WiredRE Deferred Fee Negotiation Reference
Fees Negotiation Reference
WiredRE has identified the following references and methodologies for establishing equitable fees. For the purpose of this description, all fees are based on Total Contract Value, excluding power, cooling, and one-time charges. Please see all three pages herein for total fees reference.
- When working with office or other property owners, office or industrial commission rates are reference benchmarks for deferred fees. Data center fees can be higher owing to 1) the more challenging selling environment 2) the greater technical background required (ping, power, pipe) and 3) our position as the #1 independent firm. Industrial shell commission rates nationally are around eight percent (includes the co-broker / channel commission)
- For turnkey data centers (e.g. Equinix retail or DLR wholesale) the applicable benchmarks are for retail, 15 percent of the gross revenue, including circuit, telecom, and managed service, and these fees are paid over time, as collected. For wholesale, 3.5 to 4.0 percent of the TCV is common, excluding power and cooling, paid half at signing and half at occupancy or first payment. Build-to-suit or unmanaged NNN turnkey deals follow the wholesale model.
- In the event a co-broker, channel fee or incentive is required, WiredRE will split its deferred fees, on a 50/50 basis, with the channel participant. Channels may include construction firms, telecom brokers, and / or telecom firms. In the event a real estate broker is involved, WiredRE may require the fee be paid directly, in order to comply with real estate law, as the case may require.
- The above are the most common benchmarks, but as data centers are relatively new, to say there are ‘standards’ is an overstatement. There is wide variation most critically influenced by the experience of the parties involved, ‘control’ of the deal, and the relationship between the two parties.
- The simplest way to establish a rate is via a sliding scale based on total contract value (see example on next page). WiredRE have never received a deferred fee of less than 2 percent in any scenario. Additionally, we discount our fees by 20% when paid as agreed.
Deferred fees are negotiable, and most firms have their own experience and references for establishing fees. With fair, open and transparent documentation and discussion of these objective references, coming to a mutually agreeable fee is simple and painless.
Example Sliding – Scale Fee Schedule
Time-Based Fee Schedule
Hourly Rate: $1,200 per hour with One Hour Minimum
Daily Rate: 90% of Hourly Rate
Weekly Rate: 80% of Hourly Rate
Monthly / Project Rate: 60% of Hourly Rate