How Commercial Real Estate Commissions Work

Whether you're buying, selling, or leasing commercial property in Australia, it’s important to understand how agent commissions work. Commercial real estate commissions are the fees paid to agents or brokers for facilitating a deal, and they can vary based on the type of property, size of the transaction, and the agreement made between parties.

This guide breaks down how commercial commissions are calculated, what influences them, and what both buyers and sellers should expect.

What Is a Commercial Real Estate Commission?

A commercial real estate commission is a payment made to an agent or agency for managing the sale, lease, or purchase of a commercial property. This includes offices, warehouses, retail shops, industrial units, and development sites.

The commission is typically paid by the seller or lessor and is based on a percentage of the final sale price or the value of the lease.

Common Commission Structures in Australia

Commercial real estate commissions are not fixed by law in most states, so they can be negotiated. However, some common structures include:

1. Percentage-Based Commission

The agent charges a percentage of the final sale price. This is the most common model.

• Example: If the sale price is $2 million and the agreed commission is 2 percent, the agent receives $40,000.

2. Tiered Commission

This model uses a sliding scale based on the sale price.

• Example:
  • 3 percent on the first $500,000
  • 2 percent on the balance

This rewards agents for securing higher sale prices.

3. Flat Fee Commission

A fixed amount is agreed upon regardless of the sale price. This is less common in larger commercial transactions.

4. Leasing Commission

For commercial leases, the agent is usually paid a percentage of the total rent over the lease term.

• Example: If rent is $100,000 per year for 3 years and the commission is 10 percent, the fee is $30,000.

Factors That Affect Commercial Commission Rates

• Property type and value
• Location and demand
• Length of lease (for leasing deals)
• Market conditions
• Agent experience and negotiation

High-value transactions may attract lower percentage rates, while complex or niche properties may justify higher fees.

Who Pays the Commission?

In most commercial property sales, the vendor (seller) pays the commission. For leasing, the landlord usually pays the leasing commission. However, in tenant representation deals, the tenant may agree to cover or share the fee.

Always confirm who is responsible before entering into any agreement.

How Coposit Supports Buyers in the Commercial Space

Coposit is currently focused on helping Australians purchase off-the-plan residential properties with just $10,000 upfront and manageable weekly payments. There is no interest and no need for a traditional loan. While this innovative model is not yet available for commercial properties, the potential is clear.

As our platform evolves, we are exploring ways to expand this interest-free, staged payment model to selected commercial opportunities. This could empower first-time investors and small business owners to secure office or retail spaces without the usual financial hurdles.

For now, our commitment remains to residential buyers, but commercial solutions are on the horizon. Stay tuned.