Broker Engagement Letter: How Long It Should Last, Next to How Long the Lease Will

Clock one: the engagement, measured in months

Work out the term from the stages. A well-run search takes about three weeks and a loose one six. The lease takes three to five weeks from offer to signature. Add slack for a slow landlord or a finalist that falls through, and the engagement needs a few months, not a year.

A custom buildout does not lengthen the letter by much, because the letter's main job is done when the lease is signed. If you want the broker's help through construction, write that into the scope.

Put an end date in the letter and strike any automatic renewal. If the search is still live on that date, an extension takes one email.

Clock two: the tail after the letter ends

The tail, or protection period, keeps the broker's claim alive on floors it introduced, for a set time after the letter expires. It exists so a tenant cannot wait out the term and sign that floor a week later.

To shorten it, ask for three things: a period stated as a number of months; coverage limited to floors on a written list; and no tail at all on space you found yourself. A tail that reaches every property in the city, or runs long past the term, is the version to send back.

Clock three: the lease the search ends in

This is the long one, and it is set by what the landlord puts into the deal. A furnished or pre-built private floor can be taken for 12 months, though 24 and 36 are more common, and the shorter terms carry a higher rent per square foot. A direct lease on a full floor with a custom buildout commonly runs five to seven years, because the landlord recovers its free rent and improvement money over the term. A sublease runs for whatever is left on the other company's lease.

How long office leases run, by product has the full range, and the short-term lease playbook prices the short end. Below are the furnished and prebuilt floors on our list, the stock where the shorter terms are found.

Ending the letter early, and negotiating it before you sign

A termination right lets either party end the letter on written notice. Ask for it. Without one, a stalled search holds you until the end date. With one, the tail still applies to floors already shown, which is fair to the broker and is the reason the tail's list matters.

All of this is settled before signing. The first draft is the broker's, and the term, the tail and the exit are the three lines worth changing. The tenant representation agreement covers the remaining clauses, and your attorney should confirm the final wording.