Who pays the commission in a commercial lease?

In most U.S. commercial leases, the landlord pays the brokerage commission. It typically totals around 4 to 6 percent of total lease value and is split between the landlord's listing broker and the tenant's rep. The landlord budgets it as a normal cost of leasing the space.

Is a tenant rep free for the tenant?

Effectively, in most cases. The commission is usually already built into the deal whether or not the tenant is represented, so a tenant rarely pays out of pocket. Going unrepresented usually just redirects the tenant-side commission to the landlord's broker.

Does the landlord paying the tenant rep create a conflict?

The rep's legal duty is to the tenant regardless of who pays. Because commission is a percentage of lease value, there is an incentive toward larger deals. A trustworthy rep manages that openly and will sometimes steer a client toward a smaller or shorter deal.

Who Actually Pays Your Broker?

In most U.S. commercial leases, the landlord pays the brokerage commission — commonly 4–6% of the total lease value — and it's split between the listing broker and your tenant rep. The cost is usually already in the deal whether or not you're represented. That single fact answers the question everyone's too polite to ask: if a tenant rep works for me and I don't write the check, who's really paying them?

How does the commission actually work?

When an owner puts space on the market, they typically agree to pay a commission that gets split between the landlord's listing broker and the tenant's broker. The landlord budgets for it the same way they budget for free rent or a tenant-improvement allowance. It's part of the cost of leasing space (Nolo, AQUILA).

Here's the crux: in most deals, that commission pool exists regardless. Show up without a tenant rep and the listing broker doesn't hand you the tenant-side portion as a discount — they often simply collect more of it, or it stays with the landlord. The money meant to represent you doesn't vanish because you skipped representation. It just stops being spent on you.

That's why tenant representation is usually called "free to the tenant." Not free as in valueless — free in the sense that the cost is already in the deal, and a rep is often the only way to make the part meant for your side actually work for your side.

If the landlord pays, doesn't the rep work for the landlord?

No — who pays and who you owe a duty to are different things. A tenant rep's fiduciary and contractual duty is to the tenant. The commission is a payment mechanism, not a loyalty contract, the same way a buyer's agent has historically been paid from the seller's proceeds without becoming the seller's agent.

But the structure does create a pull, and pretending otherwise would be dishonest. Because commission is a percentage of total lease value, every broker in the deal — including your own — has a quiet incentive toward a bigger deal: higher rent, more square footage, a longer term. A transactional broker follows that pull. A custodial rep works against it. The way you tell them apart is simple: does your rep ever steer you smaller — less space, a shorter term, a lower number — when that serves you? We give you the full field guide in how to spot a real tenant rep.

What does "free" hide?

"Free" is true but incomplete, and it can be used as a lullaby. Because the cost is buried in the deal rather than itemized, two things get obscured that you deserve to see.

First, the commission is real, negotiable money in the transaction. In some situations — certain renewals, some off-market or direct-with-owner deals — how it's structured genuinely affects your economics and leverage. A rep worth working with discusses this openly.

Second, "it costs you nothing, so why not?" is slightly manipulative. Nothing is truly free. The real price of representation isn't dollars — it's the judgment and incentives of the person you let into the middle of your most important operating decision. That price is worth paying when the person is a genuine steward and worth refusing when they're not.

Ask directly: How exactly are you paid on this deal, and by whom? Is there any scenario where your compensation and my best outcome diverge? Are you ever paid by a landlord or building beyond the standard tenant-side commission? You're entitled to plain answers. Vagueness is itself an answer.