How much is a real estate agency's commission on a lease?

There is no single statutory rate for a leasing commission. In the residential market, it is most often equivalent to 50% to 100% of one month's rent, usually plus VAT. When leasing an office or warehouse, the advisor's fee is usually agreed individually and is normally paid by the property owner.

A commission is the fee paid to an agent or advisor for bringing about the conclusion of a lease and handling the transaction process. Its amount, the party obliged to pay it and the timing of settlement should be set out in the brokerage agreement or in a separate arrangement between the parties to the transaction. Polish law does not set a single mandatory commission rate.

In practice, the difference between the residential market and the commercial real estate market is significant. When a flat is let, the agent often acts for one party or charges a fee to both parties. In an office lease transaction, an advisor representing the tenant works for the company looking for space, but their fee is usually paid by the building owner once the lease has been signed.

The residential ranges quoted describe common market practice, not a statutory fee scale. The final amount depends on the city, the rent, the scope of the agency's work, the availability of the unit and whether the agent represents one or both parties.

In office leasing, the commission is not usually calculated as a percentage of a single month's rent. The parties may agree it as a share of the total base rent payable over the entire lease term. This is why a 5- or 7-year lease requires a different amount of work and has different economics from a 12-month residential tenancy.

The advisor's fee is influenced in particular by:

• the size of the space being leased;
• the location and the number of buildings analysed;
• the lease term and extension options;
• the scope of commercial and legal negotiations;
• the need to run a tender between landlords;
• negotiating the landlord's contribution to the fit-out;
• the date by which the company must start operating in the new location;
• the complexity of the decision, for example a sublease, relocation or consolidation of several offices.

When comparing offers, it is not worth looking at the commission alone. What matters more to the tenant is the total cost of the lease commitment. This includes the base rent, the service charge, utilities, parking spaces, rent indexation, fit-out costs and obligations on handing the space back.

Who pays the commission – the tenant or the landlord?

Who pays the leasing commission depends on the agreement and the representation model. A residential tenant often bears the agent's cost themselves. In the office and warehouse markets, the fee of an advisor representing the tenant is normally paid by the property owner, unless the parties agree otherwise. No regulation automatically places the commission on either the tenant or the landlord. The parties rely on the principle of freedom of contract set out in Article 353¹ of the Polish Civil Code. Under Article 180(3) of the Real Estate Management Act, a brokerage agreement must be made in written or electronic form, otherwise it is null and void.

For a company's management board, the key issue is to establish whether the advisor holds a mandate from the tenant, the landlord or both parties. These roles are not the same. The landlord's advisor is responsible for commercialising the building and pursuing the owner's interests. The tenant's advisor compares the available options and negotiates on behalf of the company looking for space.

In practice, the commercial market settles these roles differently from the residential market. The office building owner includes the cost of securing a tenant in the commercialisation budget. This does not mean, however, that the tenant should ignore how the process is funded. The tenant should receive clear information on who pays the advisor and whether there are any circumstances that could affect the independence of the advisor's recommendations.

Commission in the office market – the tenant representation model

Tenant representation is an advisory service in which the agent acts under a mandate from the company looking for an office. The advisor organises the location selection process, compares offers and negotiates the lease terms. They are usually paid by the owner of the chosen building, so the tenant does not pay a separate commission.

This model is common in office leasing, especially in transactions covering several hundred or several thousand square metres. The fee becomes due once the conditions agreed between the landlord and the advisor have been met, most often on signing the lease. The tenant should not assume that the model is identical in every situation. Confirming the settlement rules before the process begins protects both parties.

It is in the tenant's interest for the mandate to specify precisely:

• the search area, for example the City Centre, Wola, Mokotów or Służewiec in Warsaw;
• the minimum and maximum floor area;
• the planned lease commencement date;
• technical requirements, building standard and certification;
• the total budget, not just the base rent;
• the people authorised to make decisions;
• confidentiality rules and how offers are reported;
• any restrictions concerning buildings already analysed by the company.

A company looking for 1,500 sq m in Warsaw should usually compare not a single offer, but the terms available in several comparable buildings. Knowing the asking rents is not enough. The difference in total cost may come from rent-free periods, the landlord's fit-out contribution, a share of reinstatement costs and the indexation mechanism.

Tenant representation brings structure to this process on the company's side. Its aim is not merely to find a vacant unit, but to secure terms that can be compared in a single financial model.

What does the advisor's fee cover?

The scope of the advisor's fee should be described before the project begins. In an office transaction, the work does not end with sending a list of buildings. The greatest value is created when comparing terms, preparing negotiations and keeping track of deadlines.

A typical scope of work includes analysing the company's needs, researching the market, preparing a shortlist of locations, organising viewings and collecting offers from landlords. The advisor then compares the terms in a single table. This allows the management board to assess the cost of each option over the entire lease term, not just on the basis of the asking rent.

As part of the process, the advisor may also:

• prepare a space layout concept to check whether the stated floor area actually accommodates the team;
• gather data on service charges, parking, transport accessibility and planned changes in the surrounding area;
• prepare a request for proposals for landlords;
• negotiate the rent, rent-free period, fit-out contribution and security;
• coordinate the exchange of documents with the legal, finance and administration departments and the fit-out team;
• support the planning of the move and the start of works in the premises.

The advisor does not replace the company's lawyer or issue legal opinions. They can, however, help prepare a list of issues for negotiation and make sure that the commercial terms agreed in the offer are correctly reflected in the draft lease.

Once the lease has been signed, the fit-out stage often begins. The landlord's contribution may partly cover the cost of the works, but it does not relieve the tenant of controlling the budget, scope and schedule. The relationship between the lease and the works in the premises is described in our material on fit-out and space design.

Commission versus value – when does an advisor pay for themselves?

An advisor's involvement pays off when it improves the lease terms by more than the cost of their participation in the transaction. In the tenant representation model, the advisor's cost is most often covered by the landlord, but the company should still measure the outcome in terms of the value of the negotiated terms and the risk avoided.

Consider a model scenario. A company needs 1,000 sq m of office space for five years. The base rent is EUR 20 per sq m per month. The total value of the base rent before indexation is EUR 1,200,000:

1,000 sq m × EUR 20 × 60 months = EUR 1,200,000

If the company secures one additional rent-free month during negotiations, the value of that incentive is EUR 20,000. An additional EUR 50 per sq m of the landlord's fit-out contribution means another EUR 50,000. Together, these two elements provide EUR 70,000 of economic value before service charges, taxes and the cost of financing are taken into account.

This is a calculation example, not a market rate. It shows, however, why comparing only the asking rent leads to wrong conclusions. One landlord may keep the rent unchanged but offer a larger fit-out budget. Another may lower the rent but shorten the rent-free period or require a high security deposit.

Before choosing an office, it is worth comparing at least the following elements:

When extending an existing lease, the advisor's fee mechanism and the negotiating potential may differ from those in a relocation. The company should start its analysis early enough, before the landlord gains the advantage that comes with a short time to lease expiry.

Next step

Before starting an office search, it is worth agreeing the advisor's mandate, the source of their fee and the scope of responsibility for the process. It is also worth preparing a total budget and a decision timeline, especially if the lease on your current headquarters expires within the next year or so. Information on the process and the scope of support is available on the tenant representation page. A conversation with an advisor is best started by confirming the settlement model for the specific transaction.

Author: Kamil Kowalewski