Contest Question #3

Different ways. Some we’ve paid no commission, some we’ve paid a set fee. When CBRE Insists, we make them include the commission on top of the increase that we’re asking and we’ve paid in two annual installments. Don’t like giving them anything right up front.

Tried to negotiate a small, flat fee but once they refused, I notified the P.O. that I would no longer negotiate with them. Ended up paying no commission and obtained rental rate I requested.

Handled commission by offering CBRE $1500 rather than the $25,000ish he had requested, if we can successfully make the deal I wanted. He took it.

After negotiation of the lease amount. They did not meet my reasonable request so I asked for a commission reduction. We agreed on a 50% reduction or 1.5% commission.

When the lease needed to be renegotiated recently, we first of all postponed the negotiations until closer to the time of the end of the lease because the post office’s agent contacted us almost 18 months in advance.

Second of all, we told the post office agent that it is not customary to expect the lessor to pay a fee for negotiating the lease when a lease is already in existence. He then reduced his commission by a percentage point. We found this not acceptable and did not pay him a commission at all.

We also refused to allow the post office to vacate on a 30-day notice, arguing that this constitutes a month-to-month lease, and is hardly worth talking abut. We might as well have no lease at all.

It all came down to squabbling over the increase in the rent. We finally came to a mutually acceptable amount, which, though not as much as inflation would dictate, was acceptable. In order to do this, we agreed to a 10-year lease with an increase in rent at the 5-year mark.

We also refused to sign the clause that dictated that the post office could perform any repairs they felt necessary and simply bill us. This would open the door for just about any sort of work on the building without our permission and this was simply not acceptable.

All in all, we felt that we could have done this directly with the post office, with whom I have negotiated all other lease agreements. The agent from CBRE was pushy at best and did little to earn whatever commission he might have felt he was owed. I cannot imagine that the USPS came out ahead in this endeavor and am concerned about how much money they may have spent in hiring CBRE to handle something they had been doing themselves for many years.

We simply said we will not pay a commission. We kept the renewed lease the same as the old lease, i.e. no termination clause, etc.

They presented a lease renewal proposal. I asked for more and got more. They then presented their commission request. I told them if I paid the commission it would be three years before I saw any increase. They then included the cost of the commission in the new lease amount. Worked out well for me. I did this on two lease renewals.

I negotiated a renewal for my Turton, SD Post Office last year. I really went round and round with myself on “should” I try to negotiate the commission percentage. On the one hand, with the current state of affairs I was extremely happy to have a renewal proposal and didn’t want to jeopardize it with a counter offer. But on the other hand, 3% seemed like too much money for hardly doing anything to earn it. I finally got the courage up to counter and along with an increase in rent, elimination of the termination clause and a 5 year renewal, I also requested the commission be reduced from 3% to 1%. They could not have said yes quicker than they did. Needless to say, this year when I negotiated the renewal for Warner & Stockholm, SD, I negotiated the same 1% commission.

My lease was scheduled to expire in February 2016. I am currently receiving $20 per square foot plus property tax reimbursement. CBRE contacted me last fall to begin negotiations. They offered me $15 per square foot which was far below market. The comps they cited were not at all comparable, metal buildings, warehouses and a post office that was almost 200 miles away.

I signed a listing with a local real estate agent to represent me. He was successful in finding comps that justified $20 to $24 rates. I wanted a 5% increase to $21 per foot but we eventually settled for a continuation of the $20 per square foot rate. The new lease is for 5 years at $20 and an additional 5 year option at $22. There is no option for the post office to terminate early. CBRE gave up on that fairly quickly.

In the most recent discussion they asked for a 3% commission at the same time they asked for a 30% reduction in the lease payments. We ended up signing a new lease for the same amount as the previous five years. I offered them $500 at the conclusion. They accepted.

Bob Glatz
Glatz Investments

The CBRE rep refuses to offer any market comparables and states they don’t have to accept ours. They compared our PO with others on the list available on the internet, but we also found others on the list at a higher rate. We stuck to our 29% increase based on normal inflation from the lease amount 10 years earlier and that we had only a 10% increase fixed five years ago. We kept our negotiation via email rather than conference call which documented their lack of direct answers when questioned about commissions.
We offered a $1000 fee (0.93%) if they CBRE would recommend our amount. We also justified our rental rate based on projected expenses to operate the PO, past expenses and location across from the only grocer within 20 miles. They quickly accepted this offer and sent us lease to sign, no termination, renewal option, purchase option or cancellation on a 5 year renewal

I treat them with respect and point out that they are working for me since I pay them and ask for help to make sure I am getting the best rent possible. I sometimes add their fee to the rent. In cases where they ask for more then 3% I tell them I will not pay more.

They have been presenting some ridiculous low offers. I do not accept them and make sure they are paying market.
Bert Distelburger

My experience was similar to Jeanette’s.

With regard to the commission, I merely refused to pay it. End of story. My rationale was they were not contracted by me, were representing the USPS, and in any event it was a conflict of interest. They attempted to include a termination clause, which I said would violate the terms of the my loan. That issue was quickly eliminated. Rental rates on the renewal was the real sticking point. I was flexible on this issue in favor of a ten year renewal. Waiting for countersigned lease.

The one issue I tried to resolve during negotiation was the repairs I made which were clearly the USPS responsibility. They were not interested to discuss this. Now I am left to enforce the terms of the lease.

CBRE response to refusal to pay commission:

“As part of our contract with USPS we are authorized to request our commission from the Landlord, as in any Tenant representation transaction done in Florida. We of course would like to be paid, however it is not a condition of the lease.”

Anthony Patete