What should be the commission structure to a listing broker on a lease that has CPI increases
Hello All,

As brokers and Landlords probably already know, typically leasing commissions are calculated as a percentage of the aggregate lease value. For example, the leasing agent would get 5 percent of the value of the aggregate lease, which could be 5 years.

My question is how should this commission be calculated if the lease includes CPI increases. In other words, after 3 years, the total lease value is unknown at this point in time and will not be known until the CPI increase is known in Year 3.

My thought was to add language to the listing agreement that says:

*The annual lease payments for years containing CPI increases will be calculated using the average annual increase of CPI between January 1, 2000 and the commencement date of the lease.*

Any other suggestions?

I am  looking for a calculation that seems reasonable and fair so that if the tenant has a broker who gets a fee from the deal, they do not push back on it either.

Thank you.
[{"id": "i4nb3d2", "text": "What is the size of the deal? If CPI is 8% increase versus 5% what is the difference in commission? If CPI is lower than your anticipated increases are you going to give money back? I would just pick an annual increase to use and tell the owner if CPI is more, I\u2019m going to bill for the difference. Then I would move on and forget about it until the lease turns over haha", "replies": [{"id": "i4rkvf4", "text": "Good thought. Thanks", "replies": [], "depth": 2}], "depth": 1}, {"id": "i4p1xcv", "text": "Do 10-year leases with fixed bumps and leave CPI gibberish to the Options!!\n\nIf you can't do that, well, just ask the LL to agree to a number in advance, ask LL if you can agree to 3% or 4% annual bumps and send them an excel commission schedule to approve.... dont leave this discussion till the lease is signed, you can probably do better with them when the LOI is getting signed and the deal is new and fresh... remember, ask nicely!!", "replies": [{"id": "i4rktwu", "text": "Thanks", "replies": [], "depth": 2}], "depth": 1}]