What Does Commercial Real Estate Brokerage Entail?

 In Industry Insights and Trends

Did you know that throughout the United States, the commercial real estate finance industry provides $3.5 trillion in financing for office buildings, apartment properties, shopping malls, industrial properties and other income-producing real estate? With such a vast sector in the real estate industry, understanding a little bit more about commercial real estate brokerage can help you if you’ve become interested in this sector.

Here’s what you need to know about commercial real estate brokerage:

  • What is a Commercial Real Estate Broker?
  • Who Works with Commercial Real Estate Professionals?
  • Becoming a Commercial Real Estate Broker

What is a Commercial Real Estate Broker?

Commercial real estate brokers help clients buy, lease, sell, or rent nonresidential properties, such as office space or retail space. In addition to understanding tax and zoning laws, brokers and agents in commercial real estate must also have a thorough understanding of market data, financial analyses, and property management.

In contrast to residential real estate, commercial properties can serve a wide variety of purposes, from business to healthcare to retail to warehousing. However, apartment complexes are also considered commercial real estate. Commercial real estate professionals serve as liaisons between multiple parties within the commercial transaction, provide extensive demographic and location information, and conduct comprehensive financial analyses to determine whether a property is good for their client’s bottom line.

Who Works with Commercial Real Estate Professionals?

Brokers who specialize in commercial real estate can work with landlords, tenants, or both. Listing brokers can help landlords find tenants, who then get a percentage (usually 3%) of the rent paid during the term of the lease. When working with tenants, brokers will look for space that is suitable for their products or services. In addition, they will negotiate the lease so that there are no hidden charges or other financial obligations that are detrimental to the client.

Nevertheless, it’s quite common for brokers to serve both types of clients. Most of the time, this is not a problem, unless the client is interested in leasing space also listed with the brokerage. The client should be informed of any potential conflict before signing the lease. In some states, a broker can serve as a dual agent, meaning that the broker acts as a neutral third party during a commercial real estate transaction. However, this isn’t truly in the best interest of either client as the broker should be needed more for negotiation purposes.

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Becoming a Commercial Real Estate Broker

In order to become a commercial real estate broker, you must first obtain a real estate license. Although laws vary by state, most people must become real estate agents first. Students can enroll in real estate license courses at a local real estate school, then take the license exam.

If an agent wishes to specialize in commercial real estate, it might be advantageous to pair your license with a business degree or one related to the area of commercial real estate you’re interested in. As a real estate professional, however, you do not need a college degree.

It is likely you will need to take advanced classes of continuing education before passing an exam to work specifically in the commercial real estate sector, depending on the state in which you are licensed. Brokers can then open their own brokerages, join existing firms, or pursue other real estate endeavors after graduation.

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As experienced real estate consultants in the office, retail, healthcare and industrial sectors, we understand the complexities of virtually every kind of brokerage transaction. We start by approaching each opportunity as an extension of our relationship with our clients.

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