How Much Do Commercial Real Estate Services Cost?

If you own commercial property, you may look for someone to help you lease, sell, manage or renovate your space. As commercial real estate professionals, we are often asked, “How much do commercial real estate services cost?” While fees vary depending on the firm, this article provides general information about the cost of brokerage, property management and project management services.

Brokerage Services

Commercial real estate advisors make a living off of commissions earned from successfully closed transactions. Commission rates vary depending on the agreement between the client and the broker, but we often see rates between 4-6 percent of the total considerations. These fees are typically paid for by the building owner or landlord. The commission amounts are then split between the listing agent and the buyer/tenant’s broker.

When you pay for landlord/seller representation services, your advisor markets your listing, fields inquiries, holds property tours and negotiates terms on your behalf. Tenant/buyer representation brokers help you find and secure a space that matches your criteria. Other services, such as a Broker’s Opinion of Value, are typically a flat fee.

Property Management Services

Property management companies’ fees depend on the size, type, location and condition of your property, as well as the services provided. For example, you will pay much less for a property manager to collect rent on your behalf than if your property manager oversees building maintenance, accounting, lease compliance and tenant relations for your real estate.

Some property management companies charge a flat monthly fee, while most costs are based on a percentage (often 2-6 percent) of gross rents collected. You may also be required to pay initial setup, eviction, vacancy or other fees, depending on your agreement.

Project Management Services

Commercial project managers oversee property construction projects from start to finish. Their services include budget/schedule administration, property design, contract negotiation and more. Depending on the scope of your project, your project manager may be working for you for a few months to a year.

Costs for such projects can vary depending on your contract and based on current market conditions. Common pricing structures include:

• A percentage (often 3-5 percent) of the total project costs.
• A fixed rate based on the manager’s hourly rate and the total length of the project.
• A cost per square foot of the total project size.

Commercial real estate services aren’t free, but the saved time, reduced risk and peace of mind are worth every penny.

Menlo Group offers a variety of commercial real estate services, including tenant/buyer representation, landlord/seller representation, investment services, real estate consulting, property management and project management. Please contact us to inquire about our fees.