Do Extra Incentives Influence Tenant Reps?

Doing What's Right... That's a picture of a Porsche Boxter, just like the one mentioned in the March 19, 2002, Dispatch, Signed Lease=Porsche, Delta Ticket=No Commission. Imagine that you represent a tenant. Would a gift of a Boxster affect your judgment? Well, as you can imagine, many Dispatch readers commented on this ethical dilemma.

Barney Kinzer, Venture Integration Manager at Microsoft Real Estate & Facilities, wrote. "Let us hope that the time comes eventually when the compensation model in the US brokerage industry evolves, because technology adds significant transparency to the commercial real estate supply. Agents will have to sell their consulting value-add to tenants and be compensated more in line with other consultants."

Another Fortune 100 corporate real estate executive (who requested anonymity) wrote. "The need to offer higher commissions, cars or anything above market incentives to procuring brokers, raises the issue of broker integrity. .... Incentives dilute the fiduciary nature of the relationship and, until they are no longer part of the commercial real estate landscape, the integrity of the profession will suffer."

Other readers pointed out that most national tenant rep relationships limit broker commissions to a predetermined amount. So an extra incentive would not influence an agent's judgment. My own belief is that, even for local tenant rep assignments, incentives play more of a promotional role than anything else. I've never noticed a material impact on lease-up. Mostly, these incentives are just a huge hassle when it's time for the house and the agent to split the commission. "You take the front wheels, I'll take the back."

--Peter Pike