Hiring a retail broker typically costs a tenant one month’s rent excluding VAT as a one-time commission, although this amount is negotiable and varies per assignment. In most cases, the landlord pays the broker’s fees, but when a retailer engages their own tenant broker, the tenant bears those costs themselves. This article answers the most frequently asked questions about retail broker fees, commission, and exactly what you get for that amount.
Who pays the retail broker: tenant or landlord?
Who pays the retail broker depends on who engaged them. In lettings, the landlord traditionally pays the commission for their own letting agent. If a tenant engages their own tenant broker to search and negotiate on their behalf, the tenant pays those costs themselves. Both parties can therefore have their own broker simultaneously, each with their own fee.
In practice, it works as follows: a landlord instructs a retail broker to let their property. That broker is paid by the landlord once the lease agreement is signed. A retailer who is actively looking for retail space can appoint their own tenant broker for retail space alongside this. That broker acts exclusively in the interest of the tenant and charges their own fee.
The distinction is important: a letting agent works primarily in the interest of the owner. A tenant broker works exclusively for you as a retailer. The costs of your own tenant broker are therefore not an expense, but an investment in better negotiation outcomes and access to locations that are never publicly listed.
What is the standard commission for a retail broker?
The standard broker commission for retail space amounts to one month’s rent excluding VAT, calculated on the annual rent divided by twelve. This is the most commonly used benchmark in the Dutch retail property market, both for letting agents and for tenant brokers acting on behalf of a retailer.
For larger transactions or more complex assignments, the commission can also be expressed as a percentage of the annual rent, typically between 8% and 12% of the first year’s rent excluding VAT. For smaller retail spaces, a minimum fee is sometimes agreed upon regardless of the rental price, because the work involved is relatively time-intensive regardless of the rent level.
What does a retail broker actually cost? For a retail space with a monthly rent of €3,500, a commission of one month’s rent means a one-time fee of €3,500 excluding VAT. With an annual rent of €60,000 and a percentage of 10%, the commission amounts to €6,000. This is a one-time payment upon signing the lease agreement, not an ongoing fee.
What additional costs come on top of the commission?
On top of the basic commission, additional costs may be charged for specific services that fall outside the standard search assignment. Think of costs for rental price advice, legal review of the lease agreement, or an extensive location analysis. Not every retail broker charges these separately, but it is wise to verify this in advance.
The most common additional costs are:
- VAT (21%): Commission is always excluding VAT. For entrepreneurs with the right to deduct VAT, this can be offset, but it increases the immediate outflow.
- Costs for market research or rental value advice: When a detailed analysis of rental prices per street or location type is required, this can be quoted separately.
- Legal guidance: Some brokers work with a solicitor for contract review. This falls outside the standard commission.
- Travel or viewing costs: Rarely applicable with specialist retail brokers, but check this in the assignment.
With a specialist retail broker such as KroesePaternotte, assessment of rental prices and guidance during negotiations are part of the standard service. This saves separate costs for what is essentially the core of the assignment.
When is it worth engaging a retail broker?
Engaging a retail broker is worthwhile as soon as the choice of location is strategically important and the rent represents a significant cost item. Those who sign a lease without guidance based on the first offer they come across will quickly end up paying more than the market rate and miss locations that better suit their concept.
The added value lies on three levels. First, access: a large proportion of the best retail locations in the Netherlands are never published on public portals. A broker with an active network of owners and developers has access to that non-public supply. Second, market knowledge: without reference points, it is virtually impossible to assess whether a requested rental price is realistic. A specialist retail broker has access to current lease data per street and location type. Third, negotiating room: landlords and their brokers negotiate on a daily basis. A tenant without guidance is structurally at a disadvantage in that negotiation.
Retail broker costs pay for themselves when the negotiation leads to a lower rental price, better contract terms such as a break option or rent-free period, or a better location than the tenant would have found independently. Over a rental period of five years, one successfully negotiated rental price can yield many times the commission.
How do you negotiate the broker fee?
The retail broker fee is negotiable in most cases, especially for larger transactions or when multiple properties are being sought simultaneously. It is normal and professional to ask at the start of the assignment about the method of calculation and whether there is room for adjustment based on the scope or complexity of the search assignment.
Effective negotiation points include:
- Volume: Are you looking for multiple locations at the same time, or do you plan to work together more often? Then a volume discount or fixed rate agreement makes sense.
- Scope of the assignment: A more sharply defined search assignment (specific cities, a certain type of location) can lead to a lower fee because the work involved is more straightforward.
- Results-based approach: Ask whether the commission is only due upon a successfully concluded lease agreement. That is the market standard, but record it explicitly.
Negotiating over the fee is worthwhile, but do not let it come at the expense of the quality of the service. A broker who significantly reduces their commission may have less time to devote to your assignment. The relationship between cost and quality of service is more relevant than the absolute level of the fee.
What is included in a service agreement?
A service agreement is the contract between the retailer and the retail broker. It sets out what the broker does, for what fee, and under what conditions the commission is due. Without a written agreement, the legal basis for the collaboration is absent and misunderstandings about costs and responsibilities can arise.
A well-drafted agreement contains at least the following elements:
- Description of the search assignment: What type of retail space, in which cities or streets, with what floor area and what rental budget.
- Duration of the assignment: For what period does the tenant give the broker an exclusive or non-exclusive instruction.
- Amount and method of calculating the commission: One month’s rent, percentage of the annual rent, or a fixed fee, always excluding VAT.
- Conditions for liability: When is the commission due? Typically upon signing the lease agreement.
- Exclusivity clause: Does the tenant work exclusively with this broker, or may they also search independently?
- Early termination: Under what conditions can the assignment be terminated and what are the consequences for the fee?
Read the agreement carefully before signing. Pay particular attention to the definition of when the commission becomes due: some agreements stipulate that the fee also applies if the tenant independently finds a property that the broker had previously introduced. That is a legitimate clause, but you need to be aware of it.
Would you like to know what working with a specialist retail broker involves in practice? View the current retail listings or contact KroesePaternotte directly for a no-obligation conversation about your search assignment.
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