Who Pays Commercial Real Estate Broker Fees in Canada?
Commercial real estate transactions work differently from residential deals — and so do the broker fees. Whether you are buying, selling, leasing, or renting commercial property, understanding who pays the broker and how fees are structured helps you budget accurately and negotiate effectively.
Commercial Property Sales: Who Pays?
When a commercial property is sold, the commission structure is broadly similar to residential — but with more variation and flexibility:
Seller Pays (Most Common)
In most commercial sales, the seller pays the total commission from the sale proceeds at closing. The listing agreement specifies the total commission and how it is split with the cooperating (buyer's) broker.
- Typical range: 2% to 6% of sale price
- Higher percentages on lower-value properties
- Split between listing and buyer broker
- Plus 13% HST on the commission
Buyer Pays (Less Common)
In certain commercial transactions — particularly off-market deals, buyer-initiated acquisitions, or where the seller has no listing agent — the buyer may pay their own broker's fee directly. This is more common in commercial than residential.
- Common in off-market or direct deals
- Fee structure agreed in buyer rep agreement
- Can be flat fee or percentage
- Tax-deductible as a business expense
Key Difference from Residential
Commercial real estate commission structures are less standardised than residential. Fee arrangements are frequently customised based on property type (retail, office, industrial, multi-family), deal complexity, property value, and the specific services required. Always get fee agreements in writing before proceeding.
Commercial Leases: How Broker Fees Work
Commercial lease commissions are structured differently from sales. Here is how fees typically work for both landlords and tenants:
Landlord's Side
- Landlord typically pays the total lease commission
- Fee based on total lease value or per-square-foot
- Commission shared with tenant's broker if applicable
- Renewal commissions may apply at reduced rates
Tenant's Side
- Tenants usually do not pay broker fees directly
- Tenant rep is paid from landlord's commission
- Some tenants engage and pay their own rep directly
- Clarify fee arrangement before signing rep agreement
Typical Lease Commission Structures
All lease commissions are subject to 13% HST in Ontario. Rates vary by market, property type, and negotiation.
Real-World Fee Examples
Here is what commercial broker fees look like in practice for common transaction types in Ontario:
Sale Example: Retail Plaza
Split between listing broker (2%) and buyer's broker (2%). Paid by the seller.
Lease Example: Office Space
Paid by the landlord. Split between landlord's broker and tenant representative.
Commercial vs. Residential Fees
Commercial and residential real estate broker fees differ in several important ways:
Tips for Managing Commercial Broker Fees
For Landlords and Sellers
- Get fee agreements in writing before listing
- Understand how cooperating commissions attract buyers
- Ask about renewal commission terms upfront
- Factor HST into your budget calculations
- Discuss cancellation and exclusivity terms
For Tenants and Buyers
- Clarify who is paying your broker before engaging
- Review buyer/tenant rep agreements carefully
- Understand that tenant rep fees are often covered by landlord
- Ask about fee structures for off-market opportunities
- Consult your accountant on tax deductibility
Related Resources
For a complete breakdown of how TMI (taxes, maintenance, and insurance) affects commercial lease costs, see our guide on What Does TMI Mean in Real Estate. For residential fee information, read our Realtor Fees in Ontario guide and our Average Realtor Commission in Canada guide.
Frequently Asked Questions
Who pays the commercial real estate broker's commission on a sale?
In a commercial real estate sale in Canada, the seller typically pays the total brokerage commission out of the sale proceeds at closing — similar to residential transactions. The total commission is then split between the listing broker and the buyer's broker (if applicable) according to the cooperating commission agreement. However, unlike residential deals, commercial commission structures are more frequently negotiated on a case-by-case basis, and it is not uncommon for buyers to pay their own broker separately in certain transactions.
Who pays the broker fee on a commercial lease?
In commercial leasing, the landlord traditionally pays the brokerage commission. The fee is typically calculated as a percentage of the total lease value (base rent over the lease term) or as a flat dollar amount per square foot. If a tenant has their own broker (tenant representative), the landlord's broker usually shares the commission with the tenant's broker. In some cases, tenants may pay their own representative directly, so it is important to clarify fee arrangements before engaging a broker.
How much are commercial real estate broker fees?
Commercial broker fees vary widely depending on the transaction type, property value, and complexity. For sales, commissions typically range from 2% to 6% of the sale price, with higher percentages on lower-value properties and lower percentages on high-value deals. For leases, commissions are often calculated at 3% to 6% of the total lease value, or $1 to $3 per square foot per year of the lease term. All fees are negotiable and subject to 13% HST in Ontario.
What is the difference between commercial and residential broker fees?
Commercial and residential broker fees differ in several key ways. Residential commissions are typically a straightforward percentage of the sale price (commonly 4-5% total). Commercial fees are more complex — they can be a percentage of sale price, a percentage of total lease value, a flat fee, or a per-square-foot calculation. Commercial transactions also tend to have longer timelines, require more specialized expertise, and involve more complex negotiations, which can influence fee structures. Commercial fees are always negotiable and often structured to align with the specific deal.
Do I need a broker for a commercial real estate transaction?
While not legally required, using a commercial real estate broker is strongly recommended. Commercial transactions involve complex lease terms (TMI, escalation clauses, tenant improvements), zoning and permitted use considerations, environmental assessments, financial analysis, and negotiations that require specialized knowledge. A qualified commercial broker can help you avoid costly mistakes, negotiate favourable terms, and identify opportunities or risks that may not be obvious. The cost of a broker is typically far less than the potential financial exposure of a poorly negotiated deal.
Are commercial broker fees tax-deductible?
Yes, commercial real estate broker fees are generally tax-deductible as a business expense in Canada. For property owners, commissions paid to sell or lease commercial property can typically be deducted as part of the cost of earning rental income or as a selling expense. For tenants, broker fees related to securing a commercial lease are generally deductible as a business expense. HST paid on commissions may also be recoverable through Input Tax Credits if you are a GST/HST registrant. Always consult your accountant or tax professional for advice specific to your situation.
Need Help with a Commercial Transaction?
Whether you are buying, selling, or leasing commercial property in Mississauga and the GTA, Joe Battaglia and the Battaglia Team can help you navigate the process. With over 25 years of real estate experience and a deep understanding of the local market, we provide expert guidance on every transaction.