An occupier's guide to how fees work, how they're documented, and why independence matters.
For many organisations, entering into a commercial lease is one of the largest financial commitments they will make. Yet despite the significance of that decision, relatively few occupiers fully understand how tenant representation fees work, how they are incorporated into a lease transaction, or why the structure of those fees is only one part of selecting the right advisor.
At LPC (Australia & New Zealand), we believe clients should understand exactly how their advisor is remunerated and how those arrangements fit within the broader commercial negotiation. Transparency is fundamental to any advisory relationship.
How are tenant representation fees paid?
There is no single approach to paying a tenant representative.
Some organisations pay their advisor directly as a professional service, much like they would engage legal or accounting advisors.
Others elect to seek reimbursement of their advisory costs as part of the overall commercial package negotiated with a landlord. Where this occurs, the reimbursement is typically funded from the incentive pool negotiated as part of the lease transaction.
Neither approach is unusual. The structure is ultimately determined by the tenant and reflected within the commercial negotiations.
"How a tenant rep fee is paid is the tenant's decision, not the agent's. Requesting reimbursement through the incentive is a commercially accepted leasing lever - no different to negotiating rent-free periods, fit-out contributions or other commercial incentives."
Adrian Gerber
Director, LPC Victoria
The important question isn't how the fee is paid
Because reimbursement is commonly drawn from the negotiated incentive pool, some occupiers ask whether this means engaging a tenant representative reduces the value of their overall deal.
The more useful question is whether the advisor creates value beyond the cost of their engagement.
An experienced tenant representative should help a business evaluate competing opportunities, benchmark market conditions, negotiate stronger commercial terms and reduce long-term occupancy risk. If the overall lease outcome materially exceeds the cost of the advisory fee, the organisation is in a stronger commercial position regardless of how that fee was structured.
"We're always transparent with clients about how our fees are incorporated into a transaction. Ultimately, the measure of value isn't where the fee sits - it's whether the overall commercial outcome leaves the client in a better position."
Adrian Gerber
Director, LPC Victoria
Tenant representation is specialist advice
Commercial leases are rarely straightforward.
Rental structures, incentives, options, make-good obligations, expansion rights and market timing can all influence the total cost and flexibility of an occupancy decision over many years.
For that reason, many organisations choose to engage specialist advisors to complement their legal and financial advisors throughout the leasing process.
"A commercial lease is one of the most significant financial commitments a business will make. The expertise required to assess the market, benchmark incentives and negotiate effectively is highly specialised, and the cost of getting those decisions wrong can remain with a business for years."
Graham Postma
Director, LPC Western Australia
Why independence matters
How an advisor is paid is only one aspect of selecting the right representation.
Equally important is understanding who that advisor ultimately represents.
A landlord's leasing agent is engaged to achieve the best possible outcome for the property owner. Their objective is to maximise the landlord's position, which is entirely appropriate given who they represent.
Conflict of interest is not primarily a question of personal integrity - it is a question of commercial structure. A firm can employ highly ethical professionals while still operating within a business model that creates competing commercial interests. Internal governance can help manage those competing interests, but it cannot change the structure that gives rise to them. Occupiers should therefore consider not only the capability of their advisor, but whether the advisor's commercial interests are aligned exclusively with their own.
Independent tenant-only representation offers a different model. Because the advisor has no financial interest in which property is ultimately selected, advice can remain focused on identifying the premises and commercial terms that best support the occupier's operational and financial objectives.
LPC represents tenants exclusively, with no ties to owner-developers or landlords and no financial interest in which property a tenant ultimately occupies or on what terms a landlord lets it. Our advice is grounded in a single principle: business comes before space. The right lease outcome is the one that supports the tenant’s operational needs, manages their risk, and positions their business well for the term of the commitment.
Questions every occupier should ask
Before appointing a tenant representative, consider asking:
• Who does this advisor ultimately represent?
• How will their fee be structured and documented?
• Will every suitable property be considered, regardless of ownership?
• How are potential conflicts of interest managed?
• How will success be measured beyond rental savings?
• What value should we reasonably expect the advisor to create over the life of the lease?
Understanding these questions helps occupiers make more informed decisions - not simply about fees, but about the quality and independence of the advice they receive.
