Signed Lease=Porsche, Delta Ticket=No Commission

Tale of Two Industries... So I read recently that San Francisco landlords are now paying historically high commissions of $10 per square foot and offering luxury cars for signed office leases. (San Francisco Business Times, March 4, 2002) Then a week later I'm reading that Delta Air Lines will no longer pay "base" commissions to travel agents for tickets sold in the U.S. (Press release, March 14, 2002) Oops. Where would you rather be an agent? And why the difference?

Here's the essence of the Delta statement. "Technology has fundamentally changed airline ticket distribution practices. The rapid growth of electronic ticketing and the Internet allow customers to shop for, buy and receive Delta tickets, on their own terms." Translation: If passengers are happy buying their own tickets, let them pay their own agents.

That's one of the critical differences between the two industries. Tenants do not generally compensate their representatives directly. Yes, I know that it's built into the rent. But the tenant does not pay it directly, like other professional fees. Culturally, real estate marches to its own drummer.

Which takes me back to the Porsche Boxster mentioned in the SFBT article. According to the broker for the 9,000 square foot tenant, "The offer of a Porsche -- on top of a high commission -- definitely was an incentive to show his client...the...space, but ultimately it was his client who made the decision to sign the lease." Doesn't sound to me like the Internet is likely to affect this kind of arrangement any time soon.

--Peter Pike