In most Austin commercial leases, the landlord pays the broker fee and the tenant pays nothing. The landlord pays its own listing broker and the tenant’s broker out of a commission it budgeted for before the space was ever listed.
The same is usually true when you buy a building: the seller pays both brokers. Here is how it works, what the typical numbers look like, and the few cases where it is different.
How commercial broker fees work in Austin
When a landlord hires a listing broker to lease a space, they sign a listing agreement. That agreement sets the total commission the landlord will pay when a lease is signed, and how it is shared if the tenant has their own broker.
So when you hire a tenant representation broker, you are not adding a cost. You are directing part of a commission the landlord has already committed to paying toward someone who works for you instead of for the building.
Typical rates
Commissions in Texas are negotiable and not set by law, but common Austin ranges for a new lease look like this:
| Situation | Typical total commission | How it is usually split |
|---|---|---|
| New lease, both sides have a broker | About 6% of total rent over the term | About 4% to the tenant’s broker, 2% to the landlord’s broker |
| New lease, tenant has no broker | About 4% of total rent | All to the landlord’s broker |
| Lease renewal | Often lower than a new lease | Set by the listing agreement |
| Building sale | A percentage of the sale price | Shared between the seller’s and buyer’s brokers |
“Total rent” is usually the rent over the whole initial term. Some agreements use base rent only and some include operating expenses, so the exact math depends on the listing agreement.
A simple example
Say you lease 3,000 square feet for five years at a full rate of $30 per square foot per year. Total rent over the term is 3,000 × $30 × 5 = $450,000.
At 6%, the landlord pays $27,000 in total commission: roughly $18,000 to your broker and $9,000 to its own. You pay $0 in broker fees. The landlord typically pays half when the lease is signed and half when you open or rent starts.
Why landlords agree to pay
- It is a normal cost of leasing. Landlords build commissions into their budgets the same way they budget for tenant improvements.
- Represented tenants close. A tenant with a broker usually knows what they need, has seen the alternatives, and gets to a signed lease faster.
- Most deal flow comes through brokers. A building that will not pay cooperating brokers gets shown far less.
Does skipping the broker save you money?
Usually no. If you call the listing broker directly, the landlord’s commission does not disappear. In most cases the listing broker earns the full commission for handling both sides, and you negotiate alone against the person paid to get the landlord the best deal. A tenant broker’s job is to push your rent, free rent, tenant improvement allowance, and lease protections in your favor, and the value of those terms usually far exceeds what the broker is paid.
Exceptions where the tenant might pay
- The landlord will not pay a cooperating broker. This is uncommon in Austin but happens with some small or owner-managed buildings. A good broker tells you before you tour, and you agree together how to handle it, for example by asking the landlord to fund the fee through the deal.
- Consulting with no transaction. If you hire a broker for a lease audit, a market study, or a renewal you negotiate yourself, you may agree to pay a flat or hourly fee.
- Subleases. The company subleasing its space (the sublandlord) usually pays the commission, not the subtenant.
What it means for you
If you are leasing or buying commercial space in Austin, you can almost always have a broker on your side at no cost. Ask any broker you interview to confirm in writing who pays their fee, and get that answer before you sign anything.
At Austin Commercial Sites, our tenant and buyer representation is paid by the landlord or seller in nearly every deal. If an exception applies, we tell you on the first call. Owners who list with us agree the commission in writing up front; see landlord representation.
FAQ
Frequently asked questions
Does the tenant pay the commercial real estate broker in Austin?
Usually not. In most Austin commercial leases the landlord pays the commission for both its own listing broker and the tenant's broker, so the tenant pays no broker fee.
What is the typical commercial lease commission in Austin?
For a new lease where both sides have a broker, a total of about 6% of the rent over the lease term is common, often split about 4% to the tenant's broker and 2% to the landlord's. Rates vary by deal and are always negotiable.
Who pays the broker when you buy a commercial building in Austin?
The seller usually pays. The listing agreement sets a total commission, and the seller's broker shares part of it with the buyer's broker.
Will I get lower rent if I skip the tenant broker?
Rarely. The landlord has usually already promised its listing broker a commission, and without a tenant broker that money tends to stay with the landlord or its broker rather than becoming a rent discount.
When would a tenant pay a broker fee?
Mainly when the landlord refuses to pay a cooperating broker, which is uncommon, or when you hire a broker for consulting work with no lease, such as a lease audit. A good broker tells you up front if this applies.
When is the commission paid?
Commonly half when the lease is signed and half when the tenant opens or rent starts, paid by the landlord directly to the brokers.
About the author
Tristen Palori is a licensed commercial real estate agent with Foresite Commercial Real Estate and leads Austin Commercial Sites, the firm's Austin team. He has worked Austin office, retail, medical, and industrial deals since 2019. More about Tristen.
