Why Offer Higher Leasing Commission

​We are now past the fervency felt during the dramatic increases in sale prices, lease rates, and overall demand for industrial space that we experienced from mid-2020 to Q4 2022. However, not everyone in the market has adjusted to the ‘new normal’ as quickly as others. More importantly, the approach to securing transactions, especially leases, must change quickly as well.  One area where we have seen some landlords quick to pivot and others more reluctant to embrace the change is in the commission rates landlords are willing to offer to source and secure new tenants or maintain existing tenants.  While this may appear to be self-serving since I am one who receives commissions from leasing space, there are clear reasons why offering more leasing commissions benefits landlords more than brokers in both the near and long term. There are two reasons in particular that we want to focus on here.

Less Vacancy
One of the key drivers of the performance of an investment asset such as an industrial property is the generation of income, and nothing stands in the way of generating income like a vacancy.  While I have not said anything revolutionary yet, the next part may be.  We live in a day and age where everyone is looking to be incentivized to perform.  Everyone is looking for a deal, and the internet makes comparisons easier and faster.  This is a double-edged sword: the ease the internet provides has helped keep costs lower in some areas, but it has also created a growing desire for incentives.  The tenant and broker worlds are no different.  If you can incentivize more agents to want to show your property, and have them excited about completing a transaction there, this will shorten the vacancy time and help the landlord begin to generate income faster.
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Quality of Tenant and Agents Involved
As professional brokers, we value our relationships and the standards upon which we operate.  We all like to work with high quality individuals and companies.  Experienced professional brokers with a proven track record typically work with higher quality companies, and those companies are generally more desirable to landlords.  Equally important is that brokers know the value of bringing a high-quality tenant to a landlord, and that value should generally be reciprocated by the landlord to that tenant’s agent, especially in a softer market where more options are available.  When the market is very tight as we experienced several years ago, the value reciprocated is the actual completed deal itself and the standard commission earned. But when the market softens, there is generally more than one building option to choose from.  Over time, brokers are aware of the landlords who do see and appreciate their value, and this will ensure that these high-quality prospective tenants are looking at their property.
 
As you consider the leasing of your space, please call us today to discuss the best strategy for getting your property leased at the highest rate and in the shortest amount of time.  We have experienced both sides of this strategy and are aware of the unique marketing strategies needed for your property.  We look forward to sharing them with you.