SL Green unchanged on low renewal commissions

TRD New York /
Apr.April 28, 2009 03:27 PM
alternate textSL Green Chairman Stephen Green (left) and NYU’s Barry Hersh

The city’s largest office building landlord SL Green Realty is holding firm on 50 percent renewal commissions in office leases despite a downturn in the economy and competition from other large property owners who are paying full commissions.

The real estate investment trust headquartered in Midtown pays a 50 percent commission on renewals, a consistent fee the company has paid for a decade, the company said in a statement released to The Real Deal.

“We welcome the participation of brokers and have had a consistent decade-long policy during both strong and weak market conditions to pay a one-half commission on renewal transactions,” the statement said.

Several leasing brokers said they were chafing under the policy.

Four brokers, who asked not to be identified because they did not want to hurt their relationship with the major landlord, told The Real Deal that the low commission could influence leasing transactions, encouraging brokers to take tenants to other landlord’s buildings.

“Why encourage them to advise tenants to go somewhere else?” one said.

SL Green said the savings on commissions helps lower rents for tenants. “This policy is consistent with what landlords typically pay to third party agents to handle building leasing,” the statement said. “Additionally, the lower capital cost allows us to provide greater savings to our renewal tenants in the form of lower rents.”

Brokers said that many large firms such as Vornado Realty Trust and the Durst Organization pay full commission on renewals.

Vornado declined to comment. A Durst spokesperson said in general it pays full commission and a Moinian Group spokesperson said it pays full commission.

Barry Hersh, clinical associate professor at the Schack Institute of Real Estate at New York University, said companies often pay half a commission in renewals. But during hard times landlords often use incentives to attract brokers, who can be swayed by commissions.

“SL Green is making the calculation that they have a strong enough relationship with the tenant, that even though the broker may make an effort to steer [the tenant] to another place, they will come out ahead. Whether they are right or not, who knows,” Hersh said.


Related Articles

arrow_forward_ios
Vornado's Steve Roth and 220 Central Park South (Credit: Getty Images, iStock)

Free and clear: Vornado pays off debt at 220 CPS

Free and clear: Vornado pays off debt at 220 CPS
Vornado chairman and CEO Steven Roth, and 608 Fifth Avenue (Credit: Getty Images)

“Negative surprises”: Vornado execs talk retail struggles on Q2 earnings call

“Negative surprises”: Vornado execs talk retail struggles on Q2 earnings call
The Daily News Building at 220 East 42nd Street and SL Green CEO Marc Holliday (Credit: Getty Images)

SL Green puts Daily News building up for sale

SL Green puts Daily News building up for sale
902 Drew Street and 400 East 58th Street (Google Maps)

New York’s multifamily sales improve in Q3

New York’s multifamily sales improve in Q3
SL Green CEO Marc Holliday with 410 Tenth Avenue, One Vanderbilt and 126 Nassau Street (SL Green, Google Maps, Wikimedia, iStock)

SL Green’s lament: Office comeback “always right around the corner”

SL Green’s lament: Office comeback “always right around the corner”
Four New York Plaza (Photo via Hines)

Four New York Plaza office tower hits the market

Four New York Plaza office tower hits the market
SL Green CEO Marc Holiday and 420 Lexington Avenue with Scabby the Rat (Getty; Google; SL Green)

Peace prevails: SL Green, Local 79 settle dispute over protests

Peace prevails: SL Green, Local 79 settle dispute over protests
Vornado CEO Steven Roth with 1535 Broadway and 220 Central Park South (Getty, VNO, Google Maps)

Vornado sees $100M retail JV loss, $190M in 220 CPS gains

Vornado sees $100M retail JV loss, $190M in 220 CPS gains
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...