CRE glossary
Tenant rep (tenant representation broker)
A tenant rep (tenant representation broker) is a commercial broker exclusively representing the tenant's interests in a lease negotiation. The landlord pays the broker's commission as part of standard market practice, but the broker's contractual loyalty is to the tenant. Tenant reps drive 60–70% of large office leasing transactions in tier-1 markets.
Tenant rep brokers do four things: (1) Source the search, identify candidate buildings matching the tenant's needs, run market tours, narrow to a shortlist. (2) Negotiate economics, extract concessions across base rent, free rent, TI, escalations, options. (3) Coordinate the deal team, architect, GC, legal, project manager. (4) Manage the implementation, fixturing, occupancy, ongoing lease administration.
The 'landlord pays' commission structure creates apparent conflicts that don't exist in practice. Tenant rep brokers are paid by formula (typically 4–6% of total lease value over the first 5–10 years), which means the broker's economic interest aligns with maximum total rent, but only if the deal closes. Walking away from a bad deal is sometimes the most lucrative move because the broker can find a better one.
Specialty matters. A tenant rep who does 50 office deals per year in NYC has different deal feel than one who does 5 industrial deals per year in Phoenix. Specialization lets the broker know exactly what concession a specific landlord will give, which buildings are softening, and what the relative leverage actually is. Generalist tenant reps cost their tenants money.
Example
- Tenant rep commission
- 4–6% of total rent over 5–10 years
- Paid by
- Landlord (split with landlord rep when there is one)
- Typical office deal commission
- $50k–$500k+ on a 7-year lease
- Most valuable broker action
- Walking from a bad deal
Broker perspective
Tenants who don't use a tenant rep negotiate against landlord reps who do this 80 hours a week. The asymmetry is huge. Even when the landlord 'won't pay a tenant rep commission,' the broker fee is built into the asking rate, using a tenant rep just diverts that fee from one party to another while delivering value to the tenant. There is no scenario where unrepresented tenants get better economics.
Frequently asked
People also ask
If the landlord pays, is the broker really on my side?
Yes. The fee structure is market norm; broker's contractual loyalty is to the tenant. The 'landlord pays' is operational accounting, not allegiance.
Should I always use a tenant rep?
For any deal over $200k total rent, almost always. Smaller deals (sub-1,000 SF) sometimes don't justify the search effort, but most do.
How do I find a good tenant rep?
Specialty in your asset class + submarket. Ask for case studies. Talk to former clients. Look at deal volume in the past 12 months.
Can I negotiate without a broker?
Yes, but you'll get worse economics. Landlord reps know the giveables; unrepresented tenants leave them on the table. The 'savings' from going broker-less is illusory.
Related terms
Letter of intent (LOI)
A non-binding outline of the major business terms, rent, term, TI, options, that becomes the basis for the binding lease.
Base rent
The headline rent before pass-through expenses, usually quoted in $/SF/year and the starting point for every comp.
Tenant improvements (TI / TIA)
Money the landlord contributes toward customizing the space for the tenant, usually expressed as $/SF.
Free rent (abated rent)
A period at the start of the term where the tenant pays no base rent, used to offset move-in costs and competitive pricing.
See tenant rep (tenant representation broker) extracted from a real lease.
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