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Commercial real estate commission calculator
Work out the commission on a sale or a lease and how it divides between the listing and co-operating brokerages. Lease commissions can be a percentage of each year's net rent or a dollar amount per square foot per year of the term. Works in Canadian or US dollars, before sales tax; nothing leaves your browser.
Results (before GST/HST)
- Net rent over the term
- $477,822.22
- Total commission
- $14,195.56
- As % of total net rent
- 2.97%
- Co-operating brokerage
- $7,097.78
- Listing brokerage
- $7,097.78
| Year | Net rent | Commission |
|---|---|---|
| 1 | $90,000 | $4,500.00 |
| 2 | $92,700 | $2,317.50 |
| 3 | $95,481 | $2,387.03 |
| 4 | $98,345 | $2,458.64 |
| 5 | $101,296 | $2,532.39 |
Works in Canadian or US dollars: enter every amount in the same currency. Calculated in your browser; nothing is sent or saved.
How it’s calculated
- Sale commission
Commission = sale price × rate - Lease commission (percentage)
Commission = Σ (net rent in each lease year × that year's rate) - Lease commission (per sq ft)
Commission = area × $ per sq ft per year × term in years - Co-operating split
Co-operating share = commission × co-op %; listing share = the rest
Worked examples (illustrative rates)
- Sale: a building sells for $4,250,000 with a 4% commission, so the commission is $170,000. With half shared with the buyer's brokerage, each side receives $85,000.
- Lease: 6,000 sq ft at $15.00 net per sq ft in year 1, rising 3% a year, for 5 years. Net rent over the term is $477,822.22.
- At 5% of year-1 net rent ($4,500) plus 2.5% of the net rent in years 2–5 ($9,695.56), the commission is $14,195.56, or 2.97% of total net rent. A 50% co-operating share is $7,097.78.
- The same lease at $1.00 per sq ft per year of term is 6,000 × $1.00 × 5 = $30,000.
Illustrative rates only. Commission rates and structures are negotiable between the client and the brokerage and are not typical or recommended rates for any market.
How commercial commissions are usually structured
On a sale, the commission is most often a percentage of the sale price, sometimes on a sliding scale (a higher rate on the first part of the price and a lower rate above a threshold) or a fixed fee. On a lease it is commonly a percentage of the net rent over the term, often with a higher rate for the first year or years than for later years, or a dollar amount per square foot per year of the term. Renewals, extensions and expansions may be paid on their own terms.
Every one of these is a negotiated term. The listing agreement between the client and the listing brokerage sets the commission and says how much is offered to a co-operating brokerage that brings the buyer or tenant. Real estate regulators and brokerages also have their own disclosure rules for how commissions are described to clients and to the other side.
Net rent, gross rent and the term
Lease commissions are usually calculated on net rent (base rent), not on additional rent (TMI or CAM), because additional rent recovers the landlord's costs rather than paying it for the space. Free-rent months and the treatment of a fixturing period vary: some agreements pay on the full net rent over the term, others on the rent actually payable. Read the agreement and mirror it in the calculator; this tool calculates on the full net rent with a single annual escalation.
Commissions are normally payable in instalments tied to milestones such as the waiver of conditions, the lease commencement or the tenant taking possession, rather than when the offer is signed. The calculator shows the total, not the timing.
Tax and the co-operating split
In Canada, real estate commissions are generally subject to GST or HST at the rate of the province, and the listing agreement usually says the commission is payable plus tax. Some US states tax brokerage services too. The figures here are before tax.
The co-operating share is the part of the commission the listing brokerage pays to the brokerage representing the buyer or tenant. Brokers then split their share with their own brokerage under their own agreements, which this calculator does not model.
Estimates only, before GST/HST or other sales tax. This is not an appraisal, and not legal, tax or accounting advice; the listing agreement and any co-operation agreement govern what is actually payable.
Questions
How is a commercial lease commission calculated?
Usually as a percentage of the net rent over the lease term, sometimes with different rates for the first year and later years, or as a dollar amount per square foot per year of the term. In the example above, 5% of year-1 net rent plus 2.5% of years 2–5 on a 6,000 sq ft lease comes to $14,195.56.
Is commission charged on additional rent (TMI or CAM)?
Usually not. Most lease commission agreements are based on net (base) rent only. Check the listing agreement.
What is a typical commercial real estate commission?
There is no standard rate. Commissions are negotiated between the client and the brokerage and vary with the deal size, the property type, the market and the work involved. This calculator does the arithmetic on whatever rate you enter.
Is HST charged on real estate commission?
Generally yes in Canada: commissions are a taxable service, so GST or HST at the provincial rate is added. The calculator shows amounts before tax.
Is my data saved?
No. The calculation runs in your browser and nothing you type is sent to OfferingStack.
Related
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