Leasing Ethics: Weighing the Porsche Factor

Porsche Boxster S

Commissions vs. Professional Fees... It's time to retire the Porsche Boxster for a while. So here are the last of the comments on bonus payments to brokers, Do Extra Incentives Influence Tenant Reps? (Dispatch, April 2, 2002) Overall opinions were mixed on the value of incentives. Nobody thought that they fundamentally distorted deal making. But some readers mentioned the negative perception of an appearance of a conflict of interest.

Christopher White with Cushman & Wakefield in Atlanta writes, "C&W is not allowed to receive incentives. We are one of the only shops in Atlanta that has this policy." ... Jim Planey with Colliers Bennett & Kahnweiler in Chicago writes, "From the industrial real estate point of view, modest incentives like a weekend getaway for two help keep the offering property in front of brokers. Any incentive should be limited and not large enough to attempt to sway the broker's judgment."

James Scofield with Carolina Investment Co. in Raleigh, NC writes, "The speculative provision of real estate service with the hope for a real estate fee at the end of the deal is a flawed compensation system for both client and service provider. ... Equally important, many corporate real estate managers need to move to the same model with a willingness to pay fixed fees or hourly-based fees, like they pay their attorneys and accountants, and wean themselves from the free information and work that many take advantage of."

George Garvin, a broker in Woodland Hills, CA, writes, "Commission-based compensation enables property owners and tenants to reduce overhead by outsourcing many functions to brokers at no out-front cost. It is not fair and makes no business sense for brokers to offer free services in exchange for fees in line with other consultants."

--Peter Pike