Commercial Real Estate Commissions: Leasing vs Sale, Who Pays, How It’s Calculated, How Brokers Split
Residential commissions are a settled convention everyone understands. Commercial is different — leasing and sale run on two logics, commissions are often negotiated deal by deal, and buyers sometimes pay their own broker. Not knowing how commercial commissions work costs you a card at the negotiating table.
How do commercial real estate commissions differ from residential?
The biggest difference is that they’re less standardized and often negotiated deal by deal. Sales: the seller typically pays the total commission out of the proceeds, split between listing and cooperating (buyer’s) broker — but far more often negotiated case-by-case than residential, and buyers sometimes pay their own broker separately. Leasing: the landlord typically pays, via three common models — a fixed amount per square foot, a percentage of net/gross rent over the lease term, or a hybrid. Per RECO, commercial commission structures are far less standardized than residential and are customized to property type and deal complexity.
Source: RECO commercial information guide / Ontario commercial practice (2026)
I’m Arthur Zhao. Everyone carries a mental expectation for residential commissions. But in commercial real estate, people get lost fast: who actually pays? If I lease a retail unit, do I as the tenant pay, or the landlord? If I buy a building, does the commission the seller pays include my buyer’s broker? The answer: commercial commissions are far less standardized than residential — negotiated deal by deal, varying by transaction type (leasing vs sale), property type, and complexity. Understand it and you’ll know your cost structure in the deal, and hold one more card at the table.
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Sales: usually seller-paid, but more often negotiated
⚠️In commercial sales, don’t assume “the seller will pay my buyer’s broker.” Unlike residential’s relatively fixed convention, a commercial listing may not set aside a cooperating commission, and in some deals the buyer pays their own broker. Before retaining a buyer’s broker, spell out in the representation agreement who pays, how much, and who covers any shortfall — to avoid an unexpected cost at closing.
Leasing: usually landlord-paid, three models
Why commercial commissions are so "non-standard"
💡 Commercial commissions have no “standard answer,” only “what this deal was negotiated to.” In sales, check whether the seller pays and whether it covers your buyer’s broker; in leasing, check the landlord pays and which model. Don’t transplant residential commission convention onto commercial — here, commission is itself a term to clarify upfront and write into the representation agreement.
As a buyer/tenant, clarify these first
Commission and what your broker is worth
ℹ️This is a general overview. Who pays, how it’s calculated, and how it’s split on any given deal depend on the listing agreement, the representation agreement, and a deal-by-deal negotiation. Before retaining a broker or signing a representation agreement, read the commission terms line by line and ask if anything is unclear — especially important in an opaque, high-value commercial transaction.
First-Time Renter Guide →Real Estate Commissions Explained →Ontario Home Buying Guide →
Frequently Asked Questions
Do I as the tenant pay the commission when leasing a retail unit?
Usually not — in commercial leasing the landlord traditionally pays the brokerage commission, with the listing agreement specifying the total and how it’s split with the tenant’s broker. Three common calculations: fixed per square foot, a percentage of net/gross rent over the term, or a hybrid. But for your specific deal, clarify before retaining anyone who pays, how much the landlord pays, and whether your tenant broker’s fee is fully covered — and put it in the representation agreement.
When buying commercial property, will the seller pay my buyer’s broker?
Not necessarily — don’t assume. Commercial sales usually have the seller pay the total and split with the cooperating broker, but commercial commissions are far more often negotiated deal-by-deal than residential, and in some deals the buyer pays their own broker (especially where the seller’s listing set aside no cooperating commission). Before retaining a buyer’s broker, spell out in the representation agreement who pays, how much, and who covers any shortfall, to avoid a surprise cost at closing.
How do the three leasing commission models affect me?
They are: ① a fixed amount per square foot; ② a percentage of net or gross rent over the lease term; ③ a hybrid. For the same lease, the models can yield meaningfully different commission amounts, and while the landlord usually pays, it can shape the landlord’s stance on rent and concessions. As a tenant, understanding the three models helps you see each party’s cost structure in the deal. Which one applies depends on the listing agreement.
Why is there no "going rate" for commercial commissions?
Because commercial deals are highly non-homogeneous: property types (retail/office/industrial/multi-family) each have their own conventions, complexity and amounts span a wide range, and services differ per deal. Per RECO, commercial commissions are therefore frequently customized to property type, complexity, value, and services, with no single going rate to apply. That’s why you should negotiate commission as an explicit term and put it in the representation agreement, rather than transplanting residential expectations.
Arthur Zhao
Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS
VP & Branch Manager, Bay Street Group Inc.
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