the best returns. For brokers working on behalf of the tenants, the job is to secure the ideal space to support the growth of the client’s business.
Businesses of all sizes will likely work with a commercial real estate broker at some point, so it’s worth understanding some of the basics of what a commercial real estate broker actually does. In this article, part of our series on commercial real estate, we’ll take a look at the different types of commercial real estate brokers, how brokers get paid, and how their responsibilities can vary.
Types of commercial real estate brokers
Brokers who work for landlords
These brokers are agents of landlords and work to get the best possible deals for their clients. A landlord with space to lease will list their property with the broker—known as a “listing broker”—who then works to find qualified tenants interested in renting the space.
Once a lease is signed, these brokers typically earn a commission from the landlord of around 3 to 6 percent of the rent paid over the term of the lease. If the incoming tenant is using their own broker, which is often the case, the landlord will pay both parties, typically paying the “listing broker” about 50 percent of what the tenant’s representative earns.
Brokers who work for tenants
This type of broker—known as a “tenant rep”—works in the interests of the tenant to find the best deal on a commercial space that suits the tenant’s needs. The tenant rep is able to give more objective advice when searching for office or retail space, as their eventual commission isn’t tied to any one listed property. A broker working exclusively for a tenant can also help navigate some of the trickier aspects of negotiating a lease while avoiding hidden clauses, fees, and other potential pitfalls.
After the lease is signed, the tenant rep is typically paid a market commission by the landlord.
Brokers who work for landlords and tenants
It is common in lower inventory markets and even some gateway markets for commercial real estate brokers to function as both a tenant rep and a listing broker, depending on the opportunity at hand. They work as an intermediary between tenants and landlords to help find and lease commercial real estate, while remaining legally bound to achieving the best outcome for their client in any given transaction.
This can sometimes lead to a conflict of interest if the tenant’s broker is listing one or more properties a tenant is interested in. But any such conflicts can be declared and addressed before agreeing to sign a contract with the broker.
Dual agents
In certain situations, it’s possible for one broker to represent both the landlord and the tenant in the same negotiation. With no back-and-forth between opposing brokers, this streamlines the leasing process, but it can also be hazy legal territory. Real estate agents are required by law to be loyal to an individual client, and dual agents split that loyalty across both sides of the negotiating table. Conflicts of interest are unavoidable and, as such, the practice is illegal in some states. But as long as dual agency is agreed to by all parties and formally documented in states where it isn’t restricted, this transaction structure can occur .
If you encounter this type of broker, their role will be more hands-off than that of a dedicated broker and will usually be limited to looking after the more technical aspects of the process. They will endeavor to remain neutral and not advocate for either side.
Standard broker responsibilities
So what does a commercial real estate broker do? It depends on which part of the office they work in and who their client is. Commercial real estate brokers are experts in their field and help clients through the complex process of buying, selling, or leasing a commercial property, from searching for office space to focusing on the finer details of the transaction. Here are some of the main responsibilities of a commercial real estate broker.
Acquisitions
These brokers help clients find and purchase commercial property. They assist the buyer through every step of the purchase: scouring multiple listing platforms and leveraging market intelligence to identify appropriate properties, analyzing investment risks, and negotiating the best possible sale price and terms for their client.
Dispositions
A commercial real estate broker working in dispositions helps clients sell their commercial property. Using market analysis and extensive research, they determine the optimal asking price for the property and look after negotiations with potential buyers. These brokers will also handle other aspects of the sale, such as hosting walk-throughs and marketing the property.
Leasing transactions
Commercial real estate brokers assist landlords and tenants looking to lease or sublease office and retail space. These brokers negotiate favorable lease terms for their clients and set rent and other fees based on market research. Their job also includes tracking down high-quality tenants and, when working on behalf of a tenant, finding the best deals on spaces that meet the specific needs of the tenant’s business.
How WeWork collaborates with brokers, landlords, and tenants
WeWork works closely with our broker partners and agents to meet clients’ needs quickly and without compromising on quality. In these uncertain times, flexibility and customization have never been a higher priority. So we move fast to provide innovative and adaptable space solutions for companies of every size. That means better terms for companies and happier clients for you.
Our Brokers page has more details about how we calculate fees, but here’s a quick summary of how our commissions structure works for our broker partners.
- In the United States and Canada, you will receive 5 percent of the Total Contract Value (TCV) for New Business, Renewals, and Expansions.
- In the Europe, Middle East, Africa, Latin America, and Pacific regions, you’ll receive between 5 percent and 10 percent of the TCV for New Business, based on the length of the commitment term. For Renewals and Expansions in this region, you’ll receive 3 percent of the TCV.
- The Total Contract Value is the net committed Membership Fees for the member’s commitment term, net any discounts. The broker fee does not include custom configuration costs (if any), design, or any additional services, and the TCV does not include any annual fee escalation amounts unless reflected in the contract fee schedule. Check out the Brokers page for more information on what’s included in the TCV.
We’re here to help, so reach out to brokers@wework.com, and the WeWork team will be in touch to answer any questions you might have. Find out more and become a WeWork broker partner today by visiting wework.com/brokers
Steve Hogarty is a writer and journalist based in London. He is the travel editor of City AM newspaper and the deputy editor of City AM Magazine, where his work focuses on technology, travel, and entertainment.
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