The Brokerage Firm Behind Your Broker: What It Does on an Office Lease

Firm, broker, salesperson: three words a first-time tenant hears

• The firm is the business that holds the brokerage registration. Its name goes on the representation agreement, and a commission on your lease is ordinarily paid to the firm.
• A broker holds the senior of New York's two license grades. A firm operates under a broker's license, and that broker supervises the people who work there.
• A salesperson holds the other grade, and is who people usually mean when they say agent. Most of the people who walk you through floors are salespeople.

Licensing is state law. If it matters to your deal who may sign or who may be paid, your attorney should confirm it.

What the firm answers for on a tenant's search

The individual does the visible work: the brief, the shortlist, the tours, the landlord proposals, and then the bargaining over the letter of intent and the lease, which your attorney reviews.

The firm stands behind it. It supervises the person on your file, it is the party to the agreement you sign, and it has to tell you if it also acts for the owner of a building on your list. Ask that of any firm, this one included. Nomad works for you when the search is yours, and the firm also offers agency leasing and owner representation.

Ask early who, by name, will run the search week to week and which licensed broker is responsible for it. A principal works on every Nomad deal, and the team page shows who they are.

How the firm is paid when you lease an office

A brokerage firm earns a commission when a lease is signed. In most transactions the landlord pays the broker fee, so a tenant usually writes no check to the firm that represented it. The firm then settles with the individual who did the work.

That is the usual pattern and not a fixed rule, since each lease and its commission agreement set the terms. Ask how the firm is paid on yours, and what paper it wants your company's signature on before work begins. Both questions apply to Nomad too.

Why an office lease calls for a commercial firm

The same New York license covers apartments and offices, so a residential firm can legally show you office space. What differs is practice. An office lease carries terms a home rental never has:

• Rent quoted per rentable square foot, where a loss factor separates the area you pay for from the area you can furnish.
• Escalations, and increases in the building's operating costs passed through above a base year.
• An improvement allowance and a work letter, which decide who pays for the buildout.
• A good guy guarantee from a principal, plus a deposit or a letter of credit that the landlord sizes to the company's finances.
• An assignment and sublet clause, which decides how you leave if you outgrow the floor.

Two checks on the firm before the first call

• The license. Ask which name the firm is licensed under and which broker holds that license, and confirm both.
• The record. Ask the person who would run your search which office leases they have closed for tenants recently, near your square footage and in your neighborhoods.

Nomad is a licensed New York real estate broker with its office at 276 Fifth Avenue, Suite 402. The brokerage page sets out the work stage by stage.