I’d like to think it’s not, but allow me to share a recent situation my office had with another brokerage company.  First, let me say that I have been involved in the commercial real estate business for over 35 years, during which time I can count on one hand the number of bad experiences I have had with cooperating brokers.  Over the years, it has been my pleasure to work with hundreds of brokerage professionals and for the most part, I have found the majority of them to be honorable and of the utmost integrity.  This being said, it only takes a few unscrupulous brokers to give the whole lot a bad name. 

As manager of NAI Capital’s West LA commercial brokerage office,  I routinely advise the brokers in our company that regardless of who you are working with (family, friend or foe), always get your fee agreements in writing (including what that fee is and how it is going to be split).

While this is normally completed during the beginning of the process, there are those rare occasions when this is not done (but even still in those cases during my 35 years in this business, it has been rare for there ever to be an issue).

Recently, however our office had an unfortunate issue involving a dispute over fee agreements made by handshake.

A broker who had joined us from another company reached out to a broker he previously worked with (who was now also with another company) and asked him if he would like to share a listing that he was pursuing.  The receiving broker said yes, and they agreed to split the fee 50/50.  The broker with our firm had completed many deals with this broker and felt his word was his bond.  The two brokers proceeded to meet with the client, but upon returning from the meeting, the receiving broker then informed the sending broker that since he was not really knowledgeable about this market that he would have to bring in help, and as such the receiving firm now wanted 66% of the deal and total control of the marketing.   In the interim, the receiving broker made arrangements to meet with the client and only told us afterwards.

Ouch.   Recognizing that our responsibility was to our potential client, we only wanted what was best for him and so we conceded.  Stunts like this are what can give our business a bad name.   The lack of integrity and fair play by this type of broker not only hurts him, but everyone else in our industry.

The good part of this story is that after all of this transpired, the client recognized the ill conduct by the receiving broker and eventually asked us to reach out to another firm to co-list the property with.    He did not like the conduct of the previous receiving broker and he expressed concern to us that if the broker treated his friends this way, how would treat his client?

Eventually, we retained the listing and were able to reach out to another firm working in the specified area, this time within our NAI Global network.    We also agreed (in writing) to work together to try and secure this listing and to get it sold.

Integrity in brokerage is not a thing of the past, but very much part of our business.  I like to think that integrity and reputation is like credit; it can take a lifetime to build and only a few moments to ruin forever.   Just one bait and switch maneuver can ruin a broker’s reputation.   Always get fee agreements in writing.

If the activity we are seeing in our West Los Angeles office is any indication, the market is certainly a lot better than what we read in the papers or hear on the streets.   It appears that tenants and buyers have come to the realization that the market may have hit bottom and if they don’t react now they may be left on the sidelines wondering where all the good deals have gone.

If you are a lessee, you may be wondering if you are still in the driver’s seat.  The answer may still be yes, but that seat-belt is being squeezed a little bit tighter when it comes to concessions landlords are making.  Rents have stabilized, and while I don’t think we are going to see any dramatic spikes in the near future, I am witnessing a decline in offers of free rent — certainly less than I was seeing six months ago.   I’ve also noticed that owners are no longer rushing into deals as they exercise patience waiting for the right tenant who will pay closer to the asking rent.

It appears we are seeing the same mentality in the investment market. As capital markets have started coming back, we have seen an increase in investment deals — many of which garner multiple offers on properties with short contingency periods and shorter escrows.

Our West Los Angeles office has seen more sales close in the past few months than we saw during the previous few years.   In fact, within the span of 8 days, one broker in our office closed four deals with a total value in excess of $10,000,000.

Barring any unforeseen occurrences and if the price of oil does not set the economy back, I’m inclined to say that 2011 is on its way to being a very good year for commercial real estate.

by Rick Gold, Senior EVP, Branch Manager

If the activity we are seeing in our West Los Angeles office is any indication, the market is certainly a lot better than what we read in the papers or hear on the streets.   It appears that tenants and buyers have come to the realization that the market may have hit bottom and if they don’t react now they may be left on the sidelines wondering where all the good deals have gone.

If you are a lessee, you may be wondering if you are still in the driver’s seat.  The answer may still be yes, but that seat belt is being squeezed a little bit tighter when it comes to concessions landlords are making.  Rents have stabilized, and while I don’t think we are going to see any dramatic spikes in the near future, I am witnessing a decline in offers of free rent — certainly less than I was seeing 6 months ago.   I’ve also noticed that owners are no longer rushing into deals as they exercise patience waiting for the right tenant who will pay closer to the asking rent.

It appears we are seeing the same mentality in the investment market. As capital markets have started coming back, we have seen an increase in investment deals — many of which garner multiple offers on properties with short contingency periods and shorter escrows.

Our West Los Angeles office has seen more sales close in the past few months than we saw during the previous few years.   In fact, within the span of 8 days, one broker in our office closed four deals with a total value in excess of $10,000,000.

Barring any unforeseen occurrences and if the price of oil does not set the economy back, I’m inclined to say that 2011 is on its way to being a very good year for commercial real estate.