Lease Commission Calculator
Calculate commission with escalating rental periods and see your net take-home: total lease value, payable months after free rent, and the full three-way broker split.
Calculate the lease commission
The lease
Abated from the front of the term.
Percent of total lease value. Typically 4–6%.
Rental periods
One row per step. A flat lease is a single period running the whole term; a stair-step lease is one row per increase.
Broker splits
Total commission
$71,250
6.00%6.00% of $1,187,500 of total lease value, over 57 payable months.
- Total lease value
- $1,187,500
- Payable months
- 57 of 60
- Monthly rent (first period)
- $20,833
- Free rent reduces commission by
- $3,750
- Amortized over the term
- $1,187.50/mo
Split breakdown
- Outside broker (50%)
- $35,625
- Principal broker (30%)
- $21,375
- Cooperating broker (20%)
- $14,250
Rent schedule
| Months | Rate ($/SF/yr) | Monthly rent | Paying months | Rent in period |
|---|---|---|---|---|
| 1–60 | $25.00 | $20,833 | 57 | $1,187,500 |
Paying months exclude the 3 free months abated from the front of the term. Total lease value is the sum of the last column, and the commission is charged on that figure, not on the face rent across the full 60 months.
How to calculate commercial lease commissions
Lease commissions in commercial real estate are fees paid to brokers for facilitating a lease transaction between a landlord and tenant. Unlike purchase commissions that are based on a sale price, lease commissions are calculated as a percentage of the total lease value, the aggregate rent paid over the full lease term, adjusted for any free rent periods.
The total lease value depends on several factors: the leased square footage, the rental rate, the lease term in months, and any free rent concessions. For leases with stair-step rent schedules (where rent increases at defined intervals during the term) each step must be calculated individually and summed to arrive at the true total lease value.
The commission rate is typically 4% to 6% of the total lease value, though this varies by market, property type, and deal size. The total commission is then split among the parties involved: the listing broker, the tenant's broker, and any cooperating brokers, with split percentages defined by their brokerage agreements. Free rent months reduce the payable months used in the calculation, directly lowering the total lease value and resulting commission.
What this lease commission calculator includes
Flexible rate input
Enter rent as $/SF annual, $/SF monthly, total monthly, or total annual. The calculator normalizes whichever format the deal is quoted in.
Stair-step rent schedules
Define escalating rent periods with start month, end month, and rent per SF for accurate total lease value calculation.
Free rent deduction
Enter free rent months and the calculator automatically reduces the payable months used in the commission calculation.
Three-way broker split
Break down the total commission among outside, principal, and cooperating brokers with custom percentages.
Total lease value
See the computed total lease value based on your rent inputs, lease term, and free rent concessions.
Payable months display
Shows the number of rent-paying months after deducting free rent from the total lease term.
Example: a 10,000 SF lease at $25/SF
Sample inputs
- Lease SF
- 10,000
- Rate
- $25/SF annual
- Lease term
- 60 months (5 yrs)
- Free rent
- 3 months
- Commission
- 6%
- Splits
- 50 / 30 / 20
At $25/SF annual on 10,000 SF, the monthly rent is approximately $20,833. Over 57 payable months (60 months minus 3 months free rent), the total lease value is approximately $1,187,500. At a 6% commission rate, the total commission is $71,250.
With a 50/30/20 split, the outside broker receives $35,625, the principal broker receives $21,375, and the cooperating broker receives $14,250. The free rent deduction reduces the commission by approximately $3,750 compared to a calculation without free rent: three months of $20,833 rent never enters the total lease value, and 6% of that is what the abatement costs the brokers.
The calculator above runs exactly this deal as its default, so you can change one input at a time and watch which way the answer moves.
How leasing commissions are amortized
Landlords rarely treat a leasing commission as a simple upfront expense. Because the commission buys a stream of rent over several years, it is usually amortized across the lease term (the same treatment given to tenant improvement dollars), so the cost is matched against the income it produced rather than landing entirely in year one.
The arithmetic is straightforward: divide the total commission by the number of months in the term. A $71,250 commission on a 60-month lease amortizes at $1,187.50 per month. Where the landlord is effectively financing that cost, an interest rate is applied and the balance follows a loan schedule rather than a straight line.
That monthly figure matters because it is what turns face rent into net effective rent. Amortized leasing commissions and amortized tenant improvements are both deducted from the rent the tenant actually pays, and what remains is what the landlord keeps. Two leases at an identical face rent can produce very different net effective rents once a large TI package and a six percent commission are amortized against them.
The unamortized balance is the figure to watch on an early exit. If a tenant terminates in month 30 of a 60-month lease, half the commission has been recovered through rent and half has not. Most leases make that remaining balance, commission and tenant improvements together, immediately payable, and it is normally the basis for a negotiated termination fee.
Renewal, expansion, and option commissions
Not every commission is paid at the full rate. Renewals, expansions and option exercises are priced differently, and the distinction is worth settling before a listing agreement is signed rather than after a tenant renews.
A renewal commission is typically half the new-deal rate (roughly 2% to 3% where a new lease would pay 4% to 6%) on the reasoning that the broker is not re-procuring the tenant, only re-papering an existing relationship. Some agreements step the rate down further on a second or third renewal, and some end the obligation altogether once the original term has run.
An expansion into additional space is usually treated as new business and paid at the full rate on the incremental square footage, since the broker is placing space that would otherwise sit vacant.
An option exercised strictly on its stated terms often carries no commission at all, because the lease already contained it and no negotiation took place. Where the option is reopened on price or term, most agreements treat it as a renewal.
Because the rate varies by deal type, run each scenario separately rather than applying one blended percentage across the whole tenant relationship.
Frequently asked questions
How are lease commissions calculated in commercial real estate?
Lease commissions are calculated as a percentage of the total lease value. Total lease value equals the monthly rent multiplied by the number of payable months (total lease term minus any free rent months). The commission rate, typically 4% to 6%, is applied to this total, and the resulting fee is split among the brokers involved in the transaction.
What is a stair-step rent schedule?
A stair-step rent schedule defines predetermined rent increases during the lease term. For example, rent might start at $25/SF for months 1-12, increase to $26/SF for months 13-24, and $27/SF for months 25-36. Each step is calculated separately and summed to determine the true total lease value for commission purposes.
Does free rent reduce the lease commission?
Yes. Free rent months reduce the number of payable months used to calculate total lease value. If a 60-month lease includes 3 months of free rent, the commission is calculated on 57 months of rent, not 60. This directly reduces both the total lease value and the resulting commission.
What is a typical lease commission rate?
Commercial lease commission rates typically range from 4% to 6% of the total lease value, depending on the market, property type, and lease size. Some markets use flat fees or tiered rates. The rate is negotiated between the landlord and the listing brokerage, with the co-broker fee for the tenant's representative usually specified in the listing agreement.
Who pays the lease commission?
In most commercial lease transactions, the landlord pays the lease commission from the rental income. The total commission is split between the listing broker and the tenant's broker according to their co-brokerage agreement. Some lease structures may provide for the tenant to pay their broker directly, but landlord-paid commissions are standard.
How do you amortize a leasing commission?
Divide the total commission by the number of months in the lease term. A $71,250 commission over a 60-month lease amortizes at $1,187.50 per month. If the landlord applies an interest rate to the cost, the balance amortizes on a loan schedule instead and the remaining principal is the unamortized amount. That monthly figure is deducted alongside amortized tenant improvements to arrive at net effective rent.
What happens to an unamortized leasing commission if the tenant leaves early?
The portion the landlord has not yet recovered through rent generally becomes immediately payable under the lease, usually alongside any unamortized tenant improvement allowance and free rent. It is also the customary basis for calculating an early termination fee, so it is worth modelling before agreeing a long term with a large commission attached.
How much is a renewal commission?
Renewal commissions typically run at about half the new-deal rate (roughly 2% to 3% against 4% to 6% for a new lease), because the broker is not procuring a new tenant. Some listing agreements step the rate down further on later renewals, and some end the commission obligation entirely once the original term expires. An option exercised strictly on its stated terms often carries no commission at all.
What is the difference between a broker fee and a lease commission?
In most transactions they describe the same payment. Lease commission is the percentage of total lease value paid to the brokers on a deal. Broker fee is used more loosely and can also cover flat consulting or tenant-representation fees that are not tied to a percentage of rent. Check the listing agreement for which structure actually applies.
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Related guides
Net effective rent
The face rent with the concessions taken out, and the check that catches a wrong one.
Commercial lease types
NNN, gross, modified gross and full service, and who pays the operating expenses.
What is a rent roll?
The foundation document behind every lease.
How to analyze a CRE deal
Full deal analysis framework from rent roll to decision.
Commercial real estate metrics
Every metric used in CRE analysis, explained in one place.
What is NOI?
The income figure a leasing commission is ultimately charged against.
A commission is charged on a rent schedule. So is everything else.
DealWise AI builds the rent roll once and derives NOI and cash flow from it, so the commission and the underwriting are reading the same lease.