The Real Deal New York

Commercial brokers quietly give huge rebates to bolster business

June 04, 2012 11:00AM

Commercial brokers are increasingly offering rebates on commissions to the biggest tenants amid growing pressure to land big clients, the Wall Street Journal reported. Commissions for large New York City deals — which generally run about one-third of the first year’s rent, the Journal said — can be “well over” $10 million. Now, with the commercial leasing climate slowing, executives in commercial real estate report quietly rebating up to 50 percent of commissions, according to the Journal.

Often brokers apply the discount to rent or to the cost of tenant improvements. “Tenants will say, ‘If you’re going to make $20 million, I want you to credit or rebate 50 percent of the fee,'” Robert Freedman, chairman at Colliers International, told the Journal. [WSJ]