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Million
Dollar
Broker
THE COMMERCIAL REAL ESTATE SENSATION
______________________________________________________
Change your life, change your perspective on wealth, and give you
and your family what you’ve always dreamed of.
Scott W Johnstone
Founder of Commercial Real Estate Brokers Academy
www.commercialrealestatebrokersacademy.com
ii
Liability
No responsibility or liability is assumed or accepted by the author
for any claimed financial losses and/or damages sustained to persons
from the use of the information in this publication, personal or
otherwise, directly or indirectly. While every effort has been made
to ensure the reliability and accuracy of the information within, all
liability, negligence or otherwise, from any use, misuse or abuse
of the operation of any methods, strategies, instructions or ideas
contained in the material herein, is the sole responsibility of the
reader. By reading past this point, you are accepting these terms and
conditions.
A POWERFUL ENGLISH PAPERBACK
First published in the United States in 2011 by Powerful English
Copyright © 2011 Scott W Johnstone
The right of Scott Johnstone to be identified as the author of this
work has been asserted by him in accordance with the Copyright,
Designs & Patents Act 1988.
All rights reserved. No part of this publication may be reproduced,
stored in a retrieval system, or transmitted, in any form or by any
means, internet, electronic, mechanical, photocopying, recording or
otherwise, without permission in writing from the publisher.
ISBN-10: 9995736194
ISBN-13: 978-99957-36-19-4
iii
Dedicated to my late grandmother, Marilynn P. Ellis, author,
poet, artist, and the best mother anyone could ever have.
She taught me passion, courage, and unconditional love. She saved
my life and led me to be a great father, leader, and lover of all that’s
beautiful, and the man I hope to be.
iv
Contents
Introduction .................................................................................... vi
Chapter One: The Secret Handshake of the
Commercial Real Estate Broker ....................1
Chapter Two: My Personal Story and My Passion for
Overcoming the Odds ...................................7
Chapter Three: The Ten Commandments of The
Million-Dollar Broker .................................26
Chapter Four: Commandment I. Choose Where and
Whom to Work with Wisely ........................37
Chapter Five: Commandment II. Specialize ......................46
Chapter Six: Commandment III. Be the Best ..................57
Chapter Seven: Commandment IV. Drink from
“The Seven Buckets of Revenue” ...............69
Chapter Eight: Commandment V. Set Measurable,
Personal, Business and Financial Goals
and Review Them Quarterly .......................74
Chapter Nine: Commandment VI. Be a Person
You Can be Proud Of ..................................77
Chapter Ten: Commandment VII.
Build Lasting Relationships ........................79
Chapter Eleven: Commandment VIII.
It’s a Marathon, Not a Sprint ......................81
v
Chapter Twelve: Commandment IX.
Have Fun, Save and Invest Your
Money and Have a Great Life .....................84
Chapter Thirteen: Commandment X. Give Back ....................86
Chapter Fourteen: Live with No Regrets .................................89
About the author ........................................................................... 93
-Appendix Example Documents: ............................................. 107
A. Example: Broker Ethics Code-
“Broker Code of the West” .............................................108
B. Example: Exclusive Tenant Representation Letter .........116
C. Example: Office – Request for Proposal-RFP .................118
D. Example: Office – Letter of Intent-LOI ..........................128
E. Example: Office – User- Purchase,
Letter of Intent-LOI .........................................................135
F. Example: Office – Investor -Purchase,
Letter of Intent-LOI .........................................................144
G. Example: Deal Process Timeline and Flowchart ............152
H. Example: Capabilities Brochure - Tenant .......................153
I. Example: Market Newsletter ............................................154
-Glossary: Industry Terminology ................................................ 159
Scott W Johnstone
vi
Introduction
This book is dedicated to changing your life by teaching you to
become one of the top one percent of money earners in the country.
While living a purposeful, fulfilling life, you can give you and
your family the lifestyle you all dream of. I know from personal
experience that by following these proven strategies, you can change
your life forever.
Packed with these strategies and tactics, this book provides
information previously inaccessible to anyone outside of the top
brokerage firms. The once secretive, closed fraternity of commercial
real estate is now open to anyone. Regardless of your gender, race,
family background, prior job experience, and education – you too
can become a top commercial real estate broker.
Our society is in the middle of the greatest redistribution of
knowledge and wealth in world history. Those of us who are
determined to change stations in life can ride this unprecedented
wave of opportunity by learning the insider secrets that, until now,
have been hidden behind the corporate walls of top commercial real
estate brokerage firms.
You can fulfill your calling in life, and become the person you
are meant to be. You can obtain financial freedom for you and
your family, eventually allowing more time for the passions in
your life. You’ll have the ability to give back to society, thus
leaving a lasting legacy for both you and your family. In the final
appraisal, your life will have mattered.
If this sounds far-fetched or hard to believe, it is also the
unvarnished truth. I am living proof that anyone in America or
elsewhere, who has a basic education, tremendous desire and
tenacity, and lives in or around a commercial business hub, can
earn $1million per year in gross commissions in the commercial
real estate industry. You can do all this while earning the respect of
your family, community leaders, and most importantly, yourself.
Million Dollar Broker
vii
Who or what is a commercial real estate broker and why use
one? Commercial agents and brokers have provided commercial
real estate solutions for facilities such as office, warehouse, retail
locations, and others, since before the industrial revolution. They’ve
helped both small and large companies, ranging from the mom and
pop store, to members of the Fortune Five Hundred.
Brokers are industry specialists who represent proprietors,
tenants, and investors in all their commercial sales and leasing
needs. Their indepth and timely market knowledge, coupled with
their knowledge of various commercial deal structures, enable
them to negotiate the best possible terms for their clients. Often,
this literally translates to saving or making clients millions in
a single transaction. Brokers best represent their clients when
they figuratively become part of their corporate team, to provide
strategic and tactical advantages that accomplish both financial
and operational goals.
A good broker provides a friendly but unrelenting advocacy for their
clients. Not only do they serve as advocates for their clients, they
also serve as buffers between opposing parties who have a vested
interest in maintaining long lasting relationships. Additionally,
during the heated battle during negotiations for deals in the millions
or billions of dollars, the broker leverages the valuable time of the
company officers, allowing them to focus on their core business.
Brokers act as trusted advisors to owners or investors to help grow
their portfolios, as well as mitigate losses, all the while earning
a great living in good times or bad. They also assist retailers in
finding the perfect location so their first ventures into business are
successful. The advantages a broker provides are innumerable just
like any great business leader.
The commercial brokerage industry of the past has been made up of
nearly exclusively white males that had been recommended into one
of the major firms, and had gone through extensive training programs
lasting one to two years, and covering all types of disciplines within
the business. Brokers usually are from a local major university
Scott W Johnstone
viii
and from one of the most powerful fraternities. Alternatively, they
are usually brought into the business by a family member who’s a
“legacy” in the industry.
The top firms like competitive athletes and risk-takers for their
competitive spirit and entrepreneurial predisposition. One major
firm not only puts you through a series of interviews with brokers,
managers and executives of the company but they also enroll you
into an eight hour psychological battery of tests to determine whether
if you match a psychological role mode based on the profiles of
previously successful brokers.
If you’re finally hired, you become a trainee in the research
department learning the basics macroeconomic drivers of the
business, while simultaneously allowing senior brokers to get to
know you. You are then considered for what is normally called a
“Runnership” program.
A “Runnership” program lasts between one and two years and it is
based on the notion that the best way to learn is though immersion
with a senior broker for a lengthy period of time, and that this
immersion in your mentor’s daily routine will teach you the finer
points of the business.
The duties of a new “Runner” are typically copying, packaging,
binding, cold calling and attending meetings & presentations.
Runners do not participate at this stage, as typically trainers have
a “listen but don’t speak” policy, until much later in your training.
During the “Runnership”, or indentured servitude, your aim is
to bond with your trainer and learn as much as possible. This
will later allow you to be successful on your own and make your
millions. During training, the typical pay is $24,000 per year, for
the one to two years it takes to earn your stripes and complete
your training. This level of income is barely above the poverty
line and most people who go through it require the financial
and moral support of family or loved ones, who help bridge the
financial gap.
Million Dollar Broker
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Ideally, the trainer has taught them the finer points of the industry,
and has Imparted the skills and wisdom. They hope the acquired
knowledge, as well as creating relationships that will allow the
runner to stay afloat out on their own. In appreciation for a job well
done often the runner is invited to join the trainer in a partnership.
The average early stage tenured broker for one of the top five firms
in the nation, on average, earn gross commissions of $1.1 million
annually. Those gross commissions are then split with the house and
paid out to the broker, after further splits with partners, if any. The
top leading brokers in the top five firms average $3.6 million in gross
commissions annually and also split their commissions accordingly.
You may not have been born into the “right family” or gone to the
“right” school or university but you have something that previous
generations of prospective brokers never had. You have the Internet.
All the data ever needed to succeed are at your fingertips. The
step-by-step process of becoming a world-class broker offered to
you through online training and this book. You have several series
of audio and video training courses from world-class experts.
Subscription-based online data service companies provide all the
research and property data provided, only a select few in major
firms previously had access to this in the past. Thanks to these
expanded opportunities for self training, firms are willing to take
you on with less human training, more virtual learning, and shorter
or no “Runnership” campaigns.
The world economy has made a fundamental shift toward paying the
highest incomes to business leaders, who can provide knowledge,
process, and execution in specific fields that include commercial real
estate. Today’s knowledge and process based pay is disproportionate
to the amount of money paid in the old “time for money model,” in
which the worker is paid on an hourly scale. Time-for-money never
allows workers a chance to get ahead of the financial curve. Today’s
contact, knowledge, and process-driven pay that commercial brokers
receive, allows for the community to be served at the highest level
while providing the Broker a world class lifestyle enjoyed only by
the top 1% of earners in the nation.
Scott W Johnstone
x
I feel it’s my life’s mission to inform those in our society who are
looking for a start or a change. I’m talking about a change that will
provide true peace of mind to all of the hard working individuals
out there looking to change their station in life, give back to the
community, and give their families what they never had growing up.
I’m not talking just about material things, I’m talking about things
like the best education for your children, money for retirement,
a home wherever you choose, and respect from your peers, your
community and your loved ones.
You see, I came from humble beginnings, and encountered some
tough times when I was young I was far from privileged. My tough
times started early, and I didn’t make it easier on myself by being a
rebel and a “bad” kid. I saw what I didn’t want for my life and I was
lucky enough to change it. I was blessed by a few people who gave
me a shot at being a better person. I want to give that blessing to you,
but you know what they say, “luck is the residue of hard work,” so
if you’re ready to give it the effort, and work hard and smart, then
I’m willing to show you how to become The Million-Dollar Broker.
Chapter One
The Secret Handshake of the
Commercial Real Estate Broker
It’s February 2010. We’re in the biggest recession since the great
depression. I look across the room of the banquet hall on “fight night”
and instantly notice the nods and winks from the seasoned vets, and the
boyish zeal of the rookies. They’re smoking cigars and cheering on the
two boxers beating the hell out of each other – all for the entertainment
of the group of 600 industry attendees – who were decked out in black
ties. As I mingle through the smoke filled room to line up for another
cocktail – my belly full of filet mignon and asparagus, topped off with
fine red wine – I’ve no other thought than to fill my glass before last
call. At the same time, a group of the top 20 to 40 guys are all headed to
an after dinner spot where the single guys will meet up with the model
hostesses that were hired to dress up the room by the event leaders that
night. The married guys will show up as well to watch the games begin,
while the ladies all vie for the highest status guys and the guys all play
the game to do the same but status is less of a concern to the boys than
beauty and sex appeal.
Before we can get there, however, the lines of Mercedes and the
occasional Maserati or Bentley have to be brought to their rightful
owner. Those brave or dumb enough to drive after drinking, do so
willingly – as this is a group of high-level risk takers, most of which
were seasoned athletes. In addition, they all believe, to some degree,
that they are invincible, or at least while the vodka is still streaming
through their veins. The destination is a place well known for those in
“the know” on Pacific Coast Highway, with a band of high-level young
brokers who are on a mission to find a mate or at least a mate that night.
A solid stream of S and SL class Mercedes Benz roll up to the after party
spot. Upon arrival, the valet gives everyone the “secret handshake,” as
he knows most of them by name.
Scott W Johnstone
2
This is a well-known spot for young brokers -- many of whom make
their own hours so they can choose to come in when they feel the
need. Their only real bosses are their clients, and most of them are
with their broker. The truth of the matter is that their clients were
probably one of them not long ago and might have even trained the
young bucks back in the day, as this small community of insiders is
incredibly close nit.
“He’s a great guy.” This is something you hear occasionally about
people in the business and definitely something you want to hear
frequently about yourself. Unfortunately, more often than not, you
might hear a terrible story of a mistake someone made, as it can
also be an industry of sharks, vying for position by knocking their
competition, in order to better their position in the eyes of the small
group of the important decision makers.
Now most of the rest of the group that night, the seasoned vets, have
taken the high road and found their way home by cab or learned
their lesson years earlier not to go big and hurt yourself that night,
as this is just another night.
Your clients will respect you tomorrow just as they had the day
before. These old dogs have learned to do the right thing. That is,
by coming home to their wives and kids at a reasonable hour, telling
the story of the night exactly as it happened. The wife already knows
that the perfume she smells is that of the hostess coming in for a test
probe to see what kind of guy he really is. He is the guy mentioned
earlier. “He’s a great guy!” He is reliable and honest, trustworthy
and candid, self-assured but not cocky. He might drive the nearly
mandatory Mercedes, but it’s way beyond its warranty and he owns
it free and clear, just as he owns his house and boat that rests in the
bay, visible from his balcony up on the hill. This is the last thing
he’ll see before he kisses his kids goodnight.
Afterward, he settles in for a good night’s sleep so he can hit the
office early in the morning to ensure he gets a jump on his day by
leaving messages for all the hung-over young bucks he’s doing deals
with that haven’t made it out of bed yet.
Million Dollar Broker
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The young guys will still make gross commissions on average this
year of over $500,000, a decent year in a bad economy, but the
seasoned vets will quietly clear more than $2,000,000 as the extra
effort and focus a loving family brings makes all the difference.
They are calmer, don’t have as much to prove and are less focused
than the younger guys on issues of status. Their focus is on making
their lives the best they can be for their loved ones, their wives,
daughters and sons, and those in their immediate families, that
need the help to carry on with pride and honor, intelligence and
dignity.
The mission of these community leaders is to make their life worth
living and to do it with purpose and drive. They usually are involved
in the community, reaching out to those less fortunate than they
are, in the process making themselves better people, all the while
keeping their eye on the prize, the prize being the love and respect
of their family.
The story I just told you is true. The “great guy” I refer to is real. I
won’t mention his name, but he is very close to me, and I know him
and his family intimately. I grew up in the business with him and
we have lived our lives in this industry for more than 25 years. His
story isn’t uncommon, as there are thousands of guys just like him
in this little known industry of experts in commercial real estate.
We are paid for our knowledge and our process, making millions
for our clients, and are paid a percentage of every deal we close, not
an hourly wage. This expertise has been passed down the line to us
from generation to generation of experts.
That has been the way since the great earthquake of 1906 when
Colbert Coldwell met Benjamin Arthurs and formed the greatest
commercial real estate firm in history from the ashes of downtown
San Francisco. Now the secrets of the industry are opening up
to anyone that can access it and make sense of it and has the
courage to take the leap. Before now you had to be born into the
right family with the right connections, have attended the right
college or been in the right fraternity. The list of silver-spoon
kids in the industry is long.
Scott W Johnstone
4
Enter the age of the Internet, with open platforms of information and
online, subscription based access to all the data one ever needs to be
the best the industry has ever seen. Enter the online training experts
who, for a small price, will give you the step-by-step processes of
how to become one of the best in the industry. By simply combining
the rules of the industry with their own hard work ethic, in a very
short period of time, they’ll make more money than they ever
expected by closing deals in their community. All the while making
lasting relationships with the leaders of industry in the community
and enriching their lives with invaluable life experiences.
These open platforms of information are allowing for a diversity of
people to enter the industry either on their own or with brokerage
companies looking for volume through masses. It’s an exciting time
for women, minorities, and underprivileged in the industry as the
old-boy networks are now less relevant than knowledge, work ethic,
honesty, character, diligence, enthusiasm, skill, insight, strategy and
tactic. Less and less are we judged by last names as is the past.
This is the good news for all those brave enough to take on the
challenge of changing your station in life, building a wealth of
knowledge to use to better increase your income, increase your free
time, choose who your boss is and make your own hours.
The bad news is that the information may be there but the lessons
of the ages seem to be lacking. Some moral and ethical rules are
left out; as a result, some new age brokers might think this is a fast
buck, get rich quick solution to the woes of our nation’s economic
meltdown. The reality is that anything worth doing in life is worth
doing well. Without the mentoring and lessons learned from those
who have come before, the new economy broker may fail before
he gets off the ground when faced with adversity or the ethical
teachings of those who have come before him.
It’s easy to make money in this industry when times are good it’s
the measure of how well someone is trained when they are able to
prosper in the down times like the example of my “good guy “friend
I spoke of earlier in this chapter.
Million Dollar Broker
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The recent lending crisis and subsequent massive job losses within
the mortgage industry have created a mass migration of new age
brokers who have come over to commercial real estate brokerage
from mortgage lending; with them have also come the bad habits
of the mortgage lending industry which up until recently was all
about churning through as many deals as possible with little or no
qualification of the client. Unfortunately, those individuals who
bring the mortgage lending mentality to commercial real estate
typically die on the vine with such a mindset. The commercial
brokerage industry and the clients we serve are typically extremely
conservative in their approach to business and have the long game
in mind while managing transactions. What I mean by long game
is the “big picture” to doing business, building relationships in the
industry, and serving their community and families.
If you wouldn’t do the deal yourself then you should never recommend
it to your clients or potential clients. This is the gut check one has to
consider prior to giving any advice or recommendations. Make no
mistake, our clients are looking to us for solid, ethical, intelligent advice,
as we are typically the connection to the information on the street level.
If you’ve been in the business long enough you’re now possibly the
“wisdom” in the room given your historical perspective and this is even
more valuable to clients so the “go slow and make a good decision”
approach is more of what is required to make it in this business.
Too many get rich quick thinkers have come into commercial
brokerage in the past ten years with information learned about the
mechanics of the industry from lack of good training from these
open platforms of information, online trainers, and data delivery
services. Not enough of them have come into the business with the
right mental attitude towards fellow brokers, clients, and vendors.
Additionally not enough psychological and social method has been
brought to the industry by the trainers and it’s time for a change.
Too many get rich quick guys have made too many ethical mistakes
and have said, “I’ll take the money and deal with the consequences
later,” no matter what damage they do to coworkers, clients, their
firms, and their own reputations. They can do a deal but they wreak
Scott W Johnstone
6
havoc in the process, as they haven’t learned the lessons of the past and
haven’t received training to make good decisions. It’s time for a change.
In the next coming years of the commercial brokerage business, the
ones who will win are those who are the long game thinkers. The
one’s whose moral compass is always pointing “North.” The ones
who will win in the future are those who are more collaborative,
have high integrity and authenticity, are more approachable, and are
visible leaders in the community. The ones who will succeed in the
end are those who have been taught the wisdom of the past while
embracing the technological advances of today and the future.
The ones who will lose in the future are those upstarts who haven’t
learned the moral and ethical lessons of the past, as well as those older
“dinosaurs” who haven’t embraced the potential that technology and
the internet brings. Those who are stuck in the past or those who are in
the present but don’t have the historical lessons vital so not to repeat the
mistakes from generations that have come before them are in trouble.
How did I come to these conclusions? The reason is that I have
witnessed the way the business used to be and how it has evolved
and I have had to evolve with it. I came from the wrong family
and from the wrong side of the tracks and through hard work and
determination, succeeded in this very elite business.
I was trained old school at two of the biggest firms in the world. I lived
through the technological advances the industry has benefited from.
I’ve worked alongside and been subject to the influx of the get rich
quick thinkers and the havoc they create. I have evolved with my own
companies as only a small business owner can because it’s make–or-
break time, all the time.
I have been on top for the better part of 25 years in this business
and know the most up to date techniques, strategies, tactics, and
formulas for success, as well as the moral and ethical lessons of the
past. I’ve trained, mentored, and partnered with some of the best
in the business and they have all gone on to live the lives of their
dreams. Join me and let me help you do the same.
Million Dollar Broker
7
Chapter Two
My Personal Story and My Passion for
Overcoming the Odds
I’m an eight-year-old, toe head blond kid in late summer of 1969. I’m
sunburned from the beach in Santa Monica in my grandparents 1913,
Glendale hills home. Peacefully enjoying my evening, pre-bed, bath
session with Mr. Bubble and my rubber duck, a World War II flotilla
and Aqua Man, I have not a care in the world when my grandmother
uncharacteristically barges in, visibly shaken and welling up with tears.
She asks me if she can talk to me about something.
Now I’m eight and that’s right about the age when you don’t want
your Grandma or any other woman hovering over you, naked,
bubbles fading and water getting colder by the minute, asking to
talk about anything, but she’s my world as mom and dad are out of
the picture so I say “Ok, Grandma, what?”
“Your mother is about to ruin your life!” I wasn’t aware of it at the
time, but my mom and dad had done some serious damage to my
young life. For example, they were seventeen and senior’s in high
school when they had me. Evidently, condoms weren’t available to
my 17-year-old dad when they did “it” at the local drive-in on their
first date. My parent’s marriage came about because my maternal
grandfather was a devout Catholic, so having an abortion was out of
the question. Between this time and when I was born, my now absent
father entered the Navy and was based out of Oakland; he moved us
to the San Francisco bay area onto the naval barracks. After my dad
ruffed up my mom a couple times, my great grandmother drove 16
hours round trip to the bay area to retrieve my brother, my mother,
and myself from the guy who started this mess.
So we’re back to the bathtub. “She’s going to ruin your life!” I’m
thinking ‘huh? what do you mean?’ So I say, “why are you crying
Scott W Johnstone
8
Grandma?” She said, “Your mom is breaking off her engagement
to Chuck (her boss) and she’s now going to marry this Hispanic
gentleman, an ex- convict out of San Quentin Prison, a heroin dealer
and they want to move you boys to east Los Angeles.
So for those who don’t know east LA, it’s known as the barrio for
most of LA’s Mexican street gangs. Therefore, it doesn’t take a
genius to figure out that East LA isn’t the place for a toe head, blond,
skinny white kid to show his face. After all, the badass locals would
literally eat me alive, beat the shit out of me daily, and eventually
turn me into either a white version of them, or kill me.
So my Grandma in very graphic detail explains all this to me and
I start balling my eyes out not only for the fear factor but because
I really don’t want to move away from her and the life I have. You
have to understand, my grandmother was the sweetest woman you
could ever hope to meet. She was cum lade at Penn State and a
terrific artist, poet, song writer, wonderful cook, and the person who
kept us on the right track. She fed us and told us the best bed time
stories ever – where we were always the hero’s. Most importantly,
she gave us the biggest gift of all – unconditional love. So moving
away from her with my now 26-year-old flakey mom with her new
drug dealing husband from the barrios of east LA to who knows
where, scared the hell out of me and made bath time a traumatic,
crying session filled with fear and anxiety I’ll never forget.
So flash forward a bit. Rather than move to the barrio, my
grandparents bought a modest house for my mom and stepdad in
a decent neighborhood some 20 miles away in Burbank where the
Disney studios are. The marriage was filled with violence, strife,
and visits to the barrio on “family” gatherings. It also included fights
to defend my younger brother, as well as myself, plus lessons on
how to saw off shotguns, hide in the bushes from local gangs, and
all around survival techniques that no nine-year-old should ever be
required to learn. After enough physical abuse, visits to the local
minimum-security prisons to visit my step dad, stabbings, and
unannounced visits from the local police, my mom figured out that
this was a bad guy and divorced him.
Million Dollar Broker
9
Unfortunately, this meant I had to step in to be the surrogate father
for my now two younger brothers while my mom was out looking
for a new man. This meant we survived off $100 a week, basically
living off MacDonald’s and whatever I could cook at fourteen.
Needless to say, I was pissed all the time as school became second
to survival. By the time I was 15 and a sophomore in high school, I
was expelled to continuation school for a prank where I put dry ice
in my math teachers back pocket. One week into high school and I
was summarily dismissed to where the other abandoned kids and
misfits went to “learn on their own schedule.”
One day an incident where, fed up with it all, I dowsed my mom
with a glass of milk for who knows what and that was it. “You’re
going to live with your father.” ‘Oh, shit’ I thought. Out of the frying
pan and into the fire. Now you have to realize, even though my
mom made questionable decisions about men, I still loved her. Even
though she’d been absent a lot I still needed her in my life. And all
I knew of my dad was from spending week long visits with him
during the summers in dreary Portland, Oregon. He would wake us
up to revelry every morning and pour cold water on us if we weren’t
up by 7:00 sharp (during summer vacation!) Now if you were a
normal kid you remember that the best part of summer vacation was
sleeping in until whenever you felt like. This guy took great pleasure
in the agony we felt, I’m sure channeling his navy days, where his
C.O. or military father did to him. Well, we were around five and
seven years old at the time and it left a distinct memory of the kind
of guy he was and the idea of being shipped off to this man was
almost as scary as moving in with Mr. San Quentin.
So, after a year-and-a-half of being told I was evil and living as an
indentured servant, along with a few physical confrontations and
being knocked around- I called my mom and told her I would be the
best kid ever if she would please take me back. Indeed, five days
later, I was on a plane home, back to sunny southern California.
Shortly after we moved back in with my grandparents because my
mom proved once again to be an unfit mother. We were back in bliss
at Grandma’s: unconditional love, three square meals a day, a ride
Scott W Johnstone
10
to water polo practice at 6:00 am, and good grades - all because we
simply were able to focus on being kids and good students which
gained us the respect of our classmates and teachers.
This was my senior year in high school and although I pulled it
together – water polo and swim team, good grades, my coaches’
and math teachers’ Teaching Assistants, great social life, home on
time, and the dream of becoming a doctor, it still wasn’t enough
to overcome the three previous disastrous years of mediocre
grades. Therefore, my chances of entering a university were shot.
So what came next was an odd surprise. A plan either devised
by my grandmother or an altruistic move on my dad’s part came
in the form of a phone call from my at the time estranged father,
inviting me to come live with him in Eugene Oregon to attend
Lane Community Junior College with the plan of eventually
transferring to the University of Oregon. So with no other plan
or opportunities, after graduation and with much trepidation I set
off for Oregon again.
The deal wasn’t quite as good as presented as my tuition, room
and board in his home was paid for but books, car, clothes gas,
etc. was my responsibility so I quickly found a job, enrolled as a
Biology major as the Dr. calling was still in me and I was off to
college. To avoid conflict and confrontation I spent as much time
on campus as possible. From early in the morning to dark I was
either in class, studying or involved in sports, mainly volleyball,
as swimming wasn’t much of a sport in Oregon, too rainy I guess.
I put in my two years and just as I was about to transfer to the
University of Oregon, my dad announced to me that he, his wife,
and new son we moving off to Portland. Now, Portland was three
hours away and if I wanted to continue to be supported with
room, board, and tuition, I’d have to change my plan and move
with them and attend a little known collage named Portland State
University, which just happened to be where my dad graduated.
It would be a great thing, according to him. Well that might have
been a good deal for him but to me I had been busting my hump
Million Dollar Broker
11
to go to the University of Oregon, as planned and had for two
years been getting to know the town and the people etc. to this end.
Moving to some new city simply to follow my dad’s life plan was
not appealing. However, as I didn’t have the funds to venture out on
my own, I went along.
Once again, long story short, I was in a new, unfamiliar town with
no friends and a campus and staff I never was properly introduced
to by my preoccupied “parents.” Things just did not work out. All
the while, I still had to have a job to pay for my car, clothes, social
life, etc. so I lasted about a week at this new school and all I could
think of was that I was wasting valuable time in my life as this just
wasn’t working out.
So a new plan came to me. I’ll take on more hours at work, save a
few bucks, and move back home. Take my chances and make a life
for myself. So I did just that. I saved $830, contacted my younger
brother living in Costa Mesa, California, a town in Orange County,
California near Newport Beach. I said “Hey bro, I’m headed home
and need to sleep on your couch for thirty days while I get a job and
figure out what I’m gonna do with my life.” He and his high school
buddies weren’t very thrilled about the idea as I was the big, mean
senior when they were sophomores in high school and I pretty much
hazed them all the time, but after pleading my case a couple times
they said thirty days and that’s it.
So I did just that and found a job in retail that paid the bills and
was also doing the one thing I knew I could do which was sales,
having done so in college to make ends meet. Another thing retail
allowed me to do was to make commissions, which if I hustled more
than the average employee, allowed me to make a decent living and
live above the poverty line. So as soon as I got my first paycheck
I thanked my brother and his roommates, bought them a case of
beer and moved to an apartment a block off the beach and shared a
room with a buddy I met who was looking to split the bills. We both
had small single beds and both snored like hell but it was heaven
compared to the couch and I was on my own in Newport Beach a
block from the sand and the waves.
Scott W Johnstone
12
“So what’s next for me,” I thought? I had this burning desire to become
more than a subsistence level retail guy. It’s not that that’s a bad thing,
but for some reason, I had visions of grandeur. Maybe it was the stories
my Grandma told me when I was a kid where I was always the hero. Or
the trip where I ran away from home at fifteen for a month with a buddy
to Wisconsin, where he was from, in late winter, where I saw the world
as it really was: tough and hard and if you don’t take action to better
your station you’ll be just another worker bee struggling to make ends
meet. Now that scared the heck out of me and with my grandma’s help
in overinflating my ego I knew I could do anything I put my head and
my heart into, no matter what the odds.
Now I wasn’t stupid, I knew I had blown the whole Doctor thing
and I knew I had to probably find a career in sales where I could get
someone to give me a shot and teach me the ropes. I also knew that
commission sales were what I was good at and that the higher the
sales price the better, simple math. So I started looking around and
meeting as many people as I could who were successful who might
point me in the right direction. Enter three key people in my life.
My girlfriend and two guys I happen to meet through friends that
happen to both work for the same company which at the time was
called “Coldwell Banker”. The girlfriend introduced me to one and
a girl I worked with at Nordstrom introduced me to the other. To this
day, these guys are two of my best friends and I’d throw myself in
front of a bus for them if it meant saving their lives.
The first guy named Bob sat me down and told me the inner workings
of how to go about getting a job with his firm, which by the way was
almost impossible for a guy like me. I had no diploma, no fraternity,
no relative in the business but he recommended me to Paul, whom I
had just happened to meet at a birthday party my girlfriend took me
to. Now, it just happened Paul and I also had a conversation about
the business at the party prior to Bob’s and my talk, but he was a
bit more reserved in his description as how to get a job as he was
actually hiring a “Runner.” His first “Runner”, as it happened, and
he was reading me as a prospect. In retrospect, it made all the sense
in the world as when I would ask a question he would always come
back with a question himself.
Million Dollar Broker
13
Well, I finally put two and two together and immediately called
Paul. I said something to the effect of, if he would be willing to
sit down and talk, I would make it worth his while, as he was
never going to find anyone with more drive, tenacity, desire or
raw talent than me. I needed someone like him on my team to
help me get hired and show me the ropes. I went on to say that
if he were to give me this chance he would have my undying
loyalty for life and could treat me like a dog and I’d happily and
willingly come back for more.
He asked me what I did and at the time I was selling menswear
at Nordstrom. He said “Great, I need a new suit so I’ll come in to
see you this Thursday and see if you can help me find something
suitable.” Now I was the king of hustle at what I did so I couldn’t
be happier.
Well, Thursday came and Paul rolls up, right on time and dressed
to the nines. He said, “I’m not sure this store has anything that is
my style.” Paul was more of a fine Italian suit guy and Nordi’s at
the time was a bit more conservative so I went about qualifying his
tastes and finding out what he had in his wardrobe and then went
about filling in the holes as every well healed man has to have at
least the basics.
Two hours later Paul left with six new suits, five new shirts, eight
new ties, two new pairs of shoes, socks etc. etc. All the while, we
really got to know each other and came to find that we came from
somewhat similar backgrounds and I could tell he liked my tenacity
and work ethic and I really liked his brutal candor.
He laid it out for me as clear as a bell. If I wanted a job I had
to go through no less than eight interviews, and an eight-hour
physiological test and then had to be recommended in by at least
two current brokers that would vouch that I was a “good guy.” He
went on to say he already had a candidate ahead of me that he liked
and that I would have to show him I could do a better job and make
him more money than this other candidate, who by the way, went to
the same fraternity as Paul.
Scott W Johnstone
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So I go about scheduling the interviews and before every one Paul
would prep me for what type of guy the interviewer was like. He
likes this but not that. Wear this but not that. His favorite game is
the NBA but don’t bring up his wife and kids. Be blunt about your
story of hard knocks but not too graphic. Emphasize your desire,
tenacity, ability to learn fast, you’re past sales experience and relate
it somehow to commercial real estate. Always be completely honest,
never puff, be humble but stick up for yourself, and tell him if he
goes with you, it will be one of the best decisions he’s ever made.
I can’t say enough about Paul. The guy virtually gave me the roadmap,
pointed out the roadblocks, mentored me through the process and
when it came time to make a decision between me and the other guy
took me on a little ride in his car. He basically had the green light to
hire either of us and I knew he had already had this talk with the other
candidate and the little ride we took was through our territory to get
my opinion of what I knew of commercial real estate.
First of all the car we were in was his bright red Porsche Cabriolet and
we were driving by an old Orange grove where a backhoe was plucking
trees out of the ground like a kid would pick weeds while doing his
chores. I turned to Paul and said what the heck are they doing to those
poor trees. He said something I’ll never forget. “Kid, you’re gonna
make millions off that land. By the way, you got the job and you start
when we open our new office in two weeks.” He said “you and me,
we’re the first hired, so we get a head start. Don’t let me down.”
I could hardly contain myself. In fact, I think I hugged the guy
and did like 10 fist pumps because someone in my life finally saw
something in me that I always knew myself and gave me a shot. Now
to tell the truth I really had no idea what I was getting myself into. I
was working for a great retailer at the time and my $20-35,000 was
pretty much automatic as long as I showed up and hustled but this
was a totally new experience. I had absolutely no business training.
The pay for Runners at the time was $12,400 annually, with a small
$200 gas allowance, which, by the way, living in Newport Beach or
for that matter Nome Alaska was far below the poverty level, so I
had to come up with a solution.
Million Dollar Broker
15
Enter my girlfriend. She and I had been paying for two separate
apartments but really living in one. We had been going out for a year
or so and there was either the choice for me to go find a couple guy
roommates or take the plunge and move in together. Now she had a
roommate and that was cool with her because she liked the idea of a
guy around for protection but was I ready to do this? This meant the
potential of marriage and I was only 23 years old at the time. I loved
her so I said to myself what the hell; let’s give it a shot.
So my first day at work I was scared to death. I had no idea what to
expect and really no idea what I was doing. Thank God I had Paul
reassuring me that if I just listened to him and didn’t say anything
stupid I’d get through training and be on my way to making my
fortune. One thing I was able to convince Paul and my other
interviewers was that because of my sales skills and experience that
I could definitely make it through the training program in just a year
and not the usual two-year program.
So I show up for my first day and hour early and couldn’t even get
in the building. I waited in my car until the office manager who was
the nicest lady, greeted me and helped me fill out all the appropriate
paperwork and get settled into my workstation or at the time they
called them cubes, because that’s what they were. Six foot by six foot
cubes with a little storage space for files a phone and that’s about
it. But let me tell you that cube was my castle. I was the happiest
guy on the planet. Behind me were the days of retail and ahead the
promise of a real career where I’d have the opportunity to work with
the top CEO’s and leaders of the community and become a fraternity
brother in the biggest Brokerage firm in the nation.
Well the next year was one of the most brutal of my life. I’d be in
the office at 6:00 a.m. and out no later than 7:30 p.m. When we had
special projects or presentations the next day I would literally work
until 2:00 am and then sleep under my desk with a book propping
up my head as a pillow and back at it at the crack of dawn. One
thing I knew was maybe I didn’t have the pedigree but no one was
going to outwork or out hustle me. The thing of it is that the business
isn’t brain surgery. It’s a lot of facts and figures, mixed with client
Scott W Johnstone
16
psychology, basic sales skills, business development, business
processes, marketing, and closing deals. Being friendly and helpful
to the senior guys goes a long way and you want to make a good
reputation for yourself because eventually you’re going to need the
senior brokers to bring you into deals after your Runnership (that is
if you’ve made a good impression) because this business is about
interdependence. This is a fancy word for teaming to spread the
work so you always have a consistent deal flow and not the spikes
and dips the lone brokers’ experience.
So fortunately I work hard enough to make a good reputation
for myself I dig up enough deals to make my mentor, Paul some
incremental income, free his time up to chase girls (he was single at
the time), and have a bit of fun. Then comes a lucky cold call.
Back in the day we were called “Runner”s for a reason: we
delivered proposals and documents because time was of the
essence and there was no Fed-Ex. We didn’t have fax machines,
Internet, or color copiers. Our secretaries typed on those IBM
Selectric Typewriters with three copies of carbon paper. We were
in the dark ages, but you know the one thing that hasn’t changed
– cold calling. It’s either done in person by walking buildings
while introducing yourself to a decision maker or by phone,
which was my specialty.
I was good at charming my way past the gatekeeper, receptionist,
or personal assistants and always tried to get a hold of the CFO or
equivalent. The reason being he’s the guy responsible for the money
and takes it very seriously. So one lucky day when the Gods were
shining on me I got through to the right guy at the right time and
sure enough he was about to sign a lease on a 110,000 square foot
warehouse that they had been in for a 10 years but had no broker
advising him on the market. I asked a few questions and sure
enough, his landlord was taking him to the cleaners. I suggested we
meet briefly to review a survey of all the alternatives that met his
parameters, invited my mentor to the meeting and sure enough after
a brief tour, we found a better building for about 20% less than his
current owner was proposing.
Million Dollar Broker
17
To make a long story short we closed the deal, as I was only
eight months into my training and my mentor was ecstatic and
magnanimous enough to include me in on 20 percent of the
commissions, which he absolutely did not have to do. My share of
the deal was $47,000 and having been living in near poverty, to me
that was a tremendous amount of money to receive all at one time.
So that’s a big win but that’s not it. I finish my one year training,
““Runner”ship” program, they throw me a big coming out on your
own party, I get put on a couple small low income listings, which
I was happy to be on but quickly realized it was really up to me to
take what I learned and put it to work and get it done. If I wanted the
brass ring, I had to reach for it, and do it harder than I ever had as a
“Runner”. At this point, it was crunch time.
So I pulled out all the stops, cold called my ass off, met with every
owner in my market, met with all the successful brokers to get any
insight I might have missed. I drove every building in my market on
weekends, took pictures, and built a database, which at the time was
unheard of as there weren’t even computers yet. Word, excel, Adobe,
Google, Costar etc. were non-existent. Therefore, I had to invent the
tools to make me the best in my market and make no mistake that
was exactly my goal. Be the best or die trying. I wrote a newsletter
and sent it to all the owners, tenants, banks and anyone who would
listen because if they at least new my name and associated it with
me being an expert then I could at least have a better chance of
getting in the door which was half the battle.
At this point I’m half way through my rookie year with all the other
first year guys. Basically, I’m competing to make the most money
and therefore, earn a trophy saying “you’re the best first year guy
that year.” More importantly, however, is the respect of the senior
guys who might give me a shot of working together on a project and
increasing my income.
So it’s a Sunday night and I’m watching the local news and there’s a
story about a bank building burning down which just happens to be
smack dab in the middle of my territory. To make things better I had
Scott W Johnstone
18
just put together a market package of all the competitive buildings
in the area together with statistics on available space, floor plans,
photos, and an executive summary. It was perfect. All I had to do was
to get to the office by 5:00 am, make 30 copies for all the tenants in
the building coming to their burnt down building and have enough
cards to hand out so I could be their broker and help find them a new
home.
Now I’m not a fire engine chaser but to a young guy in the business
it was perfect. I rolled up in my suit and acted like I owned the
place, walked under the fire tape and into the bank branch offices
and asked for the president of the bank. I briefly introduced myself
and he says to me kid, you’re exactly the person I need to talk to.
For those who don’t know banking rules, well those rules state that
a bank can’t close during normal operating hours for more than 24
hours and just like that, we were off to find him a new location.
Now you have to understand the bank wasn’t the only tenant in the
building. They were one of 30 other tenants and I was handing out cards
and market studies like they were hotcakes. I was so busy I had to bring
in two senior guys just to handle the paperwork and deal flow. That
chain of events alone made me gross commissions of $250,000 that
year and I still made over 20 other deals especially after I made a bit of
a reputation for working hard and sharing the wealth. By the time my
rookie year was over, I was far and away “Rookie of the Year” but also
number four in the office out of 45 other brokers. Most of which were
senior guys all wondering “how did this 24 year old kid do it?” So I
chalked it all up to luck, dedication, desire, drive, my unrelenting passion
for overcoming the odds and, of course, my trainer who gave me the
knowledge to realize what to do when presented with an opportunity.
After all the fanfare of that year had faded my realization was:
“You’re only as good as your next deal.” So I took some time to
think about what I really wanted to be in this industry. Now one
bit of information that will mean more to you later in the book is
that I was trained as an “Industrial Broker.” That means I worked
on warehouses and R&D facilities with companies who had need
for such facilities. I worked with manufacturers of nut’s and bolts
Million Dollar Broker
19
and high tech weaponry, clay pots, and widgets. Well that is a very
specific vertical specialty and once you choose your field of expertise
within the industry you usually never switch, simply because the
time it takes to learn all the detail is so long that even considering
making a change is daunting to say the least.
Because I had learned my craft in a newly developing market with
rapid housing growth and lots of business migration, I was fortunate
to have dabbled in both industrial properties and office buildings.
Now office buildings have a very different type of clientele who go
to work every day in these facilities. Almost everyone wears a tie.
Industrial clients, by contrast, wear overalls and jeans with work
boots and it’s usually not a very clean environment. Now that’s not
a knock on Industrial facilities or companies because they are the
backbone of our economy. They make things and distribute them
to the country and the world. However, the people working in the
two different types of facilities are usually very different. Their
dress, etiquette, style, tone, way of communicating and level of
professionalism is very different.
I bring this entire story up because of what happens next. One day
I’m at my cube, minding my own business, completely immersed
in whatever I was into that day and out of the blue, the office
administration manager comes to me and says that three senior
managers want to see me right away. Now you know that feeling
you get when you’ve just been called into the principal’s office and
you’re not sure what you did but you know it’s bad. Well that’s exactly
what I’m feeling. What the hell did I do? So I sheepishly walk into
the room with the kind of body language that says whatever it is I’m
sorry and I’ll never do it again. Well I immediately notice that they
all have big smiles on their faces and a feeling of relief completely
baths me but I try not to show it. “So guys what’s up?” I say with
a little confidence in my voice. “Well Scott as you know you had
a great year last tear and we can’t thank you enough for your hard
work and dedication.”
‘Ok,’ I think, ‘this isn’t bad so far.’ They continue on to say, “We
have been thinking as a group that there is a hole in the production
Scott W Johnstone
20
team, here in the office, and we’d like to talk to you about it.” I think
to myself, ‘a hole in the production team. What the hell is that?’ And
they continue on, “Well, land values are on the rise here in South
OC, and there is a consistent migration trend of residents because of
increased housing starts and that’s going to mean a lot more office
product being built in the next ten-year cycle.”
Don’t get me wrong; just because I didn’t go to a big school or have
a business degree I knew exactly what they were leading to. You
see I had made myself read every economic paper on the industry,
read every research paper on macro and micro economics, created
my own database and written my own newsletter, reporting on the
statistics and trends in the market and I knew exactly what these
guys were talking about and what they were about to propose. They
wanted me to fill the hole in the office team and wanted me to lead
the group. I was in, but like every good negotiator wanted to know
what was in it for me. Before I even said a word, I calculated the time
it would take to retool my business, realign myself with the senior
office team, the time it would take to build my brand as the expert
in this new specialty and how much of a dip in income I might feel
in the short run. I also knew that this was a huge opportunity as our
office department was lacking a leader unlike the five super alpha
males already vying for supremacy in the industrial division, which
I was currently part of.
I responded, “So guys what’s in it for me? It sounds daunting!” They
go on to say I have their undying support and that I would be receiving
my own “Runner.” I would be receiving my own “Runner?” You
have to understand; getting your own “Runner” is something ten-
year vets only rarely receive let alone first year rookies. They went
on to say that they would build the department around me and as
long as I continued producing I’d continue to receive assistants and
“Runner”s as they graduated and in doing so build my own little
force of team mates and with that would come, leverage, free time,
extra earners and peace of mind.
So we shake on it and sure enough Carol, a Broker form New
Orleans who was looking to migrate to California was my very first
Million Dollar Broker
21
“Runner”. Even better, she was a young vet that really only had to
be introduced to the market. She had all the instincts of a seasoned
vet but just lacked the market knowledge. She has this wonderful
infectious laugh that clients love, brains, great instincts and easy
on the eyes. We hit it off right away and were an unstoppable force.
I made it a point of introducing her to everyone and in short order
we dominated the listing market and did more tenant representation
business than any other team in our office. We were the go to team
when it came time to partner with investment brokers and we made
far more money than we set our goals for. Carol graduated from her
training program two months early, moved to the Newport Beach
office, and went on to make her fortune and we will be lifelong
friends.
That year I was among the top five producers in the office again
but the staff was getting growing, which meant more competition
(although that didn’t seem to matter). I just naturally knew I would
be among the top five producing brokers in the office and eventually
surpass my mentor/trainer (who by the way was just ahead of me
and never let me forget it!). The reason I knew this was going to
happen was for one reason. I dedicated my professional life to being
the best. Not from a place of arrogance, but to prove to myself that I
could overcome the odds and be the best. It was my passion.
As the years went on, my teams and I were consistently the go-to
guys for our market. I went on to receive a number award several
times over the years. I trained many young Runners and always
installed the mantra “Be the best.” Now my mentor/trainer was
occasionally a bit of a tyrant and I had a little of that in me, too, but
I always cared deeply for my teammates and protégés as well as co-
workers as they were my extended family.
I went on to work for CB Richard Ellis for almost 14 years and those
were the best times of my life. During those times and to this date,
I’ve been fortunate to build great relationships with fellow brokers
but also with the business leaders in the community. We’ve shared
many great off-work times together. We’ve been big wave surfing in
Fiji, Pipeline on the North shore of Hawaii, and on a 100-foot luxury
Scott W Johnstone
22
yacht in Cabo. We’ve skydived and shark dived is the same day in
Hawaii. We’ve snowboarded from helicopters all over Canada and
in the States. We spent ten days with ten guys on a 173-foot Yacht in
the Mediterranean, while sightseeing on Capri, Sardinia, San Trope,
Majorca, and Ibiza. Without the brokerage business, I would have
never had the chance to meet and play with such great people, and
for that, I’m eternally thankful for the gifts the business has brought
me.
In 2000, with the help of a few buddies we started a company called
Enfrastructure and later bought and merged it with a company called
TechSpace. We still own and thank the stars we occasionally receive
modest checks for our ownership shares even though we no longer
have day-to-day operational duties with the company. This company
is also a commercial real estate related company so the years in the
business paid off here as well.
“TechSpace is the nation’s premier full-service facilities and
infrastructure provider. We integrate world-class, flexible office
space, state-of-the-art technology services, and business process
outsourcing solutions, enabling our customers to focus on their core
business. In June 2002, California based Enfrastructure acquired
New York based TechSpace, a leading provider of alternative
office space and infrastructure services to growing and established
companies. In June 2003, Enfrastructure formally changed its name
to TechSpace to reflect the company’s value proposition and leverage
the brand awareness built by TechSpace in other markets throughout
the years. Today, TechSpace has five locations throughout the
United States: Orange County, Los Angeles, and New York (three
locations).” www.techspace.com
After helping build TechSpace and making it profitable as Co-
founder and EVP of Sales and Marketing, I caught the brokerage
bug again and called a couple of my buddies (one of which was an
old Runner and Partner by the name of Greg) and we put our team
on the market. You have to understand, even though I was out of the
market for over three years, fortunately my reputation as a market
leader and producer followed me and we shopped ourselves around
Million Dollar Broker
23
and found what was the best platform for our clients at the time in a
well know company, Grubb & Ellis.
In short order, we became one of the leading teams at Grubb and
quickly built back our book of business and continued making the
dollars expected in this industry. Eight years at Grubb & Ellis and I
was happier than ever although the entrepreneurial bug was in my
ear telling me to start my own company. “Give it another shot. Be
your own boss. Do it your way”... All the things the bug tells you
to do have finally inspired me to go for it. So in the worst economy
since the great depression I took the leap to build Bridge Commercial
Properties. Fortunately, I have a client base built up over 25 years
and the drive of a 20 year old, the wisdom of a 50 year old and a
family that inspires me to be the best I can be every day. As a result,
I built Bridge Commercial Properties in January 2011.
“Bridge Commercial Properties is a commercial real estate
brokerage firm dedicated to its core values, which are providing
the highest ethical standards while delivering unsurpassed service
and market knowledge, allowing our clients to make better, faster
decisions and reducing their overall cost of operations. Bridge
Commercial Properties has the combination of a sole proprietor’s
attention to detail with institutional experience and knowledge. Scott
Johnstone, Bridge’s founder possess over 25 years of commercial
real estate advisory and brokerage experience with a total of over
$3B in transactions. Areas of specialty include corporate tenant
representation, acquisition and disposition advisory services as
well as asset marketing and leasing services in Orange County
California. A leader in the industry, Scott Johnstone has managed
several brokerage teams representing, everyone from the small mom
and pop startup company to public, Technology Entertainment,
Financial, Fortune 500 Corporate and government clients. Widely
recognized for transaction services locally in Orange County he has
also completed numerous complex real estate transactions in major
US cities.” www.bridgecre.com
I’m very proud of these achievements. They are true stretches for
me as compared to where I came from. However, they are not the
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24
things that I’m most proud of or bring me the most joy in life. I’m
sure, like you, the things that make you happiest in life are family
and friends! My children, friends, and grandmother’s unconditional
love are my core. My greatest calling in life is to pass those gifts
onto others. This book is a small attempt to give back the gifts I’ve
received and hopefully help people better their lives.. This is my
unconditional love.
It’s that love that inspires me and those around me. The knowledge
and confidence that someone in my life cared and saw the best in
me inspired me to do great things. Now I strive to give people more
opportunity and experiences than they ever had as a kid. Such as
giving my children the opportunity to shine and become great people
with rich lives of their own.
Not only did I do modestly well in business but I also married, had
two wonderful kids, and bought a home I never thought possible as a
kid. In addition, I made friends with most of the community leaders
who are still my friends today. I traveled the world, taught myself
to surf, snowboard, and scuba dive. In addition, I taught myself to
run a company and to lead and love openly. I pilot my own boat, the
third I’ve owned in partnership with the greatest guy ever, Jimmy
U. I have raised my kids to be community leaders. My daughter is a
fashion model for the Ford Modeling agency and an honor student.
She’s poised beyond belief for a 19 year old. She also trains kids
how to ride horses and jump English and has her eye on owning her
own online fashion company.
My son is a 4.0 student, is 6’2” and won the JV football team MVP
award last year. He has a girlfriend who’s the sweetest girl in the world
and just happens to be a “Volcom” fit model. He surfs, snowboards,
spearfishes, and ran Varsity track as a sophomore. Please don’t tell
him I said this but is one of the calmest and thoughtful young men I
have ever met. (Shhh.)
So that’s my journey. One filled with strife, overcoming the odds,
hard work, faith, and success. It’s a story that keeps on going
every day but there is one thing I’ve now dedicated my life to. I’m
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25
dedicated to giving anyone (who is willing to listen, learn, and act)
the opportunity to do just what I did: build a fulfilling life and do
it on your own terms. I was fortunate to have been given a shot. It
doesn’t matter who you are as long as you want it badly enough. We
are living in tough times and it doesn’t matter if you’re a student, a
worker in search of a change, someone in the industry trying to up
your game or whomever. In this book, I’m going to give you the
step-by-step process, strategically, tactically, psychologically, and
with my personal insights to be great in this business.
One thing! This is not a get rich quick program. This is a life changer
and anything worth doing is worth doing well. This will take time,
but remember that it’s all worth it. I’ll be here for you as a mentor,
all the way, no matter what. So I welcome you to the journey to
changing your life, your perspective on wealth and building a better
future for yourself and your family.
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Chapter Three
The Ten Commandments of the Million-
Dollar Broker
There are absolute undying truths for being the type of Broker who
consistently produces $1,000,000 in gross commissions or more.
They fall into what I call commandments, but they really are life
lessons for this business. As I mentioned before, there has been an
influx of get rich quick guys in the industry and they rarely know –
let alone practice – these commandments. The guy I mentioned in
the first chapter practices them unconscientiously every day, as they
are part of his character. As much as I’m going to give you lessons
on how to be the best broker, I’m also going to give you the lessons
I’ve learned over a 50-year lifetime of how to be the best business
person possible.
Now I’m no one to preach and this isn’t some religious sermon but
there’s a hard way to go through life and business and there’s an easy
way. Now because of my upbringing I’ve usually chosen the hard
way and if I can help you avoid those mistakes this book has done
its job. A smart man once asked me why I chose to swim upstream,
when the rest of the world is swimming downstream. He said, “It’s
so much easier to swim with the current!” That is my first bit of
advice: swim with the current, just do it intelligently. So here we go.
I’m going to give you a brief look at the Ten Commandments and
then dedicate a chapter to each. If you need me to elaborate further
contact me directly and I will be more than happy to do so.
I. Choose where and whom to work with wisely.
There are almost an infinite number of firms out there and a hand
full of major ones. Do your homework, find an insider/mentor in
each of the firms you’re thinking about, and get to know them. Take
them to lunch. Pick their brain; ask them what’s good, bad, or ugly
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27
about where they work. Usually, they’ll tell you everything, but a
manager won’t. His interest is somewhat aligned with you because
he makes money when you do. However, they are political beings
and will only tell you what they want you to hear. So make a broker
friend or two within the firm and try to find one of the top producers,
as they have the best perspective and knowledge, as they have made
it their business. That’s why they are where they are, as this is a
connection, information, and process business. The broker with the
best combination of all three wins. So do your homework in advance
and start weighing the options. Picking the right mentor and partners
can mean the difference between being good and being great, so
take your time, ask around. Everyone has a reputation. Eventually
you’re going to be your own boss but you might as well just pick up
a great partner or two in the process.
The alternative to working for someone else is to build your own
company. At least you’ll really know who you’re working for and
you don’t split commissions with the house. The benefits are that
you answer to yourself and your client’s alone. No pecking orders
or layers of managers you have to kiss up to. All you have to do is
surround yourself with good people, have a good business plan,
a good value proposition and a strong differentiator and things
should go well. Now that’s a simplified version of it but I’ll get
into the nuts and bolts of it in the next chapter. The downside is
that these are tough times. Therefore, you’re going to need enough
financial runway to last you two years. Now my financial runway
came in the way of having built up a client base that follows me
pretty much anywhere. That client base combined with my shares
in TechSpace (I receive a small but important check bi annually)
enabled me to set up my own shop. The worries and fears will be
there from time to time as with any job but the rewards of running
your own show are indescribable. You’ll work twice as has you
ever have for at least two years and maybe more depending on
the economy, but it’s yours and the feeling of pride is worth
all the sleepless nights because in the end if you follow the
commandments you’ll make it and make it big. See my 6-CD series
on, “How to Build Your Own Million Dollar Brokerage Firm”
www.commercialrealestatebrokersacademy.com
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II. Specialize.
Now there are several choices and you’ll have to find what best suits
you, and your background, preferences, likes, dislikes, intellect,
geographic, personality and desires for your future. Generally, the
following are the primary types of property specialists.
1. Office Properties
2. Industrial Properties
3. Retail Properties
4. Land Sales
5. Institutional Investment Sales
6. Private Client Group Investment Sales
7. Multi Family Investment Sales
8. Hotel and Resort Sales
In this chapter focusing on “Specialization,” I’ll give you as
much insight into what I think are the best area’s to focus, but
ultimately, you’ll decide based on a myriad of choices presented
to you by your life experiences, connections, and advice from
those in your market.
III. Be the best.
This chapter will cover the most information in the book, as it should.
If you’re going to commit to this industry, which I know you will,
you might as well commit to being the best: the go-to broker. This
will be the biggest advantage to you making more money, having
better relationships and having the life you always dreamed of. It’s
not that big of a difference from being good and being the best. It’s
mainly commitment and some insight on how to do it and that’s
where I come in. I’ll show you the rules of the road the step-by-step
process of being the best.
IV. Drink from the seven buckets of revenue.
There are primarily seven ways to make money in this business.
Some specialties have less than others but for my specialty there
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are seven and that’s a good thing because this is a cyclic industry
and there are different buckets of revenue that are robust in a
down market but some that are not. Make no mistake, all seven
buckets of revenue will be available in the good times. However,
it’s the measure of the broker who can thrive when things are
down, so you should know all seven inside and out, in order to
have the revenue you want. Keep in mind I’m speaking from the
perspective of an “Office Broker.” one who specializes in office
buildings and land within my market and wants to take advantage
of all the buckets of revenue my market offers. In the Chapter on
Revenue, I’ll go into all the specialties and give relative examples
of where they make money but for now, here is how an Office
Broker can make money.
1. Exclusively listing property for lease.
2. Exclusively listing income property for sale.
3. Exclusively listing owner occupied property for sale.
4. Exclusive tenant representation for lease.
5. Exclusive user / buyer representation to purchase.
6. Corporate sale lease back.
7. Land sales.
V. Set measurable, personal, business, financial, and life
goals and review them quarterly.
I’d like to reference Tony Robbins loosely. There was a study of
a large group of similar people, who were asked to do just this.
After a period of five years, a study was done on the group. Of the
participants in the study, only five percent (5%) followed through
and actually practiced this process. They were found to earn more
than the entire rest of the study group combined and found to live
richer, fuller more involved lives to boot. Need I say more?
VI. Be a person you can be proud of.
Ethics are a personal choice. This is a big money business and
a very competitive one at that. There will be times when cutting
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30
corners, telling half-truths, puffing, backstabbing, speaking poorly
behind someone’s back or any number of tempting things will pay
you big money in the short run but will ruin your reputation for
the future. Reputation is one thing that you can never loose. Be it
good, bad or hopefully great has everything to do with ethics and
that little voice that speaks to you before any choice you’re faced
with. With assistance of a well-known document called “Code of
the West,” you’ll get a great lesson on the do’s and don’ts and some
etiquette lessons of the business. This chapter is probably the most
important of them all. If you want a real career and life filled with
joy, happiness and the respect of your family, your peers and most
importantly yourself follow this chapter as though it’s scripture for
business. At the end of the day in the initial years, you might do
slightly less business, but remember: this is a marathon and not a
sprint. The broker with the best reputations always is given more
opportunity in the end and eventually this one issue will become a
huge multiplier of income. If you’re going to make this change in
your life, as I know you will, be the best you can be and be a person
you can be proud of.
VII. Build lasting relationships.
One day, 10 years from now, in a meeting taking place without your
knowledge, someone who you were nice to, gave some advice to,
or happened to hit it off with or did something to change their life
for the better, will be in a position to recommend a broker for a very
lucrative assignment. They are going to remember what you did and
they are going to say, hey, I have the right person, and believe me,
they are it! Before you know it and without you even having to pitch
the business, you have just made an extra $100,000 that year.
I have a buddy named Scott who owns a few well-known companies,
where we both met at the early stages of our careers. I went on to
become a pretty good broker and he went on to make into Forbes
as one of the top 40 wealthiest people under 40 in America. He and
I both hit it off at a time when we both had nothing. I represented
him and his father in a small deal for their first office space. I really
Million Dollar Broker
31
had to go to bat for them against the owner because I had a feeling
about their business. I really liked them and wanted them to catch a
break. Now they had no money and the owner says to me, “Ok, I’ll
do the deal with these guys, but if they go down and I’m left holding
the bag, you’re going to owe me twice the commissions you’ll make
on this deal.” Without hesitation, I said “yes.” That relationship has
lasted 25 years, and the stories of that friendship could fill several
books.
VIII. It’s a marathon, not a sprint.
If this is your get rich quick solution then stop reading now. I mean
it. This is a life changer, a career changer, a perspective and wealth
changer, but it’s not quick. Now I will say that the time will fly by
like no other industry you’ve been in. Remember you get out what
you put in so you’re going to find that you’ll be putting your all into
this and when that happens, time flies (but in a good way). First,
you’ll be a trainee, then a Rookie, then a midlevel vet, and finally
the go to broker. It will all happen like a blur, because life is short
and you hear that adage often, so take my advice and treat it like a
Marathon. If you take your time, prepare properly, and learn as you
go, you’ll win the race. I have a “Type A” personality and am very
impatient by nature, yet sometimes this is a “hurry up and wait”
type of business. The sprinters in this business burn out quickly,
take short cuts, and hurt their reputations and their families. They
are perceived to be in it for the short run and that’s not what it’s all
about. Another adage would be: “It’s a chess match not checkers.”
Think 10 steps ahead not two. I’ll go into this more in the chapter
to come.
IX. Have fun while saving money and have a great life!
You’re going to make more money than you’ve ever thought you
would. It’s a fact. It’s going to happen. With this influx in income
comes the desire to spend it like it’s a constant! Now over time and
on average this will be true but until you’ve established yourself
and have a full pipeline on a consistent basis, do yourself the favor
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32
of learning the basics of saving and investing. Even after you’re
the master of the universe, never stop investing because there may
come a day when you may want to sail the world for a year, build
your own business, open a surf camp and hotel in Costa Rica, or
whatever. Most likely, you’ll drive the car of your dreams, live in
the best neighborhood, have a boat, etc. The thing of it is that you
can have all of those things and at the same time peace of mind that
if, God forbid, some disaster comes your way, you’ll be prepared
financially. This is an all commission business and there are cycles
both good and bad. And even though you realize this (and your
nervous system will learn to take it in stride), you may have a wife
who will drive you crazy unless she can see six zero’s or more in you
financial statement at any given time. I’ll also discuss the ultimate
killer in life: retirement. Please never do it, but if you do, do it in
style. We’ll get into the various ways to live the good life while
putting enough away to continue to do so if you, for some strange
reason, decide to leave the business.
X. Give back
Now this may seem cliché but the best feeling in the world is giving
back to those less fortunate. I believe that charity begins at home so
take care of the spouse and kids first. But don’t wait too long after
being in the business to choose an organization or organizations that
you can give your time to, not just money but your time. Volunteer
to be on a fundraising committee. Become a Big Brother or Sister
or prepare food on a regular basis for the homeless. Volunteer at
your local church. Become a board member of one of the local
chapters of a major charitable organization. You’ll benefit from the
knowledge that you’re making a difference in people’s lives. It’s
why I’m writing this book. I want those who never had the chance or
the support to know there is an alternative and I’m going to give you
a leg up. One person did that for me and I want to be that person for
as many people that I can reach. The secondary result is that giving
to others has a mysterious way of giving back to you. Someone
recognizes your work and recommends you for a job. You receive a
community award that inspires your kids or someone close to you
Million Dollar Broker
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to do the same. It’s the notion of the movie “Pay it forward.” Good
begets good and who knows before you know it you’ve made an
impact on this world for the better and that’s what I believe to be all
of our higher callings in life.
Now this is the point in the book where you start to question yourself.
Q: Can I really do this?
A: Absolutely. If you want it bad enough it’s yours.
Q: Do I need a special license?
A: No, just a regular real estate license.
Q: Will I be accepted?
A: Be nice, carry yourself with confidence and people will accept you.
Q: Do I have the time?
A: Make the time!
Q: Do I have a mentor?
A: Yes. I’m your first of many to come. People love to help others.
Q: Is this a big change?
A: Not any bigger than changing a job. It’s big but that feeling passes.
Q: Do I have what it takes?
A: If you have the desire, a high school degree, and can learn, then
YES!
Q: Will my family support me?
A: If you have one, they better, or they’ll be left behind and calling
for a loan when you make it big.
Q: Will I have the cash until the revenue comes in?
A: Find a way! Live cheap, get roommates, and call in all your
markers.
Q: Do I have to wear a suit?
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34
A: Yes. Until you’re the Alpha. Then you can wear anything you want.
Q: Will I have to get a new car?
A: You’ll have to tour clients and it depends on how big of a shit
box you currently have. If you need to, lease something cheap
with four doors because in short order you’ll have the car you
really want.
Q: Can I compete?
A: The competition is internal. Never forget that.
Q: Can I get a job with one of the best firms?
A: If they are hiring and if you follow my steps for interviewing, it
will be hard not to want to hire you.
Q: Can I find the right trainer?
A: You already have one in me, so just focus on finding a good one
wherever you land.
Q: What will I need if I start my own company?
A:
• Your real estate license in your state,
• articles of incorporation with a fictitious business name,
(preferably an S Corp. use an attorney about $1,200),
• a bank account to receive and write checks,
• a phone, a desk, a computer, internet access
• business cards ($50 online),
• a web address and e-mail, (Use Go Daddy. $50 per month)
• Costar Real Estate Information services, $215 per month.
• A website (there are hundreds of premade sites you can
customize and they are free if you pay the monthly $50
hosting fee.) There are plenty of books that will walk you
through the process. It’s not brain surgery. It’s basic blocking
and tackling.
Q: What are the steps to getting my own company going and
getting results?
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A: See www.CommercialRealEstateBrokersAcademy.com and
get my 6 - CD Series, “How to Build Your Own Million Dollar
Brokerage Firm”
Q: How long will it take?
A: It will take about twelve to eighteen months to make real money
on average depending how hard you work and what your
dedication level is.
Q: What technology will I need?
A: A computer. Most firms supply the rest.
Q: Do I need employees?
A: Not if you’re with a firm. They have all it takes.
Q: What documentation do I need?
A: A driver’s license, auto insurance and a Real Estate License in
your state.
Q: How do I get clients?
A: Keep reading, there are several ways and later, I’ll go into great
detail. Friends, relationships, cold calling and walking buildings
introducing you and your services to the tenants and owners for
a start.
Q: I can’t do this.
A: Once I asked a psychologist buddy of mine about this question.
What you’re really saying is you don’t want to do this because
you’re afraid of failure. The answer is if you want it enough,
you’ll will yourself to do it. You’ll find the courage to say
“What the hell am I waiting for?” If your reason for change is
big enough, you can do anything. This is simply making a job
change or choice that takes a little sales skill, organizational skill,
making new connections, and a learning a few new processes. If
you can mix in some charisma and a little fifth grade math, this is
unquestionably “do-able.”. Can you do this? Of course you can.
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Let me tell you that I asked myself each and every one of these
questions repeatedly prior to taking the plunge. This is the natural
process of gauging risk versus reward. We have two basic forces
driving us. They are fear and greed. Fear is always the dominant
emotion, as it’s a survival instinct. We have all heard of “fight or
flight response” Flight is the fear part and fight is the greed part of
this equation. I don’t know where you are in your life, so I can’t
answer these questions for you. But I do know this. This opportunity
is worth fighting for.
I also know this. I came from the wrong side of the tracks. I had
very little family support - my depression era grandmother was the
only one behind me emotionally. I had very little financial resources
when I made the plunge to learn this business; I was a retail sales.
employee making maximum $35,000 per year with not much future
ahead of me. I hadn’t graduated college but I did have a few things
going for me. Number one was courage, I knew I had it in me and
knew if given the opportunity I could do anything.
Second, I had a mentor and I’m here to tell you that if you’ll have
me then I’m honored to walk you through the process and be your
mentor, plus I’ll help you find others who will advocate you.
The third thing I had was desire. I had that hunger - that thing that
drives you to prove to yourself that you can be better. It’s hard to
describe “it” but if you have “it,” you know it. That one thing is
all it takes. The rest will take care of itself. Have faith in yourself.
Tell people about your desire to succeed and they will naturally get
behind you. The best quality in people is that they naturally like to
help others. Build your courage, fuel your desire, build your team
and I’ll help you accomplish the rest.
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Chapter Four
Commandment I: Choose Where and
Whom to Work with Wisely
Commercial property exists to serve the residential base that surrounds
it. Other contributing factors to the size of the Commercial Real Estate
base in a given area are the number of shipping ports, commercial and
international airports, railroads, freeway systems, free trade zones,
residential development, and a positive population migration trend.
The statistical data for major cities charting migration, population
growth, unemployment, available base of commercial property is
constantly changing. Go to these websites to do your research on the
best market for you.
• US Census Bureau www.census.gov
• www.cbre.com (market research section)
• www.cushwake.com (market research section)
• www.grubb-ellis.com (market research section)
If your current city isn’t on the Census.gov list, don’t worry, neither
is mine. I’m in Orange County, California and we have a base of
office space that is approximately 100,000,000 square feet. There are
hundreds of markets around the United States that have commercial
bases of product that will support hundreds of brokers, that the best of
which will make a million dollars a year or more. I focus on a relatively
small patch of office property of approximately 35,000,000 square feet
and in my early years, which were some of my best, my base of product
to work on was a mere 5,000,000 square feet. Income is determined
by how much market share you have, buildings you list, tenants you
represent, buildings you sell, land you sell for development etc. It’s ok
to be a big fish in a small pond or vice versus, just do your homework
and find a market your comfortable living near and choose it. It’s
probably in your own back yard.
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Go to www.BridgeCommercialProperties.com/realreport to view
the latest version of our newsletter and understand the measurable
metrics in my market.
The next step is to research all the major commercial brokerage
firms in your area or the area you want to focus on. Next, call
them all and ask for the manager. After leaving a few voicemails
regarding how much you would like to come work for the
firm, your call will eventually be returned. When your call is
returned your sole goal is to get a recommendation and contact
information for a top broker in the office who you can speak to
about the business. You can also do this online, as every firm lists
their brokers and managers. You want to make an impression
that you have desire, are tenacious, and you want the manager to
remember your name as well as refer you to the broker himself.
So be persistent and apologize for being a pest but be exactly that
because tenacity is what he’s looking for. Below is a list of the
top firms I’ve surveyed but results change based on the market
you’re in, so do your research. Also, it’s the person you work for
as much as the company so choose well.
CB Richard Ellis is the global leader in real estate services.
Each year, they complete thousands of successful assignments
with clients from the gamut of industries. This volume creates
market knowledge that allows them to seize opportunities, speed
the business process and creates the most thorough, precisely
accurate picture of global commercial real estate conditions and
trends. Every day, in markets around the globe, they apply their
insight, experience, intelligence, and resources to help clients
make informed real estate decisions.
Colliers International provides a range of services to commercial
real estate users, owners, investors and developers worldwide.
Primary services include consulting, corporate solutions, investment
services, landlord and tenant representation, project management,
property and asset management, valuation and advisory services.
The organization serves the hotel, industrial, mixed-use, office,
retail, and residential property sectors.
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Jones Lang LaSalle is a financial and professional services firm
specializing in real estate services and investment management.
Their more than 30,000 people in 750 locations in 60 countries serve
the local, regional, and global real estate needs of those clients,
growing the company in the process. In response to changing client
expectations and market conditions, they assemble teams of experts
who deliver integrated services built on market insight and foresight,
sound research and relevant market knowledge.
Cushman & Wakefield assists clients in every stage of the real
estate process, representing them in the buying, selling, financing,
leasing, managing, and valuing of assets, as well as providing
strategic planning and research, portfolio analysis, site selection
and space location, among many other advisory services. Its
13,000 worldwide employees, located in 231 offices throughout 58
countries, assess each client’s needs and implement solutions that fit
the client’s strategic, operational, and financial goals.
Grubb & Ellis Company is one of the largest commercial real
estate services and investment companies in the world. With 6,000
professionals in more than 100 company owned and affiliate offices,
Grubb & Ellis Company draws from a unique platform of real
estate services, practice groups and investment products to deliver
comprehensive, integrated solutions to real estate owners, tenants
and investors. The firm’s transaction, management, consulting, and
investment services are supported by highly regarded proprietary
market research and extensive local expertise.
Coldwell Banker Commercial With a collaborative network of
independently owned and operated affiliates, the organization
comprises over 220 companies and more than 3,400 professionals
throughout the U.S., as well as internationally. In fact, CBC
possesses the largest geographic footprint in today’s commercial
real estate marketplace. The organization’s worldwide headquarters
are in Parsippany, NJ.
NAI Global professionals provide a full spectrum of services
available to regional, national, and international clients via its
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global network of independent commercial real estate brokerage
companies. Clients will have a primary point of contact, who will
leverage all of NAI’s enterprise resources wherever they need
them around the world. In addition, the company’s leading edge
technology will support all their global moves, from streamlining a
business unit, to extracting value from the client’s portfolio, to more
efficient management of their projects and leases worldwide.
Cassidy Turley has advocated for clients for more than 100 years.
The firm has 430 million square feet of managed space, 60 offices, 23
national markets, and more than $17 billion in completed transactions
for 2010. The company is also a dominant provider of Capital Markets
and Corporate Services—serving more than 25,000 locations.
Cresa Partners, since the founding of the firm, the primary focus
of has been to serve the best interests of tenants. By representing
tenants, not landlords, they strive to ensure objectivity and avoid
conflicts of interest. Unlike traditional real estate firms, they are
service oriented, not transaction oriented. They provide an array
of integrated corporate services and work to align its client’s real
estate needs with their business plans. Cresa advisors and project
managers form partnerships with their clients, providing ongoing
service that goes “beyond the deal.”
The Sperry Van Ness organization of affiliates is the only brokerage
firm that markets all properties on a national basis to a 100,000strong
brokerage and investment community. Because of its national reach
that includes primary, secondary and tertiary markets, the Sperry
Van Ness Organization excels at seamlessly locating investment
options on behalf of clients across the country while leveraging the
power of all brokers — even those with competing firms.
TCN Worldwide is continuously improving its services and
processes by anticipating the needs of members and their clients and
utilizing the years of local expertise of the members. At the same
time, they are constantly developing and implementing the future
innovations, which will ensure the company’s long-term success
and position the member firms as leaders within their local market.
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CORFAC International is an organization of independently
owned commercial real estate services firms with local and regional
expertise throughout the Americas, Europe, and Asia. CORFAC
firms specialize in office, R&D and industrial brokerage, corporate
real estate services, investment property sales, tenant representation,
land sales, retail leasing, property management and property
consulting.
Newmark in January of 2006 formed a partnership with London
based Knight Frank, forming Newmark Knight Frank, a global
real estate consultancy with extensive worldwide capabilities and
coverage throughout North America, Europe, Asia Pacific, Latin
America, Africa and the Middle East. The Newmark Knight Frank
partnership now operates more than 220 offices in established and
emerging property markets on six continents. With a staff of 7,300
employees, they have created an effective global platform from
which to serve the property needs of their growing list of clients.
Marcus & Millichap Real Estate Investment Services, since 1971,
has been the premier provider of investment real estate brokerage
services. The foundation of its investment sales is the depth of
their local market knowledge. Their 40year history of maintaining
investor relationships in local markets enables them to be the best
information source and transaction service provider nationally.
Duke Realty has been a leader in commercial real estate development
since its founding in 1972 in Indianapolis, Indiana,. From its first
property—Building One in Park 100 Business Park on the northwest
side of Indianapolis—Duke Realty has set the standard for providing
high-quality, innovative, and distinctive environments that meet
businesses’ operating needs.
King Sturge is one of the largest international property
consultancies with a network of over 210 wholly owned,
associated, and affiliated offices in 45 countries worldwide. In
Europe, they operate in the major UK commercial centers and
principal mainland European cities. In the Americas, King Sturge
has business partners in North, Central, and South America
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through King Sturge CORFAC International and Chain Links
Retail Advisors.
Lee & Associates’ last year’s group of companies successfully
completed transactions with a total value of nearly $7 billion. Not
only has Bill Lee’s profit-sharing concept proven enormously
successful, but also it has fueled the explosive growth of group
offices throughout the West and now moving east.
DTZ Barnicke, headquartered in Toronto, has 19 full service offices
across Canada with an excess of 500 employees. DTZ Barnicke acts
as a broker to service tenants, landlords, developers, owners, investors,
governments and institutions locally, nationally and internationally.
ONCOR International is a premier global commercial real estate
system, whose members include over 50 independent brokerages
with over 170 offices in 32 countries. Collectively the members have
been responsible for approximately $13.2 billion in commercial real
estate volume in 2009.
Prudential Commercial real estate is the commercial real estate
division of Prudential Real Estate and Relocation Services, Inc., an
integrated real estate brokerage franchise and relocation services
business. Their professionals are committed with integrity and
professionalism.
Studley’s success is derived from its rich history, coupled with its
ongoing innovation and cutting-edge ideas. The company has always
valued individual merit but also understands that the aggregate of
those individuals provides a result far more powerful. It’s a culture
founded on trusting relationships.
Excerpts of this report were borrowed from Commercial Trainer,
Mike Lipsey
The next and most important step is to present yourself as a
commodity to each of the finalist firms you choose to interview with
because that should be your attitude. You’re going to be making
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them money. You need to choose wisely and what they have to offer
will be the determining factor. Do this with grace and a humble
tone but remember you want to work for the right guy and the right
company. So here are two sets of checklists to picking both.
Brokerage Company Requirements:
- A brand that is respected for their ethics and caliber of brokers.
- Management teams who are proactive in the market and can
help bring in business.
- A network of brokers who you can give and receive referrals
from multiple markets other than your own.
- A property management wing of the company that you can
refer business to and receive referrals from.
- Multiple specialists in the office that you can refer business to
and can receive referrals from in return.
- An investment team that is known for being one of the best.
Without this, you and your team will never realize a large
portion of this type of revenue.
- A friendly and cooperative group of specialists within your
specialty who you’ll enjoy going to battle with every day and
can see yourself collaborating with.
- An administrative staff that is competent, caring and cooperative.
- An administrative manager who actually likes brokers and is
open, friendly, good to the staff and therefore maintains high
moral. Furthermore, this manager’s first word cannot be “No”
when you ask for a budget expenditure on behalf of a client.
- A research department that cares about excellence and goes
the extra mile for you because the best information can often
make or break a deal.
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- A company’s bottom line should be healthy and not in the
news constantly for speculation that they may headed for
bankruptcy or sale.
- A healthy budget to spend on client needs, signs, brochures,
websites, mailers, open houses, presentation materials etc.
- You don’t want to work in a shark tank, or with an office that
has a few bad apples because they will make work miserable
so ask the hard questions and choose wisely.
Mentor/Broker Trainer requirements:
- They should have done this before and been through the
experience of training a new salesperson.
- Their previous Runners/Trainees should say good things about
them.
- They should have enough variety and volume of business to
keep you constantly busy and show you all the aspects of your
chosen specialty.
- They should treat you with respect. A good amount of friendly
hazing is to be expected but there is a difference between
friendly and mean spirited riding.
- They should have a general business plan written for you for
the year or two you’ll be there so you know what to expect and
what is expected of you.
- They should share their business plan and goals so you can be
as effective in attaining those goals as soon as possible.
- You and your team should have monthly review meetings
that include prospects, deal flow, responsibilities, and revenue
review. In addition, the meetings should include actual versus
goal income year to date, prospective client hit lists and
responsibilities as well as progress reports.
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- They should be an ethical and honor driven person. There’s
nothing worse than getting a bad reputation for working for
the wrong person before you’ve had a chance to prove yourself
on your own.
- They should be a good person and someone you can respect and
get along with because you want to be motivated every day by
the job at hand and not have to worry about the temperament
of your mentor.
- They should have a good work ethic and organizational skills
and killer presentation skills. This is a huge game changer. It’s
your job getting him in the room with the client; it’s his job to
close the client. Killer presentation skills and instinct is right
up there with the top attributes.
- Salesmanship. This job is a sales position and you should
never forget it. Your mentor should be able to teach you the
finer points and you should always be learning the basics on
your own.
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Chapter Five
Commandment II: Specialize
I previously touched on the various fields of specialty within the
Commercial Brokerage world. In this chapter, we will discuss how
you’ll choose your eventual specialty and what to expect from each.
You’ll choose your field of specialty based on many factors. It may
be as simple as it’s the only job available to you and so there you go.
Hopefully, you’ll do a little research to match your choice with your
innate skill sets and proclivity to the industry sector. You should
do this while gauging your potential success based on market size,
mentor, and company strength in the chosen fields of specialty.
Once again the fields are as follows:
1. Office Properties
2. Industrial Properties
3. Retail Properties
4. Land Sales
5. Investment Properties, Institutional and Private Client Group
6. Multi Family Investment Sales
7. Hotel & Resort Sales
I’ll take a moment to explain each and give you enough knowledge
to ask the right questions of your potential manager, mentor, and
interviewers as well as to get a feeling for what your calling might be.
1. Office properties: Typically built in urban and suburban areas,
these buildings are built for specific corporations to lease or own
as their corporate headquarters. More often than not they’re built
by a merchant developer. This person perceives a need for the
building in the market based on supply and demand then purchases
a parcel of land and build’s the building caliber to meet the needs
of the consumer base in the area which are mostly companies who
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have a client/employee base in that area. More often than not, the
projects are multi-tenant buildings that are divided into various sizes
to accommodate prospective tenants with the hope of leasing the
building to 100% occupancy so to maximize the owner’s profits.
Make no mistake these are income producing properties that in the
big scheme of international finance are a hedge against inflation
and a source of solid, continuous income because they are tangible
assets, not just stock or a piece of paper. These buildings cater to
white-collar workers who are trying to present an image to their
customers and shareholders while also building their brands.
Often, you’ll see the name of a major corporation on a sign atop an
office building. You may think they’re the sole tenant in the building
and 90% of the time you’d be wrong, as signage usually goes to the
biggest, most prestigious tenant with the best credit. This is typically
as much a major point of negotiation as it is a big branding advantage
to the tenant, and a big marketing advantage to the landlord.
Office real estate needs span a variety of aspects from small companies
to national and international requirements. Office professionals
should collaborate as experts in their primary markets, knowing all
aspects of owners and tenants needs. Typical office professionals
have available to them property databases and reporting tools,
combined with research and extensive market knowledge to advise
their clients to make a myriad of decisions that allow them to gain
maximum profit while mitigating losses.
Landlord representation
Asset analysis
Competition analysis
Development of prospect profile
Comparable transactions
Development of pricing strategy
Full-service property marketing
Land analysis and sales
Lease proposal negotiations
Lease negotiations
In-depth Market analysis
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Tenant/ Owner occupier representation
Property analysis
Renewal strategy
Comparative analysis
Situation analysis
Option development
Project implementation
Own vs. lease analysis
Lease versus lease comparison and cost analysis
Negotiation strategies
Occupancy cost reduction program
2. Industrial properties: Industrial Services is one of the largest
brokerage service lines in the world. Industrial professionals have a
deep understanding of current and emerging technologies, production
processes, and global business practices. A well-trained industrial
broker should be able to meet the precise space utilization needs of
their clients for manufacturing, assembly, research and development,
distribution, and warehouse facilities and land assignments.
Highly skilled Industrial Brokers should have a proven track
record in successfully marketing client properties for sale, lease or
sublease and should also be particularly well versed at representing
companies in relocations and/or expansions. They also should offer
consulting on land planning, infrastructure design, and marketing of
speculative buildings and should be skilled at arranging build- to-
suits for industrial facilities, providing site selection options, and
handling land acquisitions/dispositions.
Industrial Services should align client business strategies with customized
real estate solutions under local market conditions. Supported by up-to-
date knowledge of local, regional, and national industrial markets, the
broker should match the financial, operational, and qualitative needs of
clients with appropriate real estate opportunities.
Industrial tenant representation:
Current situation and business plan analysis
Build-to-suit transaction services
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Expert advice on land use provisions
Access local and regional market data for comparative studies
Lease versus buy analysis
Land acquisitions
Comprehensive property availability studies
Situation analysis
In-depth market summaries
Proposal negotiations
Lease negotiations
Negotiation Strategies and tactics
Industrial landlord representation:
Sale/lease of existing facilities
Sale/leaseback transactions
Valuation studies
Land acquisitions
Property valuations
Consulting services
Asset Marketing
3. Retail properties: The retail Broker’s goal is simple. It’s to partner
with clients to understand business objectives and create innovative
ways to optimize the value of real estate assets. Retailing is much
more than “space” or a “place to do business.” Retail real estate is an
environment. And while the business drivers behind a retail real estate
decision may be somewhat predictable, the physical and psychological
forces that conspire to create the ideal environment for each client vary
significantly. Understanding these variations, no matter how subtle, is
an important component of the value a good broker brings. It’s what
allows you to help your clients make the right decision.
Retail tenant representation: Every retailer is unique. Whether the
people the retail broker serves have one location or one thousand,
whether their interest is acquisition or disposition, you should have
solutions to meet their individual needs.
Retail experts should be ready and able to offer their clients insight
into the latest market trends. Good research tools, including
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a competitive analyses, demographic studies, and tenant mix
comparisons are an invaluable part of your clients’ decision-making
processes. It’s this kind of knowledge that makes you much more
than agents or brokers; you’re your clients’ business partners.
Typical services you should provide as a retail tenant representation
broker are:
Key Market Identification
Store Placement Strategy
Site Selection
Competitive Analysis
Mapping & Demographic Tools
Tenant Mix Synergy
Trade Area Trends
Consumer Profiling
Market Potential Reports
Deal Validation
Warehousing and Distribution Services
Demographic Reports
Situation Analysis
In-depth Market Summaries
Proposal Negotiations
Lease Negotiations
Negotiation Strategies and Tactics
Retail landlord representation: Retail property owners need and
deserve a personalized approach delivered by professionals who
partner with our ownership clients to maximize value by leveraging
the capital they have invested - whether it’s a single market asset or
a multi-market portfolio.
We serve developers, institutions, and private investors with the
following service offerings:
Brokerage Services, Sales & Leasing
Development Advisory
Asset Services
Investment Sales
Capital Markets
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Valuation & Advisory Services
Consumer Marketing
Research & Consulting
Property Marketing Strategies and Tactics
The areas of specialty retail brokers typically cover are:
Anchor Retailers
Entertainment
Food & Drug
Lifestyle
Malls
Mixed-Use Properties
Neighborhood Centers
Restaurants
Urban Retail
4. Land owner services: Land Services provides landowners with
the comprehensive ability to evaluate the highest and best use of a
particular land property. You become an expert on land entitlement and
offer your extensive knowledge of local market conditions, competitive
land parcels and the regulatory environment, to assist landowners in
formulating a strategy for maximizing the value of their real estate
holdings. I highly recommend you assemble a collaborative team of
specialists in retail, office, or industrial properties to market and sell
land parcels directly to end users and developers, and maximize the
market presence of listed properties through a robust database of
qualified buyers and developers, as well as the brokerage community.
Land investor and developer services: Land Services bring
together local market knowledge, serving the property needs of
investors and developers, and providing a competitive advantage
by capitalizing on market conditions. Build a group of professional
friends that are tightly integrated across service lines that will be
you’re go-to team when you have the right land buyer deal no matter
what the zoning or use requirements.
5. Investment properties, institutional and private client group:
Investment Property Services provide customized, asset-appropriate
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investment sales, acquisition and recapitalization specialized by
client type, geographic coverage and property sector.
Investment Property Services is segmented into two separate but
integrated and complementary groups: The Institutional Group
responds to the sophisticated needs of institutional clients, while
The Private Client Group serves the unique needs of private and
individual property investors. Both groups differ in focus, yet are
identical in their dedication to client service. By integrating market
research with online investor databases such as “Real Capital
Markets,” Investment Property Brokers analyze market cycles,
anticipate trends and command capital in local regional and national
markets. Investment Property clients include domestic and foreign-
based individuals and institutional real estate investors, opportunity
funds, owner/developers, REITs and entities with tax-sensitive exit
strategies. Investment brokers are best to collaborate with local
market-leading professionals specializing in office, industrial,
retail, multi-housing and hotels, as well as numerous niche specialty
practice brokers to maximize their sales and therefore income.
6. Multi-family investments: Apartment sales
Investor interest in U.S. multi-family properties continued at a
healthy clip at the beginning of 2011, as investment sales dollar
volume jumped 40% in the first quarter over the same period
last year. More deals closed than in any quarter since mid-2005,
according to CoStar Group data.
Just fewer than 4,000 multifamily sales transactions were recorded in
the quarter at a total volume of $9.4 billion, according to preliminary
CoStar sales data, compared with $6.7 billion in first-quarter 2010
and just $3.76 billion in first-quarter 2009. Despite the heightened
activity, sales were just 22% of their mid- 2007 market peak of $43
billion in the most recent quarter. Sales volumes declined about $6
billion from fourth-quarter 2010. While leasing fundamentals are
no longer improving at last year’s torrid pace, investor interest by
all accounts remained sharp for quality apartment product. Renter
demand for apartment units remained solid in the first quarter, as the
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supply of new units continued to dwindle and the national apartment
vacancy rate fell to 7.4%, a decline of 100 basis points since late
2009.
Despite an uneven economic expansion, “fundamentally, the
outlook for the economy remains one of recovery and growth, and
CoStar remains optimistic about its prospects. That is good news for
Commercial real estate and good news for apartment demand,” said
CoStar Real Estate Strategist Kevin White during the Washington,
D.C.-based company’s recent First Quarter 2011 Multifamily
Review & Outlook.
Investor appetite for newer institutional-grade product in high- barrier
coastal markets is driving sales volume in recent quarters, unlike 2008
and 2009, when larger transactions were difficult to finance and the
limited pool of mostly local investors opted for smaller properties in
suburban locations, explained CoStar Senior Real Estate Strategist
Michael Cohen, who co-presented the outlook with White.
REITs and private equity firms were the dominant net buyers of
multifamily property in the first quarter. REITs purchased a total of
$515 million in the quarter, with $130 million in net purchases after
subtracting dispositions. Private equity player netted $117 million
in sales, an amount expected rise into 2012. Institutions were the
largest apartment sellers, disposing of a net $354 million in assets.
Washington, D.C. and Los Angeles logged the highest year- to-date
sales volume at $900 million, followed by the San Francisco Bay
Area ($600 million), Phoenix ($500 million), and Long Island ($400
million). The top five multifamily markets accounted for $3.3 billion,
about 35% of the $9.4 billion in total sales volume. Collectively, those
top markets saw a 15% year- over-year increase in the first quarter.
“Core investors are still very interested in paying up for stability and
low volatility,” Cohen said. “Pricing has been strong in D.C., but it
still took the top spot for multifamily investment dollars.”
The distressed transactions market, including REO sales, deeds in
lieu of foreclosure and properties with high vacancy and/or deferred
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maintenance costs, accounted for about 21% of all multifamily sales
volume in the first quarter. While still quite high, the percentage of
distressed deals declined 5% from the previous quarter, however, and
CoStar expects distress levels to slowly drift down as fundamentals
continue to improve.
In housing exposed markets like Tucson, Fresno, Jacksonville, Las
Vegas, and Atlanta, distressed trades exceeded 60% of all transactions.
Supply constrained markets like Boston, Marin/Sonoma counties, CA,
San Diego, northern New Jersey, Portland, Washington, D.C., and San
Jose, showed distressed levels of 20% or less.
OCCUPANCY, RENTS RISE EVEN AS
ABSORPTION SLOWS
While the drop in the homeownership rate has led to higher absorption
of apartments over the last five quarters, the pace has slowed from
last year’s 167,000 units absorbed, which was the strongest level
of demand since 2005. The last two quarters have seen demand of
19,000 and 23,000 units, respectively.
CoStar forecasts total supply additions of just 27,000 units in the 54
largest markets in 2011, just one-third of the pre-recession average
between 2003 and 2008. However, CoStar expects to see occupancy
gains in 49 out of the 54 metros over the next three quarters, led
by San Antonio, Houston, Raleigh, Salt Lake City, Orlando, and
Portland. Markets such as Richmond, Norfolk, Seattle, Cincinnati,
and St. Louis will see modest increases in vacancy.
The limited supply of Class A and B properties continues to generate
the most demand, resulting in fewer rent concessions a strong
effective rent growth in 2011.
Three of the five top markets for rent growth in 2011 are in the supply
constrained San Francisco Bay Area, led San Francisco (7.3%), and
San Jose (7%). The East Bay, Honolulu and Boston round out the top
five, followed closely by Phoenix, Raleigh, Washington, Baltimore
and Denver.
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As published by Costar’s May 18 2011, Multi family report. http://
www.costar.com/News/Article/Multifamily-Investment-Leasing-
Fundamentals-Off-to-Solid-Start-In-2011/1288
7. Hotel & resort investment group:
Your Group should understand the unique challenges and
opportunities that come with investing in and divesting hotel
properties. Professionals who choose to specialize in this sector
and devote their careers to following the properties, investors, and
owners that trade in this space. You should know the hotel market
inside and out and strive to build client relationships that endure.
Your Hotel group’s mission is to be the single strategic advisor to
your clients for the provision of lodging real estate services focused
on the acquisition and disposition of hotels, resorts, gaming, and
golf and leisure properties worldwide.
The areas of specialty hotel investment groups typically cover are:
Hotel Capital Markets
Sales
Investment Advisory
Valuation
Development
Asset Management
Global Gaming
Golf and Resort Properties
Leisure and Alternative Investment
Pubs
Operator Selection
If your team is specifically dedicated to luxury, gaming, golf and
resort properties, your hotel group has the ability to bring specialized
knowledge and experience to each and every deal, regardless of
the client’s needs. Your specific Hotel Group should be comprised
of a highly qualified team of professionals whose mission is to
focus on the specific needs of their respective sectors within the
lodging industry. These brokers’ mission includes the acquisition
and disposition of properties, raw land zoned for development,
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appraisals, project consulting, property and facilities management,
and financial services. Being successful in this highly specialized
and volatile marketplace demands a dedicated, professional
approach. Combining your talents and experience, you’ll bring a
unique perspective to the brokerage and appraisal of all hospitality
real estate.
From a single asset in a local market, to a sophisticated portfolio
across multiple locations, each assignment benefits from your
market-making ability. Your synchronized approach to marketing
brings your owner clients to the market – and your buyer clients
to the opportunity – with unprecedented speed and efficiency. You
anticipate trends, seize opportunities, and leverage your network to
help your clients realize their investment goals.
In order to efficiently manage the marketing process and ensure
optimal exposure of an investment opportunity, you’ll have to
implement a shared platform that manages investor criteria as well
as client and market information. Information should be updated
daily on a real-time basis to keep pace with the ever-changing
environment. This platform increases speed to market by allowing
your teams to launch a comprehensive marketing campaign in a
short period of time. By leveraging a combination of cutting edge
technology and industry savvy team members, you’re effectively
putting the collective knowledge of the entire group to work for
your clients.
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Chapter Six:
Commandment III: Be the Best!
The Many Sides of Success
If you want a thing bad enough
To go out and fight for it
Work day and night for it,
Give up your time and your peace and your sleep for it,
If only desire of it
Makes you hold all other things tawdry and cheap for it,
If life seems all empty and useless without it,
And all that you scheme and you dream is about it,
If gladly you’ll sweat for it,
Fret for it, Plan for it,
Lose all your terror of God or man for it,
If you’ll simply go after that thing that you want,
With all your capacity,
Strength and sagacity,
Faith, hope, confidence, stern pertinacity,
If neither cold poverty,
Famished and gaunt,
Nor sickness nor pain
Of body or brain
Can turn you away from the thing that you want,
You’ll Get it!!!
Berton Braley
Now Berton Braley is one of our most optimistic American poets
and this is one of my favorites. His critics might say, why give up
life for one thing. The thing I’m hoping you become is the best in
your market in your selected specialty and not to the exclusion of all
else although the poem may suggest that. If I had to put into words
the feeling and desire I had as I began my career these would have
been them. In retrospect I would add a bit more about the wisdom of
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balance, but in the beginning and until you’re up and running, this is
your mantra. Read it daily!
This is the most important commandment of all. As someone once
said, “Shoot for the stars and you’ll at least hit the moon.” Well, my
motto is: Go big or go home. So let’s go big. Rome was not built in
a day and neither will your empire but there are some basics to being
great and this chapter will cover them.
First, you must adopt the mindset that you’ll be the best in something
before you can actually do it. I don’t care where the drive comes from
but it should be from a place of good and the desire to be great. Think
big and achieve it. For me it came from a place where I felt inferior
because of my lack of pedigree so I was going to prove that I was the
best no matter what it took. As I said I usually learn the hard way. Please
take my advice to find a way of combining that burning desire to win at
all costs with a win/win mentality and you’ll be great.
Let’s cover some basic ground, strategies and tactics, as well as start
thinking and building on the practices of “The Greats” that have
gone before you. These are not secrets but tried and true methods
for being great.
1. Write a business plan: Where do you want to focus your time?
What specialty or niche within the market will you choose? What
do you want to be? Create a mission statement, organizational
chart, value proposition, and set out differentiators that set you
apart from the competition. Set specific goals both functional
and financial.
2. Define team roles: Define your team role and also team
members’ roles if you are on a team. If you are not on a team,
I highly suggest being part of one. Team Leader/Rainmaker,
cold caller, document processor, marketing coordinator/
administrative assistant, “Runner”, or sometimes-financial
analyst. Everyone has his or her own likes and skill sets. Try
to align those skill sets and workload accordingly, as this will
leverage the time of the team and make you all more money
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and more consistent money without the swings in income a
lone soldier can experience. If you have the personality and the
ability to cold call and bring in business, then the highest paid
member on a team will eventually be you. Or you’ll eventually
be the team leader.
3. Be a leader through example and people will naturally
want to follow you: This is most important when it comes
to your clients. Your clients have hired you to lead them so
that is exactly what you will do. If you truly are a leader,
everyone in the room will naturally perceive it through your
body language, demeanor, and tone. One little phrase will work
wonders in having clients, partners and employees follow your
ideas: “May I make a suggestion?” People will naturally say
“Yes!” You better have a full plan of attack, strategies, tactics,
materials, and roles already thought out for what you’re trying
to achieve and it better work. If you can pull that off, you’re a
natural leader and you better earn it through example every day
because the benefits will be incredible.
4. Work ethic: Be in the office first and out last -, at least for
the first year and the impression you make will last a lifetime.
Additionally, you’ll be creating work habits that the best of the
best adhere to and will follow you through your career. You’ll
accomplish twice as much as anyone else and if you follow my
guidance you will be working smart as well and your income
will be reflective of both hard and smart work.
5. Ethics: They have to be at your core, no matter what, and
forever. You have to always tell the blunt truth, even if you
messed up. You can’t leave out even the smallest omission or
detail or nuance to a conversation or situation. Don’t puff to
make you sound better or as though you did something you
didn’t. Don’t be a person that always put’s them selves in a
position to get the credit. Never speak poorly of someone else,
no matter how tempting it is. Simply be silent or use an old
southern adage, “I really don’t know them.” If you’re talking
poorly behind someone’s back, the person you’re speaking to
will think you would do it to them too. Take credit for your
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mistakes and vow to never do them again and then don’t. See
Appendix: “Code of the West.”
6. Time management: This industry is one of the most time
intensive of any I can think of. You’re 100% commission
compensated. The dollars on each deal are huge. Your time
is your own but if you don’t use it wisely, your income will
suffer. Remember you get back what you put in so using
your time wisely is an extremely important factor to your
success. Picture that you’re at the Staples Center or any
indoor sports area and you have 15 minutes to collect as
many 1 million dollar bills taped to the bottom of the seats.
How would you go about collecting the maximum possible?
Would you move fast? Would you hire people to assist you?
Etc. Well this business is the process of collecting the million
dollar bills. The Staples Center is your territory and the 15
minutes is your career. So here are some tips for being the
most efficient million-dollar bill collector.
There are plenty of “Time Management Systems” but they
all boil down to the following. The best brokers are always
proactive. Don’t wait to get your to do’s done, go after them
with a vengeance. Every evening you must create a “To-Do” list
for the next day. You do so primarily so that you’re focused and
ready to hit the ground running the next day, but also so you can
sleep at night. Complete your to- do’s in the following order of
priority and in the context of the daily schedule below and you’ll
be ahead of the game.
A) Close or further active deals. Calls, proposals, meetings, etc...
B) Find new opportunity
C) Prepare and execute client presentations and meetings that day.
Always maintain current client relationships.
D) Build new business relationships.
E) Build new personal relationships
F) Mundane personal to-do’s
G) Things easily delegated
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Your daily schedule should be to use your time as follows keeping
in mind the priorities above:
7:00-9:00 a.m. is for initiating to-do’s, calls and emails, drafting
proposals and letters and general paperwork done and handling top
priorities so you can focus on the rest of your day and you feel a
sense of accomplishment to start the day.
10:00-11:45 a.m. is for cold calling.
11:45-1:30 p.m. is for lunch with a client, college, or potential client
as the social time with these people and the information and trust
you’ll gain is invaluable.
1:30-5:00 p.m. is for cold calling on the phone or by walking buildings in
your territory, handing out collateral, closing for meetings or generally
building relationships and qualifying prospects for future business.
5:00-6:00 p.m. is for returning phone calls and getting out proposals
that have been completed by your assistant.
6:00- 7:00 p.m. is for completing random low priority to do items and
writing the next days to do list and prioritizing them for maximum
income potential.
If you need a software program to assist there are many out there.
My recommendation would be ACT-CRE.
7. Maintain your energy level: Get on a healthy routine. Eat
right, get plenty of sleep, exercise, have fun.
8. Maintain your spiritual and emotional health: Read up
on the various methods and choose one for you and make it
part of your life.
9. Reward yourself for a job well done: Go have a great dinner,
take a weekend trip, buy yourself some new business wardrobe
items etc.
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10. Keep a running journal: Mine is a spiral binder but I’m old
school. Use whatever system works for you. The purpose is to
record notes on every phone call, meeting, and discussion’s so
you can remember what your action items are and for dispute
clarification later if needed.
11. Communicate in person or by phone: In this business the
best way to get your point across is verbally because of tone,
body language, and clear intent.
12. Answering your phone: Answer with your full name in an
upbeat and direct way with a tone that is customer service
oriented and friendly.
13. Carry and use fully a PDA: Blackberry is my recommendation.
14. Keep a clean and organized office: Being a slob who has a
mess everywhere says you have a disorganized mind. There is a
lot of paperwork in this business so create a system for keeping
it all straight. If you have to pile papers keep the stacks neat by
arranging them only by 90 degree angles.
15. Over prepare for presentations: Know the client, the
assignment, the competition, the location, the order you’re
presenting, the decision makers and all parties in the room. Call
in favors for recommendations prior. Pre-interview with the
decision makers. Suggest the agenda by sending a document
well in advance. Get to know the players. Find out hidden
objections prior to the meeting. Leave nothing to chance!
Practice, Practice, Practice!
16. Meetings: With rare exception meetings should never go
beyond an hour. All parties should have an agenda ahead of
time and assignments to bring to the meeting.
17. Build a list of mentors: Even though I’ll be at the top of your
list, always have a mastermind group of mentors you can always
call on for opinions.
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18. Be a decision maker: Weigh all the pros and cons and their long
term affects and make the call in short order. Leaders do this well.
19. Get good rest: If a problem keeps you awake, write it down
and deal with it in the morning. Usually your subconscious will
have the answer when you wake.
20. Know your market better than anyone else and act on the
information: Using Costar, produce lists of every building,
building owner, and tenant in your chosen market. Use every
weekend, holiday, and day off for whatever time it takes
to physically drive, take a photo, and walk into the building
lobby to get a feeling for and create a memory of the building.
Nobody does this anymore but you will and you’ll know your
market better.
Study every lease and sale comparable in your market on a weekly
basis and commit the deal terms to memory. You’ll increase your
memory potential and be the undisputed fountainhead of information
for your landlords and tenants.
Take all of this information and add it to a Database and CRM.
(Customer Relation Management system) A good one is ACT-CRE.
Use it religiously to track data, tenant and landlord movement, etc.
This tool alone will put you in the top 10% as few have the diligence
to keep it up while making prospecting calls etc. Get to know your
clients personally. Take them to lunch, dinner, coffee, a bay cruise on
your boat, a ski trip, whatever it takes to build a personal relationship.
You’ll be surprised how many lasting friendships you’ll build in the
process.
21. Continued education: Continuously read and educate yourself
on the more advanced techniques and software of the business.
When the time comes, attain your CCIM accreditation. It will
be invaluable. Read the paper daily for leads. Read the local
Business Journal for leads. Always read Commercial real
estate periodicals to stay on the top of your game. Learn how
businesses run. Learn to read financial statements such as a P&L,
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10 Q, and Year-end public financial statement. Research every
client before you meet with him or her. They’ll be impressed
you did your homework. Study negotiating tactics, as these are
extremely large deals and your opposing broker or owner has
been doing this for a while and will have done their homework
on every deal they work on.
22. Tenant representation deal process: Become an expert in
every aspect of this process and you’ll close more deals and make
more money. The step-by-step process of the deal pipeline/sales
cycle: all scripts, presentation materials, proposals, analytical
tools, lease and purchase offer examples etc. are available to
you at www.commercialrealestatebrokersacademy.com.
A. Prospecting: Find qualified potential clients by either
calling them directly with a list of questions or a general
script until you can work extemporaneously. Walk buildings
with collateral and ask for the decision maker and qualify
them on the spot or close for the qualifying meeting. If you
don’t get them in person, get a card and follow up with a call
and an email with collateral. Afterwards, call and close for
the meeting.
B. Qualifying: Learn every intelligent question to ask at the
first level of communication to determine if this is an actual
potential client. The best place to do this is in person so your
first goal while prospecting is to “Close for the meeting.” If
they aren’t available in a short period of time then qualify
them on the spot, either while walking their building or on
the phone.
C. Converting them to a client: Whether it’s by a simple
handshake or an “Exclusive Letter of Representation”
after presenting against five other competitors, conversion
is an art which usually requires a step by step process of
convincing the client you have done this many times, are the
best in the business, can handle their assignment and they
trust you enough to commit to hiring you.
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D. Situation analysis: Sit with the decision makers after
reviewing their lease or ownership situation. Find out what
their one, three, and five year business goals are, as well as
their financial strength and align a strategy to their stated
goals. Perform an employee scatagram with their home zip
codes and compare their drive times to the existing facility
and consider where the optimal location may be. Be sure
you find out where the CEO and other decision makers
homes are. 90% of all location decisions take place because
of where the owner or top decision maker lives.
E. Survey alternatives: Take all the information learned
from the situation analysis and come up with a game
plan and immediately begin execution on it. This usually
means choosing a geographic box and surveying the
various available properties that meet their needs within
that geographic box. Take that information and format it
in an intelligent format, which should also include market
information, building information, floor plans, and specific
notes on the real situation the building and owner are in
which is gathered from the listing broker.
F. The proposal process: Select three to five potential
alternatives for the client’s needs that would all work if
they had to. There will naturally be a couple leaders and
the client may just want to move forward on his favorite.
You always want at least two real back up alternatives as
the first choice building may be leased or sold during the
process. Additionally, having at least three alternatives in
the mix keeps all three owners honest and creates a truly
competitive environment among the landlords.
During the proposal process, a few things have to be coordinated to
come to terms with a landlord or seller. First, an architectural space
plan has to be developed to meet the client’s space needs taking into
consideration, adjacencies, workflow, space optimization, special
use areas, the size of the various offices and work areas. If the deal
is at least $5,000, the tenant should interview three space plan firms
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and choose one that will act as their advocate as the owner will pay
for this but the tenant can accurately compare each facility on an
apples to apples basis.
Next, it’s time to either submit a proposal or LOI (Letter of Intent)
on each building calling out all the terms you desire including rent
and TI’s etc. The alternative (if the deal is large enough) is to submit
a “Request for proposal,” which creates a psychological turning of
the tables. The distancer/pursuer relationship is flipped in your favor
and the negotiating dynamic is very different.
Next in the proposal process is to budget the cost of construction
to make sure you accurately negotiate the proper budget for
construction of interior Tenant Improvements (TI’s).
The counter proposal process can go several rounds but ultimately your
client will choose an alternative that works. Once you’ve negotiated
to the owner’s “point of indifference” there may be several millions of
dollars of difference from the beginning of the process to the end and
that is a tremendous amount of value you’ve added for your client. Far
surpassing any fee received as part of the deal.
The dynamic is very different if you represent the Owner and your
job is to add value through good market information so that he
knows when to hold em and knows when to fold em so to speak.
G. Contract negotiations: Now you may be negotiating a
Lease contract or a Purchase agreement although in either
case a strong word of advice: You’re not an attorney and do
not give legal advice - ever. Have a few good Real Estate
contract law specialists you work with on a consistent basis
and recommend them to your client. They will either use
their own attorney or take your advice on your referral, in
either case it’s your job to perform several specific acts.
Some of which are:
i. Compare the LOI to the lease for accuracy of all business
terms and dates.
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ii. Work with the client and their attorney to negotiate terms
that are not agreeable as his time may cost upwards of
$450 per hour.
iii. Introduce industry standard language surrounding
building expenses and other market norms that will
benefit your client.
iv. Coordinate the Architect, the attorney, contractor and
your client to make sure they are on time and under
budget so not to create delays or overage costs that will
be billed to your client.
v. Work closely with the Owner and his attorney to negotiate
all terms and assist in overcoming disputes in an amicable
way.
H. The closing process: Drive all parties to execute the final
document. Follow up with exchanging fully executed
versions of the final document and follow through with the
construction process.
I. Payment: Make sure that payment is made to the brokers of
record. If it’s a lease, the landlord will need to be invoiced
and a check will need to be cut and delivered. If it’s a sale,
the commissions will have been withheld in Escrow and
escrow will issue a check to the Brokers of record upon
close of escrow.
23. Under promise and over deliver: Do this and you’ll always be
perceived as the best, and perception is reality.
24. Be reliable and always follow through: Do what you say and
say what you mean. I cannot over emphasize this enough. Gain
this reputation and it will last a lifetime. This is so simple but so
effective.
25. Don’t keep secrets from your team: I am a proponent of being
a “no secrets” leader. I make the point that there is no advantage
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to keeping secrets and there is a huge benefit to sharing all that
you know especially in a team environment. The collective is
always smarter than the individual.
26. Work hard and smart: They are two different things. Learn
the subtleties of each and do both well.
27. Be meticulous about detail: “The Devil is in the Details.” So
is the money!
28. Be continuously prospecting and adding new business. You
can always hire more employees but you can never hire new
clients.
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Chapter Seven
Commandment IV: Drink from the Seven
Buckets of Revenue
The following are the most recognized revenue lines a broker can
tap into. Not every specialty can take advantage of all seven so I will
give a real life example of a deal for each, the type of broker that can
participate and the math involved in the commissions paid. These
are general rules of thumb for today’s markets and commissions
vary from market to market and from specialty to specialty although
these commission examples were taken from real life deals recently.
One thing I don’t get into in these examples is commission splits.
There are too many scenarios to compare so I leave them out. Suffice
to say that each deal may have a brokerage house and co broker to
split commissions with although not necessarily if you own your
own Brokerage firm.
1. Exclusive listing, property for lease: This is a simple case of
leasing space in your exclusive listing. You and your team contract
with an owner on an exclusive basis to market and lease the owners
building. Brokers who perform such transactions are typically,
Office, Industrial, or Retail specialists. After extensive marketing
and negotiations, the listing team signs a lease for $25,000 for a
period of ten years at an average rent of $2.00 over the term.
Example: 25,000 S.F. Tenant, 120-month term of lease, $2.00
average rent/S.F. over the term, 4% commission for the first 5 years
and 2% for the second 5 years. The listing broker represents the
Tenant.
25,000 S.F. X $2.00 X 60 months X 4%= $120,000
25,000 S.F X $2.00 X 60 months X 2%= $60,000
Total Commissions $180,000
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2. Exclusive listing, income property for sale: This is a case where
we have a leased building and the owner wants to get the highest
value for the building. He has signed an exclusive listing agreement
to sell the property. Therefore, you and your team value and prepare
an Offering Memorandum, prepare a preliminary flyer for all brokers
and buyers to gain initial interest and get it out to your list of all
brokers and investors using “Real Capital Markets” (an online buyer
database and sales management process software program used in
the investment community). Those who show interest receive a
detailed Offering Memorandum.
The brokers meet with all interested parties and assist them in
understanding the building, the underlying market, and the value of
the building. After several buyers make offers and the owner counters
and does their diligence to choose the correct buyer, the two parties
enter escrow. The buyer does their “Due Diligence,” releases their non-
refundable deposit and closes escrow on the property. At the close of
escrow, the brokers of record are paid through escrow. The brokers
who typically participate in these types of transactions are Institutional
Investment, Private Client Investment, Hotel Investment, Multi Family
Investment, Office, Industrial and Retail specialists.
Example: Building sale price $22,000,000. Broker commissions of 3%.
$22,000,000 X 3 % = $660,000
Total Commissions $660,000
3. Exclusive listing, owner occupied property for sale. This is a
situation where the company who occupies the building wants to
sell it for one reason or another. You enter into an “Exclusive Listing
to Sell” contract. You value the property, market it, take offers,
qualify the various buyers, choose a buyer, counter offer, come to
terms on a sale, and enter escrow. The seller performs their “Due
Diligence,” releases their non-refundable deposit and closes escrow.
The brokers of record are paid through escrow. The brokers who
typically participate in these types of transactions are Institutional
Investment, Private Client Investment, Hotel Investment, Office, or
Industrial and Retail specialists.
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Example: Building sale price: $45,000,000. Broker commissions of
2%. (Typically, as buildings sale prices are larger, the commissions
become more negotiable)
$45,000,000 X 2 % = $900,000
______________________________________________________
Total Commissions $900,000
4. Exclusive tenant representation for lease. In this scenario, you
have entered into an “Exclusive Right to Represent” contract with
a corporation or Tenant who occupies space. Please refer to the
Tenant Representation Deal Process section of chapter six and
follow all the steps thoroughly. Afterwards, at the collection stage,
commissions to the tenant representative broker will be similar to
this example. The brokers who typically participate in these types of
transactions are Office, or Industrial and Retail specialists.
Example: Your 98,000 S.F. tenant pays an average of $2.20 per
square foot for a period of five years. As a result of the market being
soft, the owner pays a $2.00 per S.F. bonus for leases longer than
three years. Commissions for a five-year lease to the representative
broker are 4% of the total rent paid.
98,000 S.F. X $2.20 X 60 Months X 4% = $517,440
98,000 S.F. X $2.00 for Broker Bonus = $196,000
Total Commissions $713,440
5. Exclusive user/buyer representation to purchase. In this
example, you enter into an exclusive representation contract
to represent a corporation/user. Typically, these are smaller
properties although the commission percentage are usually higher
proportionately to the compared to the price. You find the right
property for your buyer, then present, negotiate an offer, and agree
on terms of the sale. You negotiate a Purchase and Sale Agreement
contract, (PSA) and open escrow. You assist with the buildings due
diligence. The buyer’s deposit becomes non-refundable and escrow
closes. The broker of record is paid through escrow. The brokers
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who typically participate in these types of transactions are Private
Client Investment, Office, Industrial and Retail.
Example: Building size 20,000 S.F., Purchase price $275 per S.F.,
commission 6%.
20,000 S.F. building X $275 per S.F. X 6% = $ 330,000
Total Commissions $ 330,000
6. Corporate sale, lease back. In this scenario you have contracted
with the seller to sell a building that they occupy although they will
pay the buyer rent to occupy the building for a ten-year period of
time and in doing so, creates an income producing property for the
buyer. There is a direct correlation to the value of the building based
of the capitalized value of the rent and the Internal Rate of Return
using a 10 year discounted formula, which most buyers evaluate
using software called “Argus.” I highly recommend if you intend to
sell Investment Grade property that you learn the “Argus” program
and have an analyst on your team as an employee or use a freelance
analyst as needed per job. In either case, know the program inside and
out as your clients surely do. The brokers who typically participate
in these types of transactions are Institutional Investment, Private
Client Investment, Office, or Industrial and Retail specialists.
Example: 120,000 S.F. building, tenant pays $2.50 Triple Net (NNN)
per S.F., over a 10-year term. The buyer agrees to pay a price equal
to a 7% capitalization rate on first year income; the first year’s rent
is $2.10 per S.F. , and the commission is 3%.
120,000 S.F. X $2.10 per S.F. X 12 months divided by .007 =
$36,000,000 purchase price X 3% = $1,080,000
______________________________________________________
Total Commissions $1,080,000
7. Land sale: We saved the easiest for last. We have a parcel of
land with a total size of 30 acres for sale. The brokers who typically
participate in these types of transactions are Institutional Investment,
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Private Client Investment, Hotel Investment, Multi- Family
investment, Office, or Industrial and Retail specalists.
Example: There are 43,560 S.F. in each acre and the price is $40 per
S.F., with a commission of 5%.
30 X 43,560 X $40 per s.f. X 5%= $2,613,600
______________________________________________________
Total Commissions $2,613,600
Each of these examples are highly simplified, and accurately
represent commissions paid daily in the real world in this industry.
I have a great story of a good friend who just closed a Tenant
Representation deal where he represented one of the largest bond
funds in America, here in Orange County, California. The deal is for
their new world corporate headquarters facility, which is to be built.
The deal was negotiated on a ten-year lease and the commissions
totaled over $7,000,000 and will be paid in 2011. Congratulations,
Rick!
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Chapter Eight
Commandment V: Set Measurable
Personal, Business, Financial, and Life
Goals, then Review Them Quarterly
Setting goals gives you a vision of your future and a pathway to that
vision. The process keeps you focused and on track and reviewing
them quarterly allows for changes in your life to be integrated
smoothly.
Why set goals? So you can clearly and precisely define what you
want and then measure your progress.
The process: What do you want for your life? Play out the movie
in your head as you would dream it and then set 1, 3, 5 and 10-year
goals and life achievements.
The next step is to break them down by categories. Once you see
the movie in your head clearly you can go about making the movie
a reality. The human brain is an incredible machine. According to
studies the brain does not discern the difference between imaginary
and real images and scenarios. Furthermore, the brain is always
seeking to complete a picture. So set goals and make a habit of
viewing your internal movie. What would it feel like to obtain those
goals? Envision yourself living the life you want. What does it taste
like? What does it look like? Who is there standing next to you?
Where are you living? Do this legwork and play this movie in your
head constantly. Your brain will naturally seek to complete that
picture by manifesting it in reality.
Step 1: Visualize and write down your lifetime goals: Visualizing
the movie of your life gives you perspective that shapes your
decision making process for life.
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The following are the typical categories you should set specific and
measurable goals for. You can add or take away from this as your
lifestyle dictates.
Business – If this book isn’t clear enough about what you should be
trying to achieve let me say it again. Become “The Million Dollar
Broker.”
Financial – These are bigger goals about overall wealth including
investments and net worth.
Education – Never stop learning. Become a lifelong learner. Choose
your topics and do it.
Personal – Do you want to marry? What type of person is a good
choice for you to be your spouse? Do you want children?
Personal expression – Do you want to be a writer, poet, artist etc.?
Mental and emotional – Are you a well-balanced person -- both
mentally and emotionally? Are you where you want to be? If not
then, find out areas that need improvement, make a plan, and set
goals.
Physical health – Athletic, dietary, weight, sports you may want to
learn.
Happiness – Measure your overall happiness on a 1-10 scale,
10 being best. Learn ways to increase your happiness and rate it
quarterly.
Giving back – How do you make the world a better place? Find
ways that fit your lifestyle and capabilities and act on them.
Step 2: When setting goals, work backwards. Start with the
end in mind. From your 1, 3, 5, and 10 year goals drill down
to quarterly milestones then set to do-lists daily: Make a daily
action plan to further each goal by integrating them into your to-do
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lists so you maintain a balanced, rich life and review the overall
results quarterly.
Final advice:
• Stay the course. Be diligent and have no excuses.
• Be specific and precise: Be able to see, smell, and almost
touch your goals mentally. Make them as real to you as
possible and try them on for size. Tell someone you’re actually
doing it. This makes it real.
• Prioritize: Just as you do with your everyday to-do’s make
priorities.
• Put them in writing: There is a special power to goals when
you write them down and keep doing so every review period.
• Set Performance goals: For example, complete 20 cold
calls per day, schedule three business lunches per week, give
four presentations for new business per month, etc. You’ll
maintain momentum and feel a sense accomplishment even
if the financial goals that should follow have not materialized
yet. If you base your goals on personal performance, then
you can keep control over the achievement of your goals, and
draw satisfaction from the progress.
• Make all your goals measurable: Review them and rank
your achievements based on a percentage of your goal.
• Achieving goals: Take a moment and smell the roses. Reward
yourself according to the magnitude of the goal.
Homework: Before you go the next chapter put the book down and
do the goal setting exercise I described before picking the book up
again. Then put a reminder in your calendar to review them in 90
days and keep doing so.
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Chapter Nine
Commandment VI: Be a Person You Can
be Proud Of
It’s the actions we take on a daily, weekly, and monthly basis that
form the habits which determine our level of personal success and
ultimately define who we are.
Here are a few things I think are essential to “Be a Person You can
be proud of.”
1. Become a leader: The world requires them. Women respect
them. Children need them. Be one and you’ll forever respect
yourself.
2. Become independent then interdependent: First, learn to
take care of yourself and to be able to make it on your own.
Next, learn to work as an interdependent team. Life is great
when you know you can do both.
3. Have self confidence: There is a balance one has to have here.
Allow yourself to feel confident based on realistic perception
of wins you’ve achieved as you go through life viewed through
the perspective of your third eye or ego. Always exude self-
confidence, as people will always follow the leader, so to speak.
But beware of hubris. If your not familiar with the word or the
story, look it up. It has been the demise of many ambitious and
young brokers.
4. Persistence and determination: Never give up, and never,
ever give in. If you stumble and fall, get up, learn from it, and
move on. Fall seven times, get up eight. Make this a part of
your being.
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5. Think big and imagine bigger: Read “Think and Grow Rich.”
Think, Bill Gates, Henry Ford, Rockefeller, Disney, etc.…you
can do or be anything you can imagine.
6. Be tough: Know when to pick your battles but nobody respects
a pushover.
7. Know thyself: You’ll never truly understand others until you
know yourself. Be ever diligently introspective.
8. Be clear about your intentions: Know exactly what you want
down to the smallest detail. Make it known to those that count
and then execute.
9. Focus: You can have all the drive in the world, but without
focus, you’ll become lost. The shortest distance between two
points is a straight line.
10. Be forever optimistic: You always have the choice of looking
at your current situation as positive or negative. Always view
challenges as opportunities and lessons, and always see your
future as an opportunity to become better. Never dwell on the
past. Have faith things will always work out for the better.
11. Passion: Have a passion for everything you do in life because
you believe it’s noble. This is a choice. “Perception is reality.”
Everything about life is better when you put passion behind
it. Hold it near and dear to your heart. Never let anyone or
anything take it from you.
Even if we aren’t conscious of it, it’s what we do that determines
who we are. And it is ultimately who we are that determines how we
react to life’s trials and tribulations. So always be a person you can
be proud of.
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Chapter Ten
Commandment VII: Build Lasting
Relationships
Think about some of the similarities between business and personal
relationships. They are different but the fundamentals are so similar
and one often turns into another so pay attention. Become great at
building both and live a rich life. Etiquette and emotional intellect are
at the root of both so make sure you study both subjects thoroughly
although there are a few points that must be in place to make them
last.
Loyalty: According to the Myriam Webster dictionary, “allegiance,
faithfulness to commitments and obligations”. My #1 requirement
of a friend or partner.
Trust: This is the cornerstone to every relationship. Demonstrate
that you’re trustworthy everyday and you’ll receive it in return.
Know your clients and friends: Know every aspect of your
relationship base and each specific person intimately.
• Know them personally - their family, friends, where they live,
and where they vacation.
• Know the allies and partners they built their empires with.
Know how the company was formed, how they structure each
deal, and how they philosophically operate their company.
Learn how they accomplish their achievements in life.
• Know the company they keep. Be it employee, vendor, or
best friend. See what they cherish in people. See if you have
those qualities. Know the key employees and make friends or
at least be friendly so they know you by name.
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• Know their personal interests and if you share them open up
and share a part of yourself.
• Be a friend and help with advice or in any way possible, you
just might make a best friend out of a client and people like
doing business with friends. The greatest gift of this whole
process is the possibility of making a new friend as we all
need as many as we can get in life.
Communications skills: Stephen Covey put’s this well. First, seek
to understand then to be understood. That should be the premise of
all communication. Although, study communication skills as if your
getting your masters degree in it and focus on “conflict resolution.”
Collaboration: Always conspire to be interdependent with all
whom you work with and focus on the win–win and you’ll close
more deals, therefore making more money while building lasting
relationships at the same time.
Give more than you get: people will always want to do business
with you.
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Chapter Eleven
Commandment VIII: “It’s a Marathon
not a Sprint”
I put this in quotes because I’m always saying this to my partners,
trainees, and friends when a critical stress moment comes or we
have a set back or an especially big win over a short-term goal.
Like life, this business is a marathon and not a sprint. Don’t get too
high or too low emotionally as the road of life is long and filled
with twists, turns, set back’s and big gains just as your career will
be in commercial real estate. The idea is run the race. Few people
choose to prepare and commit to running a marathon. Most people
are bystanders so at lease by committing to this endeavor you have
at least chosen to run the race.
There are several parallels and these are the ones I’ve seen and
experienced firsthand:
• First, prepare mentally by visualizing seeing the course in
your mind. Where will you begin? Where do you want to
be by each stage of the race? Winning is irrelevant as you
may be a great racer but there is always someone better so be
happy with the fact that you’re in the race and achieving your
personal goals.
• Train for the race. Every marathoner will tell you that you
have to build up your strength and endurance to become great.
Look at each day as a training session until you mentally are
ready to go when the gun goes off at your starting line.
• Pace yourself. There are mini races within the race and
sprinting at certain sections of the course will be required but
always remember the greater course and remember you don’t
want to burn yourself out before the end of the race. The idea
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is that you have used your energy wisely at each stage of the
course and have some left over to reflect and enjoy at the end.
• Along the way, you’ll pick up mental skills that you can
use later in the race. You’ll learn to build buildings. You’ll
learn to be a master negotiator. You’ll learn to become a
master conflict resolver etc.…These skills can be related
to technique but in the long run you can use what you’ve
learned along the way to expand the meaning your life and
become a world class “Runner” so to speak.
• If you stumble and fall behind then immediately and calmly
get up, access the damage, adjust your mental plan for the
race, and thoughtfully continue while learning the lesson
of what made you fall and commit to never doing it again.
You’ll feel a sense of achievement for reentering the race
and having learned a lesson along the way.
• If you see another racer fall, go to their aid and help them
back into the race. The Karma Gods or whoever will shine
upon you later in the race.
• Improve your technique as you continue further into the
race, therefore becoming more efficient and running a
smarter race.
• Draft off the faster “Runners” in the pack when you need a
breather. There is no shame in relying on the racers who are
around you who are sprinting to pull you into their draft as
the pack is always changing who becomes the leader and it
will be your turn several times in the race to lead and pull
the pack along.
• Take fuel and liquids along the way. This is giving you the
permission to take breaks. Vacations, family time, guy time,
girl time, and alone time will all replenish your fuel for the
continuing the race. Don’t fret. Every smart “Runner” has to
do this, or they won’t finish the race.
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• Take note of your surroundings. Appreciate the bystanders
cheering you along, as they are there to support you. They
chose to do so. Acknowledge them all along the course and
thank them with a smile and a nod, as you’ll see many of
them you know at the end of the race.
• Form alliances or a team so you run a smarter race and can
become part of a greater team. It’s always more rewarding
when you can experience life with others bonded by a
common goal.
• Follow the right path. We’ve all seen it - the Olympian
“Runner” who for one reason or another goes off the
course only to realize they will never win nor achieve their
goal and they quit the race in tears and disgrace. First,
please follow the course set before you. If you go astray
momentarily, regroup, ask for directions, and calmly get
back on track. The race will be continuing and the point
is to be in the race and do your best but never allow your
emotions to run too high or too low as this is a Marathon
not a sprint.
• Make friends along the way as you’re in a pack of people
doing what they love. Be friendly to those you’re running
with you and make a point of getting to know them.
• In life, as in any race, there is always a finish line. You
know where it is in your mind roughly. You’ve trained
your entire life for it. It’s your ultimate goal so run a race
worth being proud of. proud of.
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Chapter Twelve
Commandment IX: Have Fun, Save
Money and Live a Great Life.
This is the eternal lifestyle vs. saving money balancing act.
How do you balance spending now and saving for later?
First, let me say I’m the right guy for this chapter. At 38 years old, I
had a few million in net worth and everything was on cruise control.
Literally - my work, income, family, home, boat, trips, investments,
savings, and even concerts and sporting tickets were booked a year in
advanced by my staff. I had it all in balance and I was having the time of
my life. Then came along a little thing called divorce and over the next
ten years nothing was the same. Although, I rebuilt well because I did
the following. If you do the basics in this business and invest regularly
while spending frugally compared to your income and carry little to no
debt, then all will be fine. Please speak to a good investment advisor but
there are a few very basic principles that you must do.
1. Invest as much as possible in your 401k. If the company
matches it, you’re making 100% return day 1.
2. Dollar Cost Averaging. Invest an equal amount, monthly
into a SEP IRA or directed investment account. Put it into a
set of mutual funds that you adjust annually. This will take
the highs and lows out of the market as long as you don’t
ever touch the money until after retirement.
3. Take advantage of the “miracle of compounding interest.”
Make sure that all of your dividends are reinvested into the
Mutual Funds you hold.
4. Invest in Real Estate: Either put the extra money you have set
aside for investments into commercial property you know for
a fact is a screaming deal. If you don’t find any, then purchase
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a rental property on a regular basis (let’s say every 3-5 years.)
In the end, they will become income-producing properties and
you’ll be collecting checks while on your boat.
Spending vs. saving: Manage it this way:
Savings account A: For having a good time and maintaining the fun
factor in your life.
Savings account B: This is for the future, retirement old age when
Social Security eventually goes bankrupt.
Remember to set up account B as soon as possible as time is what
counts.
- Establish automatic payments on all your debts to make sure you
pay everything according to the plan.
- Establish an automatic investment plan for your retirement account
that pays yourself first.
- Take out life, disability, and critical illness insurance.
Then, take the money you’ll have left over to fund account A, and
have fun:
- Buy a cool house in a great neighborhood.
- Buy the car of your dreams.
- Travel to exotic places, buy a boat, learn to skydive, etc. Live life
like you mean it!
Account A should be a lot smaller than Account B, and not as
restrictive as Account B. This should be a hard and fast rule. The
ratio should be 3:1 (B:A).
The answer to the eternal money question is “Find Your Balance”
because that’s what a great life is all about.
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Chapter Thirteen
Commandment X: “Give Back”
Through this industry, you’ll be given more than you’ll ever believe
possible. It’s all of our duty and responsibilities to remember
where we came from not just where we are going. It’s all of our
responsibilities to help those who have less than us, need a leg up,
a kind word, or an opportunity to shine. I was given an opportunity
and I want you to give one, too, when the time comes. In addition
to mentorship, we all have a greater responsibility to humanity. I’m
not particularly religious but these words (which came from some of
the greatest thinkers and philanthropists the world has known) say
so much about the human condition. I want to share them with you
and hopefully have you take away some small sense that we all have
a responsibility to “give back.”
“The practice of altruism is the authentic way to live as a human
being, and it’s not just for religious people. As human beings,
our purpose is to live meaningful lives, to develop a warm heart.
There is meaning in being everyone’s friend. The real source of
peace amongst our families, friends, and neighbors is love and
compassion.”
~Dalai Lama
“At the end of life we will not be judged by how many diplomas
we have received, how much money we have made, how many
great things we have done. We will be judged by ‘I was hungry and
you gave me food to eat, I was naked and you clothed me, I was
homeless and you took me in. Hungry not only for bread, but hungry
for love. Naked not only for clothing, but naked for human dignity
and respect. Homeless not only for want of a room of bricks -- but
homeless because of rejection.”
~Mother Teresa
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“Everybody can be great...because anybody can serve. You don’t have
to have a college degree to serve. You don’t have to make your subject
and verb agree to serve. You only need a heart full of grace. A soul
generated by love.”
~Martin Luther King, Jr.
“That best portion of a good man’s life; his little, nameless,
unremembered acts of kindness and love.”
~William Wordsworth
“You give but little when you give of your possessions. It is when
you give of yourself that you truly give.”
~Kahlil Gibran
“No act of kindness, however small, is ever wasted.”
~Aesop
“It’s every man’s obligation to put back into the world at least the
equivalent of what he takes out of it. We get a lot, and some take too
much. Few give back more than they get - even fewer the equivalent
of what they take. There is a mentality of entitlement that has spread
throughout the world, and it’s selfish appetite is nearly insatiable.
Most people are polite, courteous and civil when it serves their self-
interest, but not many are truly selfless. When is the last time you
did something for another person without expecting anything in
return? What difference are you making in the lives of those around
you? In your community! In the world! It starts with the little things,
but should it stop there? Einstein is probably one of the few whose
contributions to society, science and the world could be argued as
more than what he got or took, but it doesn’t need to be so grandiose
to meet his obligation. It all starts with replacing the question, “What
do I get?” with “What can I give?” in every situation. Some say, “the
more you give the more you get,” but I don’t think that’s true. I think
“the more you give the closer you are to even,” and as Einstein says,
we should at least be striving to break even in this life.
~Albert Einstein
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“So long as we love we serve;
So long as we are loved by others,
I would almost say that we are indispensable;
And no one is useless while they have a friend.”
~Robert Louis Stevenson
“Thousands of candles can be lighted from a single candle, and the
life of the candle will not be shortened. Happiness never decreases
by being shared.”
~Buddha
“You cannot do a kindness too soon because you never know how
soon it will be too late.”
~Ralph Waldo Emerson
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Chapter Fourteen
Live with No Regrets
Now this journey is coming to an end I want recap where we have
been and give you a glimpse into the first steps of your future. We’ve
learned what the lifestyle of the commercial broker can and should
be if the work is done properly. We’ve heard the story of the get rich
quick thinkers, how that path leads to failure, and how we should
avoid it at all costs.
You learned a bit about my past. The moral of my story is that if
given the drive, the will, and the work ethic anyone can overcome
adversity and accomplish the goals of this book, which is to make
you a million dollar per year gross commission earner in commercial
real estate.
We’ve reviewed the Ten Commandments of being a great broker.
In addition, we’ve chosen where and with whom to work. We’ve
learned that specialization is the key to success, as well as what each
of the different specialists does on a consistent basis to be great.
We went deep into the mentality of being the best and all of the best
practices of the great brokers and how you can be the best in your
market and specialty.
We reviewed the seven different buckets of revenue and how you
should take advantage of as many of them as possible, in order to
maximize your revenue potential.
We discussed the importance of setting and acting on measurable
personal, business, financial, and other life goals and how doing so
and reviewing them on a regular basis will set you apart from 95%
of people in the world.
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We reviewed the importance of building lasting personal and
business relationships and how they intertwine throughout your
career and life to make your life the richest it can be.
We got into the philosophy of how viewing life as a marathon and
not a sprint will give you the right perspective on money, business,
relationships and the decision making process when faced with a
short tem dilemma that may affect your life for the long run.
We learned that maintaining a balance of hard work, fun and financial
responsibility in this industry for the long run will lead to a great life
for you and your family.
Finally, we’ve learned that the big picture of success is to share the
gifts that the industry will afford you by being a great person and
giving back.
I’m giving you your first action item and homework assignment.
No excuses. If you don’t already have a Real Estate License, apply
for the classes and obtain your Real Estate License in your state.
It’s only a couple of hundred bucks and about four months of light
homework in the evenings and your set for life. If you are already a
licensed real estate agent your first step is to choose your market and
begin calling the office managers of the major firms for the names
of the top producers. You will be setting lunch meetings with these
brokers to pick their brains to choose a specialty and a home for
your future business. DO IT! NO EXCUSES!
One last story to leave you with that is bittersweet for me to tell as
not many people have heard this and I haven’t thought of it much.
But while writing this book I was thinking about the early days of
my career, when the rest of my family was basically either poor or
the closest thing to it without technically qualifying. I received a call
at my office one day.
It was the very somber, almost frantic voice of an oncology nurse in
the San Francisco Bay area where my mom was living.
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Now a few years earlier, my mom disappeared from our lives when
I was a senior in high school. She called me as my senior year was
just beginning and we hadn’t spoken in months and it happened to
be my birthday. As I said earlier in the book, I was an angry teen
and there was a silence on the phone after she said, “Hello,” and I
came back with, “Happy having a kid day!” I could hear her choke
up and quietly tear up while trying to maintain her composure. So
I sarcastically say it again and she didn’t really respond accept to
ask for my grandmother. She was at work, I told her, so and the
conversation ended with her saying goodbye.
Flash forward nine years later. I’m a 27-year-old, successful junior
broker with money in the bank, a nice place to live and a fancy car
but my mom had pretty much dropped out of our lives since that
call on my 18th birthday. It turns out that she had contracted breast
cancer but for some reason didn’t want to share it with the family. I
can only think that she thought somehow this would burden us. Five
years of not hearing from her and not knowing if she was sick or
where she lived; I was just pissed that she had completely abandoned
me and my brothers, leaving me to be the father figure, so to speak,
as I was the oldest of three boys in our immediate family.
She resurfaced in the San Francisco Bay area five years after the call
to tell us she had been sick and was ok and living with some guy and
that she was happy and in remission. I visited a couple times with
my live-in-girlfriend who was from that area and we saw her at her
favorite bar a couple of times but it was never the same as when I
was a kid and she was actively playing the role (or at least trying to
play the role) of mom in my life..
Back to the call from the Oncology nurse and she (in a rushed and
somewhat fatalistic voice) says that my family and I need to get
there in 24 hours to say “goodbye,” as she may not make it through
the night. Without a thought, I called the airlines and bought the
first flight out for my brothers and me to the bay area where my
grandmother, now living in Oregon, met us. My mom was in a coma
induced by the Morphine to relieve the pain and the only thing she
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would or could say was “I love you” repeating it after we would
initiate the gesture. Those words were worth the world to me as she
passed a few hours later in silence. So that’s what I’m left with from
her. She at least was able to say goodbye by saying she loved me and
that’s all I needed.
Now she’ll never meet my kids or enjoy holidays or family times
again but she will always live in my heart. I remember yelling
and swearing at her, saying the smart ass comment about “Happy
Having a Kid Day” on my birthday. Now, I wish I could take it back.
She was 46 when she died and I’m now 49. My life is dedicated to
making sure my kids’ lives are better than my and my brothers lives
were growing up that I make up for the things I did that I regret and
the words I wish I had never said. All I wish now is that I had a mom
in my life to share the good times given to me, ultimately, from the
chance I was given by my buddy Paul.
Back to you! If you ever thought you could be better and do better
for your family while making a mark on the world – now is the time.
It doesn’t matter if you’re a student trying to figure out what your
next step is or if you’re someone out of work or stuck in a dead end
job. Now is your time. The economy can’t get much worse. The time
for change is happening all over the world and your time to make
that change is now. Take the leap. Draw upon your courage, draw up
your action plan based on the steps I’ve given you in this book and
go out and change your world and your community. Your greater
calling is now.
Never live with the regret that you never took action to make your
life or your family’s life better. So go do it now! I’ll see you on the
other side as a colleague with no regrets!
I‘d love feedback on my website and would be happy to give
further tips to make sure you achieve your ultimate goal. BUT first
complete your homework assignment! Take action!
www.commercialrealestatebrokeracademy.com
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About the Author
Scott Johnstone possesses over 25 years
of commercial real estate advisory
and brokerage experience, with a total
of over $3 billion in transactions. His
areas of specialty include corporate
tenant representation, acquisition and
disposition advisory services, as well
as asset marketing and leasing services
in Orange County, California. A
leader in the industry, he has managed
several brokerage teams representing
entertainment, technology, financial,
Fortune 500 corporate and government clients. Widely recognized
for transaction services locally in Orange County, he has also
completed numerous complex real estate transactions in major US
cities, such as Manhattan, Boston, Los Angeles, Austin, Houston,
and San Francisco.
President
Bridge Commercial Properties
January 2011 – Present
Bridge Commercial Properties is a commercial real estate brokerage
firm comprised of those dedicated to its core values, which are
providing the highest ethical standards while delivering unsurpassed
service and market knowledge, thus allowing our clients to make
better, faster decisions while reducing their overall cost of operations.
Bridge Commercial Properties combines a sole proprietor’s
attention to detail with institutional experience and knowledge. Scott
Johnstone, Bridge’s founder, possess over 25 years of commercial
real estate advisory and brokerage experience, and have accumulated
over $3 billion in transactions. Their areas of specialty include
corporate tenant representation, acquisition and disposition advisory
services, and asset marketing and leasing services in Orange County,
California www.BridgeCommercialProperties.com
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Senior Vice President
Grubb & Ellis
2003–2011
Scott was a leader and top-producing broker for the Newport
Beach office of Grubb & Ellis with an emphasis on office tenant
representation, institutional building marketing, investment sales,
medical leasing, and user sales. ***Top Five Office Brokers -
Orange County, 2004-2008 ***Top 2 Office Brokers - Newport
Beach, 2008.
Grubb & Ellis (NYSE: GBE) is one of the largest and most respected
commercial real estate and investment companies in the world.
Our 5,200 professionals in more than 100 company- owned and
affiliate offices draw from a unique platform of real estate services,
practice groups, and investment products to deliver comprehensive,
integrated solutions to real estate owners, tenants, and investors. The
firm’s transaction, management, consulting, and investment services
are supported by highly regarded proprietary market research and
extensive local expertise. Through its investment management
business, the company is a leading sponsor of real estate investment
programs.
Co-Founder & Executive Vice-President of Sales & Marketing
TechSpace
2000–2003
Co-Founded in 2000, TechSpace is the nation’s premier full-service
facilities and infrastructure provider. We integrate world-class flexible
office space, state-of-the-art technology services, and business process
outsourcing solutions, enabling our customers to focus on their core
business. In June 2002, California based Enfrastructure acquired New
York based TechSpace, a leading provider of alternative office space
and infrastructure services to growing and established companies. In
June 2003, Enfrastructure formally changed its name to TechSpace
to reflect the company’s value proposition and leverage the brand
awareness built by TechSpace in other markets throughout the years.
www.techSpace.com
Million Dollar Broker
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Senior Vice President
CB Richard Ellis
1986–2000
Scott acted as a leader and top producing broker focused on Orange
County office properties working out of the Newport Beach office
of CBRE. CB Richard Ellis is the global leader in real estate
services. Together with our partner and affiliate offices, we have
more than 300 offices in 50 countries. Each year, we complete
thousands of successful assignments with clients from a wide range
of industries. Every day, in markets around the globe, we apply our
insight, experience, intelligence, and resources to help clients make
informed real estate decisions. We do not exist without our clients
– and we never lose sight of this fact. To that end, every employee
in every office around the world lives by our corporate mission: Put
the client first – always. Tailor our services to the client’s needs.
Think innovatively, but act practically. Help the client make the
most informed business decisions. Deliver results. ***South
Orange County “Rookie of the year and number 4 in the Office
1988. ***South Orange County Office Broker of the Year, 1993.
***South Orange County Broker of the Year, 1994, 1995, 1996.
***Top 5Brokers of the year South Orange County, 1988-2000.
***Top 10 Office Brokers Orange County, 1989-2000. ***National
Chairman’s Club Member, 1993, 1994, 1995, 1997.
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2011-Present, Founder, Commercial Real Estate Brokers Academy
Commercial Real Estate Brokers Academy,
www.CommercialRealEstateBrokersAcademy.com was founded
by Scott Johnstone, a 25 year veteran of the commercial real
estate industry, in an effort to create an online, single source of
educational products and services for entry level to senior level
brokers looking to break into or increase their income in the
commercial real estate industry.
Products and services include:
• e-book: The Commercial Real Estate Broker’s Career Guide
Book
• Paperback Book: Million Dollar Broker: The Commercial
Real Estate Sensation
• 6 Disc Audio Training Series: How to Build Your Own Million
Dollar Commercial Real Estate Brokerage Firm, a Step-By-
Step Process to Building your Own Company the Right Way
• 6 DVD Series: How to Renegotiate a Commercial Real Estate
Lease
• Online Video Training Series: Building and Maintaining Your
Commercial Brokerage Business at the Highest Level
• Monthly Continuity Membership Video Series: The latest
cutting edge presentations, processes and collateral in the
commercial brokerage industry, and video interviews with
industry leaders on how they became and continue to be great.
Million Dollar Broker
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Testimonials
“Although Scott is now a competitor, when we worked together
years ago when I was still a broker I always found him to be hard
working, driven, high Energy and fun to be around.”
Jeffrey Moore, Senior Managing Director, CB Richard Ellis
“I had the pleasure of working with Scott when he was a senior level
broker at Grubb & Ellis. As one of the Company’s top producers,
Scott did an excellent job of listening to his clients and developing
strategies that exceeded their expectations. He was responsive,
creative and productive.” April 27, 2011
Robert Bach, SVP, Chief Economist, Grubb & Ellis
“Scott is a true professional in the commercial real estate business.
He provided excellent leadership in our effort to find and negotiate
office space for the company, and it concluded recently with a very
fair and economically advantageous deal for CompPartners. I would
definitely work with him again!”
Bruce Carlin, CEO, CompPartners
“Scott Johnstone and I began our careers in Commercial real estate
over 25 years ago. Scott is a tenacious broker with a vast knowledge
of the Orange County real estate market. He knows how to add value
to any transaction. Scott knows how to get the job done, and has an
array of testimonials that attest to these facts.”
Greg May, Managing Director,
Executive Vice President, Grubb & Ellis
“Scott is a consummate professional who consistently goes beyond
what is expected to achieve superior results for his clients. In
addition to being incredibly knowledgeable and detail oriented he’s
a lot of fun to work with!”
Debra Larsen, Co- Founder TechSpace
“Scott is clearly one of the most capable (and therefore successful)
commercial real estate brokers with whom I have had the pleasure
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to work. He and his team of experts were second to none when they
represented our interests, particularly when faced with challenging
market conditions. I strongly recommend him and would be most
pleased to provide further information as may be required in support
of this solid professional.”
Michael Hall, Ph.D.
“I have known Scott personally and professionally for over 20 years
and he is driven, results oriented and has high integrity.”
Jim Ulcickas, CEO, Managing partner,
Blue Water Grill restaurants
“Scott has done an excellent job helping us lease and sell our office
properties and with our relocation needs.”
Lyle McColloch, CFO California Pacific Homes
“Several of my technology clients worked with Scott during
their expansion phase and he always impressed with his market
knowledge, performance and execution. He is a consummate
professional and I would highly recommend him to all of my
clients.”
Mark Breneman, Senior Vice President,
Silicon Valley Bank
“20 years ago, I got my start in commercial real estate working as
a “Runner” for Mr. Johnstone. His passion for the business, strong
work ethic and professionalism started me on my career path that I
enjoy to this day. Without reservation, I recommend Scott Johnstone
for commercial real estate needs.”
Chris Schreiber, CCIM,
“Scott’s many years in the business of commercial real estate
consulting has allowed him to be a trusted and highly credible
advisor to many tenant and landlord clients in all aspects of
complicated and structured transactions. Scott has worked on some
of the largest tenant and landlord projects in Southern California
and it’s his experience and expertise that makes him very valuable
asset in guiding his clients through the transaction process from
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start to finish. I would highly recommend Scott in the business of
commercial real estate transactions.”
John Bendetti, Leasing Director, Maguire Properties
“Scott is consistently on top of the market with intimate knowledge
of all activity throughout Orange County. He has been a great
resource for me and remains a true professional.”
Raymond Polverini,
Project Manager CT Realty Investors
“Scott is a consummate professional -- always prepared and polished.
He is a strategic thinker, very personable and he instills confidence
with his depth of knowledge and expertise.”
Ann Forella, Senior Asset Manager,
Buie Stoddard Properties
“Scott is the ONLY commercial real estate broker I recommend. He
has impeccable work ethic and his knowledge of commercial real
estate in Orange County is remarkable. My father might be the most
well connected and reputable commercial real estate individual in
Orange County, and he hired and believes in Scott.”
Gregory Wertman, Director, “The Buddy Group”
“Scott is experienced, highly personable, very professional and takes
great care to listen and provide feasible solutions. Scott is detail
oriented, sees the big picture and is a visionary. With compassion for
people he is a pleasure to work with.”
Stefanie Phan, Assistant Editor, Riviera Magazine
“Scott is a great, hard working, focused, go-getter! He knows whose
whom and is focused on getting the job done once he gets the deal.
He knows how to work hard and play hard and on top of that is a
great dad!”
Stacey Noonan, Account Executive -
Major Accounts Division, Fidelity National Title
“Scott introduced us to several of his clients in which we
recommended an audit of the Common Area Maintenance (CAM)
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charges. We were able to recover overcharges for the clients that
most tenants never question. Not only did Scott do the deal, he helped
implement the deal after the fact to ensure what was negotiated was
actually being done.”
Terry Barger, Managing Member, CyberLease, LLC
“I can always count on Scott to get the project leased/sold with
expediency and at top value.”
John Dobrott, Commercial Developer
“I have worked with Scott on several projects over the years. I’ve
found him to be honest, hard working and diligent with an excellent
knowledge of the commercial real estate market in Orange County.
He has been a consummate professional in all our various dealings.
I highly recommend Scott and look forward to working with him on
future investments.”
Brent Rusick, President, Buy.com,
CEO Business Cards express
“I have be acquainted with Scott for many years. He is very
professional and always delivers for his clients. I would recommend
him to any of my clients.”
John Racunas, Senior vice president,
Lockton Insurance Brokers
“Scott is an extremely detailed and driven broker. His follow through
with his clients places his services above the rest. Scott is a hard
worker who somehow finds time to spend with his family. He brings
his knowledge of the market and excitement for the industry to each
transaction makes working with Scott a pleasure.”
Devon Stanke, Property Manager, CIP
“I have known Scott both personally and professionally for many
years. Scott has demonstrated constant professionalism, and has
always dedicated himself to both his clients and their needs. I look
forward to Scott’s support on future endeavors.”
Gregory Bloom, Executive Vice President &
General Manager, Seal Science, Inc.
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“In our dealings with Scott while he was at Grubb & Ellis, we were
very impressed with his market knowledge, professionalism and
integrity. I would highly recommend him.”
Lonnie Nadal, Commercial Property Investor
“I can’t imagine a better client trusted advisor and advocate than
you Scott- I really enjoy working with you!” June 29, 2011
Sandi Warneke, Senior Architect, Gensler
“As a commercial real estate attorney with 30 years+ experience, I
have worked with many, many commercial brokers. Scott stands at
the top of the list in terms of ability, intelligence and resourcefulness.”
Stevan Gromet, Managing Principal,
Gromet & Associates
“As a Contractor, we rarely see a broker follow through a project
until completion. Scott’s attention to detail and diligence on behalf
of his clients has been not only helpful, but refreshing to see. I
believe this is why Scott maintains one of the best reputations in the
business.”
Don Fraser, Vice President, Howard Building Corporation
“Scott, is a very seasoned professional with an attentive eye for
detail. “The Devil is in the Detail” Never seems to be a burden
for Scott but rather a favorite pastime. Seeking and outing those
Devilish clauses is an inherent strength Scott possesses and uses to
perfection with each contract.” “In addition to Scott being a talented
broker he’s also an exceptional snowboarder!”
Ronald McElroy, Owner, Real Office Centers
“Scott has been a great guy to work with. He and his team are
organized, knowledgeable and very professional. Our past business
deals have been very successful. I recommend Scott to anyone who
needs real estate services.”
Ken Wink, Vice President, LEED AP, Ware Malcomb
“I have had the privilege of working with Scott in the past while
he was with CBRE. Scott is an exceptional resource, has excellent
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102
communication skills, and uses a broad network of business
professionals to execute for his clients. I would highly recommend
Scott on future assignments. MM”
Michael Merk,
“I have known Scott on both a professional and personal level for
over 25 years, and can truthfully say he’s a great guy and someone
I would look forward to working with on any opportunity. Scott has
the unique ability to act in a very professional manner, yet he brings
fun and enjoyment to the process at the same time. I’m confident
that should someone have the pleasure of working with Scott they
would find it to be a very positive experience.”
Derek Dean, Sr. Marketing Consultant,
Grubb & Ellis/BRE Commercial
“Scott is a true professional with a high level of integrity! I very
much recommend his services.”
Trisha Navidzadeh, Space Agent, Virgin Galactic
“Scott has a great team that continues to serve our real estate
portfolio at the highest level. When we need an expert, we call Scott
and his team. We have know Scott over 20 years, and consider him
a valuable asset to our real estate holdings.”
Kelly Boyle, Senior Asset Manager,
Griffin Related Properties
“I’ve worked with Scott at CBRE and he is a conscientious
commercial real estate professional. He has always been a top
producer and is committed to excellence service and superior market
knowledge. He was a real pleasure to work with.”
Charlie Christensen, Vice President,
General Growth Properties
“Scott has extensive experience in the commercial real estate field
spanning over decades. This combined with his thick Rolodex
allows Scott to get deals done at the highest level of execution.”
James Fowler, VP, CBRE
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“I’ve worked with Scott on numerous projects where he represented
tenants in real estate transactions. Scott has consistently negotiated
deals where we clearly saw benefits to the tenant with good TI
budgets and aggressive rents. Scott has always been a team player
and we certainly enjoy working with him.”
Ted Heisler, Senior Architect, Ware Malcolm
“I have had the opportunity to work with Scott several times over
the years. Each and every time the end result was positive for all
parties. Scott has always exhibited high levels of knowledge,
professionalism and integrity.”
Dawson Davenport,
President Coldwell Banker Commercial
“Scott has done an excellent job representing Mark IV Capital
in South County for many years. Scott is a true professional,
possessing expert knowledge, tremendous experience, and creative
insight. I would highly recommend Scott to anyone needing quality
representation.”
Paul Cate, CFO Mark IV Capital
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These are my two beautiful children on a farewell trip for my
grandmother where we spread her ashes as requested in a secret
place on the Merced River in Yosemite National Park. A place we
discovered when I was a child on one of our many camping trips in
this magnificent valley. A place where the mighty Merced slows to a
peaceful flow , mirroring the granite walls of the valley where there
is a rock in the slow waters flow. “The rock” that we all swim to and
warm ourselves on after the snow melted waters chill our bones. The
rock that seems to have avoided times eventual test. A place where I
take my children now and where we bid our final farewell.
Here is a poem my grandmother wrote about me some years ago that
she published shortly after her last birthday at the age of 89. We didn’t
have a lot of money as kids and camping was our favorite vacation time.
Boy At The End Of The Pier
The sun sinks below the rim of the sea.
The shoreline and the Gaviota Hills
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Blur as misty vapor fills the early evening air.
The water and the sky are darkening, swells break
Heavily against the wooden struts and spans.
The boy was the only one still fishing,
The only one on the end of the pier.
Skinny twelve-year-old kid, sunburned,
Yellow hair stiff with salt, eyeballs pink
From the wind and flashes from the sunstruck sea.
He’s been here since early morning,
Before the fog lifted, except for runs
To the rest room on the beach, or
The faucet on the pier for brackish water.
A blue plastic bucket holds the day’s catch,
Four sand dabs and two silver mackerel,
One still splashing in the bloody water.
A couple of trash fish lie by the pail,
Chopped up for bait, fish blood and
Stringy entrails now dried, becoming
An integral part of the wooden deck
Till the next storm washes it clean.
An oblong plastic container
Holds rusty pliers, a red penknife,
And a square of plastic sponge
Pierced by odd sized hooks.
On the smooth, gray planks around him
Are curled up remnants of peanut butter sandwich,
Pieces of orange rind and three empty Coke cans,
A Milky Way wrapped and a Frito bag,
All covered with sand and fish scales.
Two old men in dark zippered jackets and
Baseball caps clean their fish in
A trough by a faucet, glancing at
The boy casting his line against the wind.
They nod their heads approvingly -- tough little kid.
One by one, the lights go on
In the RV park across the beach.
A woman leaves a campsite, crosses
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The windblown sand stinging like sleet,
Head down, body braced against the wind,
She walks quickly to the end of the pier.
She embraces the boy and he pulls up his line,
Secures the hook to the bail of the reel.
Slowly and reluctantly, he follows her,
Looking back over his shoulder
At the dark blue sea.
It is his passion.
He’ll be back in the morning.
Marilynn P. Ellis
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Appendix
A. “Broker Code of the West”
B. Example: Exclusive Tenant Representation Letter
C. Example: Office – Request for Proposal-RFP
D. Example: Office – Letter of Intent-LOI
E. Example: Office – User-Purchase, Letter of Intent-LOI
F. Example: Office – Investor-Purchase, Letter of Intent-LOI
G. Example: Deal Timeline & Flowchart
H. Example: Capabilities Brochure – Tenant
I. Example: Market Newsletter
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Appendix A: “Broker Code of the West”
The definitive code of Ethics passed down from leader
to leader, firm to firm.
I. Commercial Real Estate Brokerage Practices
A. Initial Contact - Clients
When initially contacting a potential client, the client must be asked
if he is working with any other broker within your office. If he
mentions another broker at your office, it should be immediately
determined (a) who the other salesperson is, and (b) whether this is a
current relationship and specifically involved with the client’s current
requirement. Should this be the case, it’s improper to continue, and
the second salesperson should state that the client is “in good hands”
and then immediately inform the original salesperson of the contact.
B. Different Decision Makers
In some cases, two or more salespersons may learn that they are
working independently with different decision makers within
the same firm. When first learning of the situation, they are
encouraged to “pool their efforts.” Should that not occur, once
all salespersons involved have discussed it fully with each other,
they are obligated to immediately inform management of the
problem, who, in turn, shall render a decision as to who shall
represent the client.
C. Prior Relationships
If a salesperson leases or sells a building to a client, he shall have
no automatic right to represent that client on future transactions. It
should be noted, however, that it might be beneficial to all parties to
honor another salesperson’s prior relationship.
D. Expired Listing Protection
When an exclusive listing expires or is cancelled and the contract
is not given to another salesperson, the listing salesperson shall be
honored as the exclusive agent within the firm for an additional
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period of sixty days, if the listing salesperson has been actively
marketing the property during the original listing period.
E. Injecting Oneself in Deal
Under no circumstances should a salesperson try to inject himself
into a transaction initiated by another broker from the same firm.
II. Co-Listings
A. Listings, which are serviced by two or more salespersons,
merit an acknowledgement of the commission split on both
the seller/lessor side and buyer/lessee side, ideally in writing.
Variations and exceptions must be clarified “up front,” in
writing, signed by all parties and could include:
1. Exclusions of previous clients.
2. Different treatment for “call-ins” versus “cold calls.”
3. Properties where one of the salespersons is operating outside
his geographical territory.
4. Any commission split other than an equal distribution
among members.
III. Partnership / Teams
A. It’s recommended that the partnerships or teams address, in
advance and in writing, such issues as the following:
1. Purpose of the partnership/team.
2. Expected duration.
3. Treatment of deals resulting from partnership/team
activities but not related to the designated requirement.
4. Representation of prospects after partnership/team
termination.
B. As a guideline, a partnership or team, when joining another
salesperson(s), shall be treated as one person, regardless
of the number of salespersons in the partnership/team.
Understandings should be evidenced by written agreement.
IV. General
A. Seven-Day Grace Period
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A salesperson will have a period of seven (7) calendar days after
taking a valid listing to present the listing to his prospective
buyers/tenants. At the end of that period, he or she must distribute
the listing in the normal manner.
B. Dissatisfied Client
Should a client inform one salesperson that or she is unhappy with
the services of another salesperson, the second salesperson should
immediately inform the original salesperson and management.
C. Open Listings
Management must approve all open listings. It’s the obligation
of the listing salesperson to distribute the information within the
appropriate offices in order to be honored as the listing agent
within the same firm. However, this listing position does not
apply to major properties, such as development projects, which
are generally known to be available.
V. Negative Selling
A. Sales personnel shall not use “negative selling” in an attempt
to gain control of a client or property. Such tactics include
implying (or expressly stating) that another broker/salesperson,
or office in the same firm, is not sufficiently qualified by
experience or location to handle a particular requirement.
VI. Offers
A. Once an offer has been presented and accepted, no further offers
should be solicited. One has a duty to inform all parties they may
represent and receive approval from the parties in writing when
one is in a situation to present multiple offers on one property.
VII. Sharing Information – Handling Potential Disputes
A. Sales personnel are encouraged to share information freely.
If a salesperson expects to be compensated for sharing
specific information (or clients), it’s his or her duty to
be explicit about their commission expectations. Any
understandings between salespersons shall be reduced to
writing and signed by all parties.
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B. Should any information be relayed to another broker within
your office in or out of the specialty group meetings and the
receiving broker learns differently about the information
it should be relayed immediately to the broker providing
the information and all questions should be directed to the
information source before going direct to the client.
C. Should situations arise that cause conflict and or confusion,
the brokers involved should immediately bring it to the
attention of the other to “politely discuss” each side before
going to management.
VIII. Contact with Potential Clients
A. Initial Contact — if a broker/salesperson in your firm is
mentioned:
1. If actively working together: “You’re in good hands.”
2. Recommendation: Talk to the salesperson, tell them you
“stumbled on” their deal and ask if you can be of any
assistance.
3. If not active: “I’ll speak with ________ and one of us will
get back to you.”
4. Recommendation: Team up!
B. Different Decision-Makers — do as the code says. What
should be prevented is broker/salespeople hearing of a
requirement and purposely go to a different decision-maker
— this is highly unethical.
C. Whom Can You Call? Anyone who is not currently known to
be working with a broker/salesperson in the same firm — at
your discretion — no one who recently worked with a broker
/ salesperson in your firm.
IX. Hot Off the Press / Marketing Materials
A. Do not review other brokers printed materials without the
marketing broker’s permission and refrain from approaching in-
house agents unsolicited about properties that they have
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not yet openly marketed (aka “surfing the copy machine for
leads”). Often time’s agents are given permission to discreetly or
even exclusively market an asset. However, out of respect to the
agent that generated the opportunity, please do not approach the
marketing broker until such times as he sends out an announcement
encouraging others to participate in the process.
B. An exception might be a situation where a project handled
by another broker (i.e. leasing broker) is being marketed
by another broker within the company, without the leasing
agents involvement and our company comes off as being
uncoordinated in our marketing efforts as a prospect might ask
the leasing agent about a property he thinks the agent would
naturally know is being offered for sale or lease. In this case,
the discovering agent should first approach the marketing
broker and then management if the situation is “murky.”
X. Other Issues
A. Dissemination of Information
Don’t mail information to other people’s clients.
B. Runner / Trainer Relationship
As a “Runner”, if you uncover a deal or create a relationship, it’s the
property of your trainer.
C. Promotion of Fellow Salespeople
Always promote a broker/salesperson in your firm for listings and
tenant representation assignments!
D. Full Commission and Bonus Commissions
Don’t ask for them and don’t encourage your clients to give them
unless absolutely necessary to get the project leased — don’t accept
them when offered to you unless they are being formally offered to
the entire community.
E. Direct Contact with Other’s Clients
Don’t contact your counterparts’ clients in a deal, unless your
counterpart gives you permission.
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F. Soliciting listed Buildings
The real estate code of ethics strongly prohibits soliciting already
listed buildings.
G. Plagiarism
Always respect the creator of unique marketing tools. Ask permission
to copy something exclusive to them — especially if they were your
trainer.
H. Renegotiation of Lease Extensions and Options
If a contract exists, you should always ask, especially if a fellow
broker/salesperson is involved, work on the deal at your risk without
potential for payment.
I. Appraiser Calls
Always support a fellow salesperson if an appraiser calls on one of
their deals.
J. Investment – Lease Scoop
Never try to scoop a salesperson leasing a building by trying to sell
it as an investment before they can — after all, they created the
opportunity by leasing it.
K. Owner – Tenant Conflict
If a salesperson is representing a tenant on relocation, don’t call the
landlord to solicit the listing without asking the salesperson first.
You may screw up their deal and they should have a chance at the
listing — unless, of course, you have a relationship with the landlord
on the building and your firm does not list it.
L. Past Discussions on Opportunities
Comments like “let’s go after…” or “let’s work on...” should be
documented or have a formal/verbal agreement unless both parties
actively pursue the deal with regular discussion. Too often, after
nothing has happened, one party will be reintroduced to the deal by
another salesperson, work on the deal with them, and be accused by
the old partner of cheating them.
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M. Office Talk
You can’t work on anything you overhear that wasn’t addressed to
you. Respect an open environment — it’s a privilege.
N. Administrative Support Desks
If you oversee something regarding someone else’s business while
at your administrative support’s desk — erase it from memory.
O. Sign Calls
Partners on the listing referenced share all sign call deals.
P. Verbal Registration
Don’t discuss a deal in hopes of getting others to back off. Unless
you have a solidified relationship — or have had a meeting with the
principal — you speak at your own risk.
Q. Simultaneous Pursuit of a Deal - Options
• Team up
• Continue until one party gets control — fairly
• See your manager —, which is always a good idea first.
R. Listings
If a salesperson has a lease listing, you can’t call the owner regarding
a sale.
S. Exclusivity of Clients Listing to Listing
This is a gray area — always honor current relationship and be fair
to your fellow salespeople — use the relationship to your advantage
T. Seniority
Respect the senior salespeople, even though they may be no older than
you
• It takes a lot to be successful here in the long run, and they
have earned it
• Besides, they have probably helped you along the way and
you’ll be senior yourself one day.
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U. Brokerage Team Restructuring
If multiple salespeople from the same firm are working together on the
same account, and one or more salespeople desire to either add a different
salesperson, or otherwise restructure the current team, the salesperson
initiating the change shall initially discuss the desired change with the
current team and then if necessary with management. In no event shall
a salesperson initiate any discussion with a client unless and until it has
been resolved as outlined above.
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Appendix B: Example Document -
Exclusive Tenant Representation Letter
January 1, 2011
Scott Johnstone
Bridge Commercial Properties
4695 MacArthur Blvd, Ste 1100
Newport Beach, CA 92660
RE: ACME Widget Company Representation:
This letter confirms the agreement between ACME Widget Company
and Bridge Commercial Properties as its sole and exclusive agent to
aid in a contemplated relocation, renewal, or purchase of a facility.
This appointment shall become effective immediately and shall
extend until a lease, lease amendment, sublease, or set of escrow
instructions is fully executed. It is to be understood that either party
upon thirty (30) days written notice may cancel this agreement. In
such event, Bridge Commercial Properties shall be protected on all
properties submitted.
Bridge Commercial Properties is authorized to negotiate on behalf
of Acme Widget Company with owners, developers, brokers, and
all interested parties to explore real estate opportunities that meet
ACME Widget Company.
Bridge Commercial Properties will make all efforts to present to
ACME Widget Company all pertinent information in detail as
required throughout the decision making and transaction process.
John Doe
CEO
ACME Widgit Corporation
1000 Commonwealth Blvd.
Newport Beach, CA 92660
949.555.5555 main
949.555.5555 fax
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All documentation resulting from Bridge Commercial Properties
efforts and negotiations is subject to ultimate approval by ACME
Widget Company.
Commissions and/or fees to which Bridge Commercial Properties is
entitled shall be paid by the owner, landlord, or sub-landlord of the
property purchased, leased, or subleased by ACME Widget Company
shall require that the owner, landlord, or sub-Landlord compensate
Bridge Commercial Properties with a market commission.
AGREED AND ACCEPTED:
ACME Widget Company Bridge Commercial Properties
By: ______________________ By _______________________
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Appendix C: Example Document –
Office – Request for Proposal-RFP
January 1, 2011
John Doe
Any Brokerage Company USA
12345 Any Street, Suite 100
Newport Beach, CA 92660
VIA EMAIL: johndoe@anybroker.com
RE: REQUEST FOR
PROPOSAL TO LEASE
111 #1 STREET, NEWPORT BEACH, CA
Dear Tim:
On behalf of The Acme Corporation, (“Tenant”), Bridge Commercial
Properties has been authorized to present the following Request for
Proposal to Any Landlord (“Landlord”), whereby Tenant would consider
leasing space at 111 #1 Street, Newport Beach, CA (the “Project”).
The terms and conditions Tenant requests Landlord to respond to are
as follows:
1. Project: 111 Plaza
2. Premises: 111 #1 Street, Newport Beach, CA
3. Square Footage: Approximately 50,000 rentable square feet.
All measurements, including those described
above, are to be determined in accordance with
the standards set forth in ANSI Z65.1-1996,
as promulgated by the Building Owners and
Managers Association (“BOMA Standard”).
Tenant shall be entitled to independently verify
all measurements.
Scott W Johnstone
President
Bridge Commercial Properties
4695 MacArthur Court, Ste 1100
Newport Beach, CA 92660
949.555.5555 main
949.555.5555 fax
S@BridgeCommercialProperties.com
www.BridgeCommercialProperties.com
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4. Lease Term: Please provide a ten (10) year option.
5. Lease
Commencement
Date:
The Lease Term shall commence upon substantial
completion of the Tenant Improvements (as
described below) and after a final certificate of
occupancy has been issued with respect thereto,
anticipated to be July 1, 2011.
6. Delayed Occupancy
Resulting from
Landlord Delays:
In the event the Tenant Improvements are not
substantially complete for move in by Tenant
on or before sixty (60) days from the Target
Commencement Date, Landlord shall indemnify
and hold Tenant harmless against any damages, cost
for liabilities incurred by Tenant including but not
limited to additional rent and/or penalties resulting
from such delay.
7. Early Occupancy: Following completion of the Tenant Improvements,
subject to a punch list, Landlord shall deliver a
Certificate of Occupancy to Tenant and grant a
period of two (2) weeks prior occupancy to fixturize
the Premises which would include, but not limited
to, installation of furniture systems, fixtures, and
equipment (FF&E), telecommunications and
computer cabling.
8. Rental Rate: Please propose the basic monthly rental rate during
the lease term on a full service gross basis.
9. Tenant
Improvements:
Tenant requests that Landlord provide Tenant
with a tenant improvement allowance sufficient
to cover all costs associated with the build-out.
The tenant improvement costs may include,
but shall not be limited to, the following: space
planning, programming, design development
drawings, pricing drawings, construction
drawings, electrical / mechanical / plumbing
/ engineering drawings, reimbursables,
city permits, approval fees, construction
administration, construction, all profit,
overhead and general conditions.
10. Core and Shell
Description:
Tenant requests that Landlord provide written
information as it relates to the condition of the core
and shell.
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11. Move Costs,
Telephone/
Computer Cabling
Costs, And FF&E:
Tenant will require Landlord provide an allowance,
which will be used to assist Tenant with its move
costs, telephone/computer cabling costs, and FF&E.
12. Option to Renew: So long as Tenant is not in default under the terms
of the lease and with not more than nine (9) months
and no less than six (6) months prior written notice,
Tenant shall have the option to renew the lease for
two (2) additional periods of five (5) years each. The
rent during the option term shall be 95% of the then
fair market value for similar type properties in the
general market area.
13. Operating
Expenses:
Tenant shall pay its pro rata share of operation
expenses and real estate taxes (“Operating
Expenses”) associated with the Premises, in
excess of the base year amount. The base year of
the lease for the purposes of calculation shall be
2012. The base year shall be grossed up to reflect
100% occupancy of the Project and any increases
in operating expenses shall be capped on a non-
cumulative, non-compounded basis at three percent
(3%) per year.
In addition, Tenant will require a list of operating
expense exclusions to be incorporated into the lease
agreement.
14. Audit by Tenant: Landlord shall provide to Tenant in substantial detail
each year, calculations performed to determine the
Project Operating Expenses in accordance with
the applicable provisions of the lease. Landlord
shall show by account the total operating costs for
the building and all adjustments corresponding
to the requirements as set forth herein. Landlord
shall provide in reasonable detail its calculation
of Tenant’s pro rata share of project operating
expenses by setting forth the ratio of the Premises,
ratable square feet to project’s rentable square feet.
Landlord shall also provide the average building
occupancy for such year.
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Tenant shall have the right, at its own cost and
expense (without requiring that Tenant pay
Landlord’s cost of complying with this provision)
to audit or inspect Landlord’s detailed records
each year with respect to the project operating
expenses as well as other additional rent payable
by Tenant pursuant to the lease for any lease year
(not to exceed one time per year). Landlord shall
utilize, and cost utilized, accounting records
and procedures for each lease year conforming
to generally accepted accounting principles,
consistently applied with respect to all project
operating expenses for such lease year.
15. First Right of Refusal: Tenant shall have the First Right of Refusal to
lease any space that may become available in the
building. When any space becomes available
and Landlord has a bona fide interested third
party, then landlord shall provide Tenant with
written notification of such availability and
Tenant shall have ten (10) business days to
elect to expand into said Expansion Space.
Expansion Space terms and conditions shall be
co-terminus and consistent with the terms and
conditions originally negotiated for the initial
Premises incorporating a new base year for the
purposes of Operating Expenses calculation.
16. Relocation: Landlord shall have no right to relocate
Tenant’s Premises during the Lease Term.
17. Parking: Tenant shall have, for the use of Tenant and
its clients and employees and other agents, a
parking ratio of four (4) parking spaces per
one thousand (1,000) rentable square feet
leased. All Tenant’s parking spaces shall be
available free of charge and accessible 24
hours per day, seven (7) days per week, every
day of the year for the entire term of the Lease
and any extensions thereafter.
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122
18. Roof Rights: Tenant shall have the exclusive rights to install
and maintain on the roof of the building,
satellite dishes for Tenant’s exclusive use.
The location of such equipment shall be
in a mutually agreed upon location with
specifications being provided by Tenant for
Landlord’s reasonable review and approval.
Landlord shall not charge Tenant for said
rights and Tenant shall be responsible for
the installation, maintenance, including
electricity, insurance and removal of said
satellite, including the damage to the building,
if any, caused by the use or installation of said
satellite.
19. Architects/Space
Planning:
In the event your building is selected as a
finalist, Tenant will require that Landlord
compensate an architect of Tenant’s choice
to complete a space program, space plan and
design development drawings at the cost of
$0.15 per usable square foot. Tenant’s architect
shall complete all space programming, space
planning, and construction drawings as well
as coordinating all electrical, mechanical,
plumbing, and engineering drawings.
20. Construction
Administration Fee:
There shall be no construction administration
fee of any kind.
21. Heating, Ventilation
& Air Conditioning
(“HVAC”):
Tenant’s standard operating hours during the
term of the lease shall be Monday through
Friday, 6:00 a.m. to 8:00 p.m., and Saturday,
8:00 a.m. to 1:00 p.m. After hours HVAC shall
be provided at Landlord’s actual cost.
22. Toxic Materials: Landlord shall have the express responsibility
to advise Tenant of any toxic materials or
hazardous wastes, which are located in, or
about the Premises.
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23. Non-Disturbance
Agreement:
Landlord shall provide Tenant with a non-
disturbance agreement reasonably acceptable
to Tenant from any superior mortgagee of
Landlord now and when that may come into
existence at any time prior to the expiration of
the term of the lease as a condition precedent
to any obligation of Tenant to subordinate its
interest to any such person.
24. Insurance and
Indemnity:
Landlord shall maintain full replacement “all
risk” property insurance on the Project with
full waiver of subrogation and shall indemnify
Tenant on the same terms as Tenant may agree
to indemnify Landlord.
25. Property management
and Project Defects:
Landlord, at Landlord’s sole cost and expense,
shall operate, manage, and maintain the
Project and common areas in first class order,
condition and repair throughout the lease
term. Landlord shall be 100% responsible for
repair of any and all defects in the Project and
Premises over the lease term.
26. Americans with
Disabilities Act:
All costs related to compliance with the applicable
provisions of the Americans with Disabilities Act
of 1990 (ADA) shall be Landlord’s cost. These
costs shall not be part of the Tenant Improvement
Allowance or contribute to increasing the
operating expenses.
27. Signage: In addition to suite entry and directory board
signage, Tenant will require the right, but
not he obligation, to install building top and
monument signage at the Project.
28. Sublease/Assignment: Tenant shall have the right to sublease or assign
all or a portion of the space to any subsidiary
company without Landlord’s approval and all
other subleases or assignments with Landlord’s
approval, which shall not be unreasonably
withheld, conditioned or delayed.
Scott W Johnstone
124
29. Security Deposit: Tenant shall not be required to pay a security
deposit.
30. Holding Over In the event Tenant remains an occupant of the
Premises beyond the expiration of the lease
term, Tenant will agree to pay Landlord a hold
over rent in the amount equal to 150% of the
then rent payable.
31. Commission
Agreement:
Bridge Commercial Properties is representing
the Tenant in this possible transaction, and
shall be paid a standard full commission of
four percent (4%) for the first five (5) years,
and two percent (2%) for the second five
year of the full service gross lease value by
Landlord as follows: One hundred percent
(100%) is payable upon lease execution.
32. Dual Agency
Disclosure:
In the Agreement, Lessor and Lessee will
each represent and warrant to the other that it
has engaged no broker or intermediary other
than Bridge Commercial Properties, which
represents both the Lessor and Lessee, in
connection with the proposed transaction and
will agree to indemnify the other party for any
other loss, liability, and reasonable expenses,
including attorneys’ fees, incurred by virtue of
any action on its part giving rise to a breach of
such warranty or a claim for such other fees.
Lessor will be responsible for commission due
to Bridge Commercial Properties pursuant to a
separate written agreement.
Both parties are hereby notified of the Dual
Agency and agree hereto.
This Proposal is intended solely as a preliminary expression of
general intentions and is to be used for discussion purposes only.
The parties intend that neither shall have any contractual obligations
to the other with respect to the matters referred herein unless and
until a definitive agreement has been fully executed and delivered
by the parties. The parties agree that this Proposal is not intended
Million Dollar Broker
125
to create any agreement or obligation by either party to negotiate
a definitive lease/purchase and sale agreement and imposes no
duty whatsoever on either party to continue negotiations, including
without limitation, any obligation to negotiate in good faith or in
any way other than at arm’s length. Prior to delivery of a definitive
executed agreement, and without any liability to the other party,
either party may (1) propose different terms from those summarized
herein, (2) enter into negotiations with other parties, and/or (3)
unilaterally terminate all negotiations with the other party hereto.
We appreciate your assistance and cooperation, and look forward
to receiving your response. This Proposal shall remain valid until
January 10, 2011. If you have any questions, please feel free to
contact either of us at your convenience.
Regards,
Scott W. Johnstone
Senior Vice President
(949) 555-5555
s@BridgeCommercialProperties.com
CA License # 00950979
cc: Robert Rich, CEO, Acme Corporation
Scott W Johnstone
126
EXHIBIT A
CALIFORNIA SALE/LEASE AMERICANS WITH DISABILITIES ACT,
HAZARDOUS MATERIALS AND TAX DISCLOSURE
The Americans with Disabilities Act is intended to make many business
establishments equally accessible to persons with a variety of disabilities;
modifications to real property may be required. State and local laws also may
mandate changes. The real estate brokers in this transaction are not qualified to
advise you as to what, if any, changes may be required now, or in the future.
Owners and tenants should consult attorneys and qualified design professionals
of their choice for information regarding these matters. Real estate brokers cannot
determine which attorneys or design professionals have the appropriate expertise
in this area.
Various construction materials may contain items that have been or may be in
the future be determined to be hazardous (toxic) or undesirable and may need
to be specifically treated/handled or removed. For example, some transformers
and other electrical components contain PCBs, and asbestos has been used
in components such as fire-proofing, heating and cooling systems, air duct
installation, spray-on and tile acoustical materials, linoleum, floor tiles, roofing,
dry wall and plaster. Due to prior uses of the Property or in the area, the Property
may have hazardous or undesirable metals (including lead-based paint), minerals,
chemicals, hydrocarbons, or biological hazards (including, but not limited to,
mold) or radioactive items (including electrical and magnetic fields) in soils, water
building components, above or below-ground containers or elsewhere in areas
that may or may not be accessible or noticeable. Such items may leak or otherwise
be elsewhere in areas that may or may not be accessible or noticeable. Such items
may leak or otherwise be released. Real estate agents have no expertise in the
detection or correction or hazardous or undesirable items. Expert inspections are
necessary. Current or future laws may require clean up by pas, present and/ or
future owners and/or operators. It is the responsibility of the Seller/Lessor and
the Buyer/Tenant to retain qualified experts to detect and correct such maters and
to consult with legal counsel of their choice to determine what provisions, if any,
they may include in transaction documents regarding the Property.
Sellers/Lessors are required under California Health and Safety Code Section
25915 et seq., to disclose reports and surveys regarding asbestos to certain
persons, including their employees, contractors, co-owners, purchasers and
tenants. Buyers/Tenants have similar disclosure obligations. Sellers/Lessors and
Buyers/Tenants have additional hazardous materials disclosure responsibilities to
each other under California Health and safety Code Section 25359.7 and other
California laws. Consult your attorney regarding this matter, and make proper
disclosures. Grubb & Ellis Company is not qualified to assist you in this matter or
provide you with other legal or tax advice.
Million Dollar Broker
127
Sale, lease and other transactions can have local, state and federal tax consequences
for the seller/lessor and/or buyer/tenant. In the event of a sale, Internal Revenue
Cod Section 1445 requires that all buyers of an interest in any real property
located in the United States must withhold and pay over to the Internal Revenue
Service (IRS) an amount equal to ten percent (10%) of the gross sales price within
ten (10) days of the date of the sale unless the buyer can adequately establish that
the seller was not a foreigner, generally by having the seller sign a Non-Foreign
Seller Certificate. Note that depending upon the structure of the transaction, the
tax withholding liability could exceed the net cash proceeds to be paid to the seller
at closing. California poses an additional withholding requirement equal to three
and one-third percent (3 1/3%) of the gross sales price not only on foreign sellers
but also out of state sellers and sellers leaving the state if the sale price exceeds
$100,000. Generally, withholding is required if the sales proceeds are distributed
outside of California, if the last known address of the seller is outside of California
or if a financial intermediary is used. Consult your tax and legal advisor. Real
estate brokers are not qualified to give legal or tax advice or to determine whether
any other person is properly qualified to provide legal or tax advice.
SELLOR/LESSOR BUYER/TENANT
By: __________________________ By: ___________________________
Title: _________________________ Title: _________________________
Date: _________________________ Date: _________________________
Scott W Johnstone
128
Appendix D: Example Document – Office
Lease Letter of Intent-LOI
January 1, 2011
Jan 1, 2011
John Doe
Any Brokerage Company USA
12345 Any Street, Suite 100
Newport Beach, CA 92660
VIA EMAIL: johndoe@
anybroker.com
RE: Request For Proposal to Lease
111 #1 Street, Newport Beach, CA
Dear John:
On behalf of Acme Corporation (“Tenant”), we have been
authorized to present this best and final lease counter proposal for
your consideration. The following sets forth a summary of the terms
and conditions under which the tenant would enter into a lease for
the above-referenced property.
1. Tenant: Acme Corporation
2. Building: 111 #1 Street, Newport Beach, Suite 100
Newport Beach, California 92660
3. Premises: Approximately 10,000 rentable square feet located
in Suite 100 of the building (“premises”). Final
square footage to be determined following approval
of space plans.
4. Term: Sixty-Six (66) months.
5. Commencement: Upon substantial completion of tenant improvements.
6. Moving Allowance: Tenant shall receive a two-dollar ($2) per rentable
square foot moving allowance.
Scott W Johnstone
President
Bridge Commercial Properties
4695 MacArthur Court, Ste 1100
Newport Beach, CA 92660
949.555.5555 main
949.555.5555 fax
S@BridgeCommercialProperties.com
www.BridgeCommercialProperties.com
Delivered by email:
johndoe@anybroker.com
Million Dollar Broker
129
7. Early Access: Tenant shall be granted access to the premises up to
fourteen (14) days prior to the commencement of
the lease term free of all charges for the purposes of
installing phone/data lines and furniture.
8. Base Rental Rate: Rent shall be calculated on a full service gross basis
as follows:
Month(s) Monthly rent per square
foot
1 $1.80
2-11 $0.90
12 $1.80
13-24 $1.90
25-36 $2.00
37-48 $2.10
49-60 $2.20
61-66 $2.30
9. Operating
Expenses:
Tenant shall pay its proportionate share of operating
expenses and real estate taxes (“operating expenses”)
associated with the premises, in excess of the base year
amount. The base year of the lease for the purposes of
calculation shall be 2012. Tenant shall be excused from
operating expense escalations for the initial twelve
(12) months of the lease term. The term “proportionate
share” shall be defined through an equation in which
the numerator shall be the number of rentable square
feet of floor area in the premises and the denominator
of which shall be the number of rentable square feet
of all rentable square footage within the project.
Operating expenses, taxes, insurance, and utilities shall
be calculated with the standard accounting practices
based on the building being ninety-five percent (95%)
occupied. Tenant shall have industry standard audit
rights of landlord’s operating expense accounting. A
cap of four percent (4%) shall be instituted on annual
operating expense increases over and above the prior
year’s billing. The four percent (4%) shall be based
upon the total operating expenses for the project, of
which, tenant shall pay its pro-rata share.
Scott W Johnstone
130
10. Tenant
Improvements:
Landlord shall provide a tenant improvement
allowance equal to $30.00 per rentable square
foot or turnkey, whichever is greater. If the tenant
improvement allowance is less than $30.00 per
square foot, tenant shall have the right to apply
balance to offset rent, FF&E, and parking.
11. Tenant Signage: Landlord shall provide, at landlord’s cost, building
standard directory and suite signage for tenant.
Additionally, landlord should provide at tenants cost
monument signage for the project.
12. Parking: Tenant shall be allotted four (4) spaces per one
thousand (1,000) rentable square feet including two
(2) reserved stalls free for the term. Parking shall be
free for the term.
13. Assignment &
Subletting:
Any consent required for assignment of subletting
shall not be unreasonably withheld or delayed by
landlord. Landlord will have no recapture rights,
and tenant will be allowed to retain all, if any profits.
Tenant shall have the right to sublet or assign to a
parent or, subsidiary or affiliate without landlord
consent. Tenant shall be entitled to sublease any or
all of the premises.
14. Heating,
Ventilating & Air
Conditioning:
The normal operating hours for the building HVAC
shall be Monday through Friday from 8:00 A.M.
to 6:00 P.M., and from 8:00 A.M. – 1:00 P.M.
on Saturdays, excluding local, state, and federal
holidays (to be defined in the lease).
Tenant, at tenant’s sole cost and expense, shall pay
landlord the prevailing after hours HVAC charges in
excess of normal building Hours. The current after-
hours HVAC charges per the building are sixty-five
dollars ($65.00) per hour.
15. Security Deposit: Landlord shall waive the security deposit.
16. Access: Building operating hours shall be between 8:00
A.M. and 6:00 P.M., Monday through Friday, and
8:00 A.M.-1:00 P.M. on Saturdays. Please describe
afterhours operating costs.
Million Dollar Broker
131
17. Hazardous & Toxic
Materials:
Landlord shall have the express responsibility to
advise tenant of any toxic materials or hazardous
wastes that are located in or about the premises.
18. Americans with
Disabilities Act
Compliance:
All costs related to compliance with the applicable
provisions of the Americans with Disabilities Act of
1990 (ADA) shall be landlord’s cost. These costs shall
not be a part of any tenant improvement allowance or
contribute to increasing operating expenses.
19. Brokerage
Commission:
As representatives for Acme Corporation,
landlord shall pay Bridge Commercial Properties
a commission equal to four percent (4%) of the
total lease consideration and any customary leasing
bonus due upon lease execution.
This proposal is not legally binding and shall not be construed as an
actual lease. Only a fully executed lease agreement shall constitute a
lease for the premises, and neither party shall be obligated until both
parties have executed said Lease. This proposal shall remain open
until 5:00 p.m., Jan 10, 2011.
Sincerely,
Scott Johnstone
President
Bridge Commercial Properties
CA Broker # 00950979
AGREED AND ACCEPTED:
Landlord: Acme Corporation:
By: _____________________ By: _____________________
Title: ____________________ Title: ____________________
Date: ____________________ Date: ____________________
Scott W Johnstone
132
CALIFORNIA SALE/LEASE
AMERICANS WITH DISABILITIES ACT,
HAZARDOUS MATERIALS AND TAX DISCLOSURE
The Americans With Disabilities Act is intended to make many
business establishments equally accessible to persons with a variety
of disabilities. However, modifications to real property may be
required. State and local laws also may mandate changes. The real
estate brokers in this transaction are not qualified to advise you
as to what, if any, changes may be required now, or in the future.
Owners and tenants should consult the attorneys and qualified
design professionals of their choice for information regarding these
matters. Real estate brokers cannot determine which attorneys or
design professionals have the appropriate expertise in this area.
Various construction materials may contain items that have been, or
may in the future be, determined to be hazardous (toxic) or undesirable
and may need to be specifically treated/handled or removed. For
example, some transformers and other electrical components
contain PCBs, and asbestos has been used in components such
as fireproofing, heating, and cooling systems, air duct insulation,
spray-on and tile acoustical materials, linoleum, floor tiles, roofing,
dry wall, and plaster. Due to prior or current uses of the property or
in the area, the property may have hazardous or undesirable metals
(including lead based paint), minerals, chemicals, hydrocarbons,
or biological hazards (including, but not limited to, mold) or
radioactive items (including electrical and magnetic fields) in soil,
water, building components, above or below ground containers, or
elsewhere in areas that may or may not be accessible or noticeable.
Such items may leak or otherwise be released. Real estate agents
have no expertise in the detection or correction of hazardous or
undesirable items. Expert inspections are necessary. Current or
future laws may require clean up by past, present and/or future
owners and/or operators. It is the responsibility of the seller/ lessor
and buyer/tenant to retain qualified experts to detect and correct
such matters and to consult with legal counsel of their choice to
Million Dollar Broker
133
determine what provisions, if any, they may include in transaction
documents regarding the property.
Sellers/lessors are required under California Health and Safety Code,
Section 25915 et seq. to disclose reports and surveys regarding
asbestos to certain persons, including their employees, contractors,
co-owners, purchasers and tenants. Buyers/ tenants have similar
disclosure obligations. Sellers/lessors and buyers/tenants have
additional hazardous materials disclosure responsibilities to each
other under California Health and Safety Code Section 25359.7
and other California laws. Consult your attorney regarding this
matter, and make proper disclosures. Grubb & Ellis Company is not
qualified to assist you in this matter or provide you with other legal
or tax advice.
Sale, lease and other transactions can have local, state and federal
tax consequences for the seller/lessor and/or buyer/ tenant. In the
event of a sale, Internal Revenue Cod Section 1445 requires that all
buyers of an interest in any real property located in the United States
must withhold and pay over to the Internal Revenue Service (IRS)
an amount equal to ten percent (10%) of the gross sales price within
ten (10) days of the date of the sale unless the buyer can adequately
establish that the seller was not a foreigner, generally by having the
seller sign a Non-Foreign Seller Certificate. Note that depending
upon the structure of the transaction, the tax withholding liability
could exceed the net cash proceeds to be paid to the seller at closing.
California poses an additional withholding requirement equal to
three and one- third percent (3 1/3%) of the gross sales price not
only on foreign sellers but also out of state sellers and sellers leaving
the state if the sale price exceeds $100,000. Generally, withholding
is required if the sales proceeds are distributed outside of California,
if the last known address of the seller is outside of California or if a
financial intermediary is used. Consult your tax and legal advisor.
Real estate brokers are not qualified to give legal or tax advice or to
determine whether any other person is properly qualified to provide
legal or tax advice.
Scott W Johnstone
134
SELLER/LESSOR BUYER/TENANT
By: _____________________ By: _____________________
Title: ____________________ Title: ____________________
Date: ____________________ Date: ____________________
Property Address: ___________________________________
Million Dollar Broker
135
Appendix E: Example Document – Office
User – Purchase, Letter of Intent-LOI
January 1, 2011
John Doe
Any Brokerage Company USA
12345 Any Street, Suite 100
Newport Beach, CA 92660
VIA EMAIL: johndoe@anybroker.com
Re: Office Condominium Center, Suite 100
Newport Beach, CA 92660
Dear Nick,
This Letter of Intent (“Letter”) to Purchase represents the basic terms
and conditions under which John Smith, (“Buyer”) would purchase
the property referenced in Paragraph 1 below (the “Property”) from
Condominium Developer (the “Seller”).
1. The Property: Office Condominium Center is a two story state
of the art Office Building. The Property to be sold
is approximately 2,000 gross square feet in suite
110 located at 100 Office Condominium Center
Drive, Newport Beach, CA.
2. Purchase Price: The purchase price (the “Purchase Price”) shall be
One Million Dollars 00/100 Dollars ($1,000,000),
which equals $500 per square foot.
3. Deposits/Payment of
Purchase Price:
The Purchase Price will be paid as follows:
Scott W Johnstone
President
Bridge Commercial Properties
4695 MacArthur Court, Ste 1100
Newport Beach, CA 92660
949.555.5555 main
949.555.5555 fax
S@BridgeCommercialProperties.com
www.BridgeCommercialProperties.com
Scott W Johnstone
136
(a) Upon the opening of Escrow, Buyer will
deposit with Escrow Holder the sum of One
Hundred Thousand Dollars ($100,000)
(the “First Deposit”). Escrow holder shall
invest the first deposit in an interest bearing
account selected by Buyer with all interest
accruing credited to the Purchase Price
upon the close of Escrow. The First Deposit
shall be invested by Escrow Holder in an
interest bearing account selected by Buyer
with all interest accruing credited to the
Purchase Price upon the close of Escrow.
The First Deposit shall become liquidated
damages and non-refundable to Buyer and
released to Seller upon the expiration of the
Inspection Period which shall be thirty (30)
days from the opening of escrow. The First
Deposit shall be applicable in full towards
the Purchase Price.
(b) Upon expiration of the Contingency
Period, Buyer will deposit with Escrow
Holder the sum of One Hundred
Thousand Dollars ($100,000.00) (the
“2nd Deposit”). The 2nd Deposit
shall be invested by Escrow Holder in
an interest bearing account selected
by Buyer with all interest accruing
credited to the Purchase Price upon
the close of Escrow. The 2nd Deposit
shall become liquidated damages and
non- refundable to Buyer and released
to Seller upon its deposit into Escrow.
The 2nd Deposit shall be applicable in
full towards the Purchase Price.
(c) The balance of the Purchase Price shall
be paid through Escrow in cash or by
cashiers or certified check upon close
of Escrow.
Million Dollar Broker
137
4. Purchase and Sale
Agreement:
Seller shall deliver the Agreement to Buyer
immediately after mutual execution of this
Letter. Buyer and Seller shall enter into an
Agreement within five (5) days of Buyers receipt
of document.
5. Inspection Period: Seller will afford Buyer reasonable access to the
Property in order for Buyer to conduct inspections
of a scope satisfactory to Buyer. Buyer shall have
a total of Thirty (30) days from receipt of Due
Diligence materials to conduct its due diligence
investigation and waive contingencies. Seller shall
make available to the Buyer all documents and
records in its possession that are reasonably required
for Buyer to conduct its due diligence investigation,
including the CC&R’s encumbering the project.
If Buyer’s inspections reveal any condition or
information which is not satisfactory to Buyer, to
be at Buyer’s sole discretion, prior to the expiration
of the Inspection Period, Buyer may give written
notice to Seller that it elects not to purchase the
Property, and the Escrow Company shall return the
Deposit, and any interest earned thereon, promptly
to Buyer. If Buyer fails to notify Seller that Buyer
elects not to purchase the Property by the end of the
Inspection Period, then Buyer shall be deemed to
have approved the condition of the Property and
the Deposit shall become non-refundable and pass
through to the Seller.
6. Financing
Contingency:
Buyer shall have Thirty (30) days from mutual
execution of the Agreement to secure a loan
commitment for a loan on market terms and
conditions reasonably satisfactory to Buyer and
waive the Financing Contingency. If Buyer is
unable to secure said loan, the Title Company
shall return the Deposit, and any interest earned
thereon, promptly to Buyer. Upon Seller’s
request, Buyer shall promptly provide requested
information of equity and financing sources to
Seller for review and approval.
Scott W Johnstone
138
7. Closing: The close of escrow shall occur Sixty (60) days
after the opening of escrow.
8. Closing Costs: Each party shall be responsible for its own
attorney’s fees and other costs associated with
due diligence and completing the sale. Each of
the parties will pay one-half of the escrow fees.
The Buyer shall pay for the cost in excess of
the CLTA policy to be provided by the Seller if
Buyer desires endorsements or an ALTA policy.
Failure to obtain said insurance or other matters
required by the Buyer’s Lender to close escrow
might constitute a default under the terms and
conditions of the Agreement.
9. Condition of the
Building:
Building shall be delivered in a warm shell
condition to include:
1. Finished lobby and hallways
2. Two elevators
3. Two bathrooms on each floor – total of
four (4)
4. Electrical room with gears
5. HVAC packages installed on the roof, but
not distributed
6. Touch screen electronic directory board
10. As-Is, Where Is: The property is to be purchased in an “As-Is,
Where Is” condition, with no representations or
warranties by Seller, express or implied.
11. Pro-rations: All pro-rations will be as of the Closing Date.
Post-Closing reconciliations will be made as
described in the Agreement.
Million Dollar Broker
139
12. Agency Disclosure: In the Agreement, Seller and Buyer will each
represent and warrant to the other that it has engaged
no broker or intermediary other than Bridge
Commercial Properties, which represents the both
the Seller and the Buyer, in connection with the
proposed transaction and will agree to indemnify
the other party for any other loss, liability, and
reasonable expenses, including attorneys’ fees,
incurred by virtue of any action on its part giving
rise to a breach of such warranty or a claim for such
other fees. Seller will be responsible for commission
due to Bridge Commercial Properties pursuant to a
separate written agreement.
13. Hazardous Waste/
ADA:
Please refer to the attached Exhibit A, which
addresses Federal Law known as the Americans
with Disabilities Act and disclosure requirements
regarding hazardous waste materials.
14. Confidentiality: Buyer shall keep confidential all information
regarding the Property made available by Seller or
Seller’s agent(s), except for disclosure to persons
assisting Buyer with this transaction and Buyer’s
lender, if any, and except as may be required by
law. This obligation shall survive expiration or
termination of this Letter.
15. Commission: Seller shall pay a commission in accordance with
the Exclusive Listing Agreement with Bridge
Commercial Properties, which shall be paid
through escrow at the close of escrow.
Scott W Johnstone
140
16. Broker Duties: Buyer hereby acknowledges that they have
been and are now advised by the Broker(s) to
consult and retain their own experts to advise
and represent them concerning the legal and
income tax effects of this agreement, as well as
the condition and/or legality of the property, the
improvements and equipment therein, the soil,
thereof, the condition of title thereto, the survey
thereof, the environmental aspects thereof, the
intended and/or permitted usage thereof, the
existence and nature of tenancies therein, any
other outstanding agreements, if any, and the
existing or contemplated financing thereof and
that the Broker(s) is/are not to be responsible for
pursuing the investigation of any such matters
unless expressly otherwise agreed to in writing by
Broker(s) and Buyer or Seller.
17. Dual Agency
Disclosure:
In the Agreement, Buyer and Seller will each
represent and warrant to the other that it has
engaged no broker or intermediary other than
Bridge Commercial Properties, which represents
both the Buyer and Seller, in connection with the
proposed transaction and will agree to indemnify
the other party for any other loss, liability, and
reasonable expenses, including attorneys’ fees,
incurred by virtue of any action on its part giving
rise to a breach of such warranty or a claim for
such other fees. Seller will be responsible for
commission due to Bridge Commercial Properties
pursuant to a separate written agreement. Both
parties are hereby notified of the Dual Agency and
agree hereto.
Please evidence your agreement that the foregoing represents an
accurate statement of our present mutual intent by signing and
returning a copy of this Letter to the undersigned no later than
5:00 PM, January 10, 2010. In the event this Letter has not been
fully executed and returned to the undersigned on or before the
above date and time it shall automatically expire and become null
and void.
Million Dollar Broker
141
Buyer and Seller acknowledge that this letter does not, and is not
intended to, constitute a binding agreement. No party will be otherwise
obligated or bound unless and until both parties have entered into
the formal purchase agreement. The parties acknowledge that this
proposal does not include all of the terms of the purchase agreement.
Respectfully,
Scott W. Johnstone
President
(949) 555-5555
S@BridgeCommercialProperties.com
www.BridgeCommercialProperties.com
License #00950979
AGREED AND ACCEPTED:
Buyer: Seller:
John Smith Condominium Developer
By: ________________________ By: ________________________
Exhibit A
CALIFORNIA SALE/LEASE AMERICANS WITH DISABILITIES ACT,
HAZARDOUS MATERIALS, AND TAX DISCLOSURE
The Americans With Disabilities Act is intended to make many business
establishments equally accessible to persons with a variety of disabilities;
modifications to real property may be required. State and local laws also may
mandate changes. The real estate brokers in this transaction are not qualified to
advise you as to what, if any, changes may be required now, or in the future.
Scott W Johnstone
142
Owners and tenants should consult attorneys and qualified design professionals
of their choice for information regarding these matters. Real estate brokers cannot
determine which attorneys or design professionals have the appropriate expertise
in this area.
Various construction materials may contain items that have been or may be in
the future be determined to be hazardous (toxic) or undesirable and may need
to be specifically treated/handled or removed. For example, some transformers
and other electrical components contain PCBs, and asbestos has been used
in components such as fire-proofing, heating and cooling systems, air duct
installation, spray-on and tile acoustical materials, linoleum, floor tiles, roofing,
dry wall and plaster. Due to prior uses of the Property or in the area, the Property
may have hazardous or undesirable metals (including lead-based paint), minerals,
chemicals, hydrocarbons, or biological hazards (including, but not limited to,
mold) or radioactive items (including electrical and magnetic fields) in soils, water
building components, above or below-ground containers or elsewhere in areas
that may or may not be accessible or noticeable. Such items may leak or otherwise
be elsewhere in areas that may or may not be accessible or noticeable. Such items
may leak or otherwise be released. Real estate agents have no expertise in the
detection or correction or hazardous or undesirable items. Expert inspections are
necessary. Current or future laws may require clean up by pas, present and/ or
future owners and/or operators. It is the responsibility of the Seller/Lessor and
the Buyer/Tenant to retain qualified experts to detect and correct such maters and
to consult with legal counsel of their choice to determine what provisions, if any,
they may include in transaction documents regarding the Property.
Sellers/Lessors are required under California Health and Safety Code Section 25915
et seq., to disclose reports and surveys regarding asbestos to certain persons, including
their employees, contractors, co-owners, purchasers and tenants. Buyers/Tenants have
similar disclosure obligations. Sellers/Lessors and Buyers/Tenants have additional
hazardous materials disclosure responsibilities to each other under California Health
and safety Code Section 25359.7 and other California laws. Consult your attorney
regarding this matter, and make proper disclosures. Grubb & Ellis Company is not
qualified to assist you in this matter or provide you with other legal or tax advice.
Sale, lease and other transactions can have local, state and federal tax consequences
for the seller/lessor and/or buyer/tenant. In the event of a sale, Internal Revenue
Cod Section 1445 requires that all buyers of an interest in any real property
located in the United States must withhold and pay over to the Internal Revenue
Service (IRS) an amount equal to ten percent (10%) of the gross sales price within
ten (10) days of the date of the sale unless the buyer can adequately establish that
the seller was not a foreigner, generally by having the seller sign a Non-Foreign
Seller Certificate. Note that depending upon the structure of the transaction, the
tax withholding liability could exceed the net cash proceeds to be paid to the seller
at closing. California poses an additional withholding requirement equal to three
Million Dollar Broker
143
and one-third percent (3 1/3%) of the gross sales price not only on foreign sellers
but also out of state sellers and sellers leaving the state if the sale price exceeds
$100,000. Generally, withholding is required if the sales proceeds are distributed
outside of California, if the last known address of the seller is outside of California
or if a financial intermediary is used. Consult your tax and legal advisor. Real
estate brokers are not qualified to give legal or tax advice or to determine whether
any other person is properly qualified to provide legal or tax advice.
SELLER/LESSOR BUYER/TENANT
By: __________________________ By: __________________________
Title: _________________________ Title: _________________________
Date: _________________________ Date: _________________________
Scott W Johnstone
144
Appendix F: Example Document – Office
Investor – Purchase, Letter of Intent-LOI
January 1, 2011
Mr. Scott Johnstone
Bridge Commercial Properties
4695 MacArthur Court, Suite 1000
Newport Beach, CA 92660
Re: Purchase Offer,
Letter of Intent
1111 Pacific Coast Highway
Newport Beach, CA 92660
Dear Scott:
This letter summarizes the basic business terms and conditions
upon which Acme CRE Investment Company Inc, or its assignee,
(“Buyer”) would purchase the property located at 1111 Pacific Coast
Highway, Newport Beach, CA 92660 APN 123-456-789, containing
approximately 150,000 square feet of land and (1) improvement
thereon, including the approximately 40,000 square foot, two-story
office building and associated surface parking lot. There shall be
parking spaces providing a 4/1,000 square feet ratio of dedicated
parking spaces; (2) all construction and other warranties associated
with the property; (3) all personal property located at or used in
connection with the operation and management of such property;
and (4) all appurtenances, licenses, permits, contracts and intangible
property affecting the property (collectively, “Property”) from the
current owner ABC Development Company (“Seller”).
John Doe
Principle
Acme CRE Investment Company Inc
111 First St, Suite 100
Newport Beach, CA 926660
949.555.5555 main
949.555.5555 fax
CA License # 00950979
Million Dollar Broker
145
1. Property
Description:
The property is described as a 40,000 SF Two
Story Office building located at 1111 Pacific Coast
Highway, Newport Beach, CA 92660 APN # 123-
456-789.
2. Purchase Price: The purchase price (“Purchase Price”) for
the Property shall be Twenty Million Dollars
($20,000,000) payable as follows:
A. Buyer shall deposit the sum of One-
Hundred-and-Fifty-Thousand Dollars
($150,000) (“Initial Deposit”) with First
American Title Company (“Escrow
Holder”) concurrently with the execution
of a definitive Purchase and Sale
Agreement and Joint Escrow Instructions
(“PSA”). Upon the satisfactory approval
by Buyer of the “Due Diligence Materials”
(defined below), Buyer shall increase the
Initial Deposit by One-Hundred- and-
Fifty-Thousand Dollars ($150,000)
(“Additional Deposit”.) (The Initial
Deposit and the Additional Deposit will be
collectively referred to as, the “Deposit”).
The Deposit shall become non-refundable
upon Buyer’s removal or waiver of its
contingencies as set forth in the PSA,
subject to satisfaction of any remaining
conditions to the closing. Escrow Holder
shall invest the Initial Deposit and the
Additional Deposit in an interest-bearing
account or other investment instrument
designated by Buyer, with interest accruing
and payable to Buyer.
B. The balance of the Purchase Price shall be
Nineteen-Million-Seven-Hundred Thousand
Dollars ($19,700,000) shall be paid in cash
upon closing through Escrow.
Scott W Johnstone
146
3. Escrow: A. Upon execution of the PSA, which Buyer
will prepare in a timely manner, and
escrow (“Escrow”) shall be opened with
First American (“Escrow Holder”), and
Buyer and Seller agree to execute such
additional escrow instructions as Escrow
Holder deems reasonably necessary or
advisable in order to effect the terms of
the PSA. The opening of Escrow shall be
deemed to be the date upon which Buyer
and Seller deliver executed counterparts
of the PSA to Escrow Holder.
B. Escrow shall close and the Grant
Deed recorded (“Closing”) on the date
that is Forty-Five (45) days after the
Contingency Date.
4. Contingencies: A. Buyer’s obligation to purchase the Property
shall be conditioned upon satisfaction of
each of the contingencies set forth in the
PSA on or before the date (“Contingency
Date”) that is Thirty (30) days after the later
of (a) execution of the PSA or (b) delivery
to Buyer of the last of the Due Diligence
Materials set forth in the PSA, such items
to include, but not limited to, the items set
forth on Exhibit A attached to this.
In the event that Buyer does not affirmatively
approve of the Due Diligence Materials on or
before the Contingency Date, Then the PSA shall
automatically terminate, and Escrow Holder
shall return the Deposit (and all accrued interest
thereon) immediately to Buyer:
B. During the period ending on the Contingency
Date (“Contingency Period”),Buyer shall
have the right to inspect and approve (i) all
physical, mechanical, structural, seismic
and all other aspects of the Property, (ii)
each of the Due Diligence Materials and
(iii) all books, records and files regarding
the Property, and to make inquiries and
investigations as Buyer deems necessary or
appropriate.
Million Dollar Broker
147
Seller will cause its consultants to furnish Buyer
with any information and copies of documents
reasonably requested by Buyer during the
Contingency Period. In addition, the Buyer shall
have the right to enter The Property to interview
the property manager and tenants and to conduct
reasonable tests and inspections deemed reasonably
necessary or advisable by Buyer or its consultants
including, but not limited to, physical inspection,
calculations of floor areas and inspections of the
improvements;
C. Seller shall maintain the Property in good
condition and repair and shall maintain
adequate casualty liability insurance
covering the Property until the Closing.
Seller shall not enter into any lease, contract
or other agreement affecting the Property,
or amend or terminate any of the same,
without Buyer’s approval, which shall not
be unreasonably withheld or delayed;
D. The PSA shall contain standard terms
and conditions that are typically found
in an acquisition of this size and nature,
including, but not limited to, title, buyer:
12345 Big City Drive, Suite 1000, Los
Angeles, CA 90000 | (310) 555-5555 t |
(310) 555-5555 f
Seller representations and warranties, pro-rations,
assignments of tenant leases and marketing of the
property post acceptance of this letter;
E. All of Seller’s and Buyer’s covenants
required to have been performed by the
Closing shall have been so performed,
and all representations and warranties of
each of Seller and Buyer shall be current
as of the Closing and no material changes
in the physical of financial condition of
the property shall have occurred as of the
Closing
Scott W Johnstone
148
Approval of the foregoing conditions shall be
in writing signed by Buyer. Failure of Buyer to
approve any Due Diligence Materials on or before
the Contingency Date (or such other date which
may be expressly specified above) conclusively
shall be deemed to constitute Buyer’s disapproval
thereof, and the Deposit (and all accrued interest
thereon) shall be returned to Buyer (and the
Deposit shall also be returned to Buyer if Buyer’s
closing conditions are not satisfied);
F. Financing Contingency: None
G. Estoppel Certificates. Buyer’s obligations
shall be further conditioned upon obtaining
“clean” estoppels certificates (in a form
reasonably acceptable to Buyer) from
Seventy-Five (75%) percent of all the
tenants and all of the major tenants.
5. Brokerage
Commissions; Closing
Expenses:
Each of Buyer and Seller shall pay for and indemnify
the other against any brokerage commission or
transaction fee owed as a result of the engagement
by Buyer or Seller of a broker or other person in
connection with this transaction, except that Seller
shall pay a brokerage fee to Scott Johnstone of Bridge
Commercial Properties. (“Broker”), as agreed toby
Seller and Broker in a separate agreement. Buyer
and Seller shall each bear their own legal fees, and all
escrow fees, title and recording charges, conveyance
taxes and all other closing expenses shall be borne or
charged in accordance with customs of the Orange
County market.
6. Marketing: Seller is prohibited from marketing, soliciting or
accepting any offers from prospective buyers during
the Contingency Period, or anytime thereafter if
Buyer waives contingencies and approves of the Due
Diligence Materials. Additionally, Seller shall not,
without Buyer’s prior written approval, enter into,
amend or terminate any leases or contracts affecting
the Property or take any other actions affecting the
Property from the date of acceptance hereof through
the earlier of (a) the Closing or (b) the termination
of the Purchase Agreement. Notwithstanding the
foregoing, Buyer will have the right to market the
Property for lease during this period.
Million Dollar Broker
149
7. Terms of Offer/Non-
Binding Affect:
The foregoing offer may be accepted by Seller by
executing and returning a counterpart of this letter
to Buyer on or before 5:00 p.m. on January 10,
2011.
Upon acceptance, Buyer shall cause the PSA to
be prepared, incorporating the terms of this letter,
together with such other customary terms and
provisions and representations and warranties
applicable to a transaction of this nature. This
letter shall not constitute a formal and binding
agreement and shall not create any legal rights
or obligations between parties. It is intended that
all legal rights and obligations between parties
be created under and governed solely by the PSA
when the same is fully executed by Buyer and
Seller. Notwithstanding the foregoing, during the
course of negotiation of the PSA, Seller agrees
not to market the Property to other parties, nor to
solicit offers for the acquisitions of the Property.
We look forward to working with you toward consummating this
transaction.
Very truly yours,
John Doe
Principle
Acme CRE Investment Company Inc.
AGREED AND ACCEPTED:
Buyer: Seller:
John Doe, Acme CRE Investment
Company Inc.
ABC Development Company
By: ________________________ By: ________________________
Scott W Johnstone
150
EXHIBIT A
DUE DILIGENCE MATERIALS
Buyer shall have had the opportunity to review and approve, at a minimum, each
of the following:
(1) A copy of a current rent roll describing the occupancy status of the Property
as of the beginning of the current month as well as monthly rent rolls for
each of the previous twenty four (24) calendar months;
(2) A copy of the bank statements for the property for the prior twenty four(24)
months that reflect deposits that reconcile with rent amounts reflected on
the rent rolls provided;
(3) A current preliminary title report including the legal description of the
Property, together with copies of all documents referred to therein, prepared
by a First American (“Title Company”);
(4) Evidence that the Property complies with all applicable codes and The
Subdivision requirements;
(5) A current ALTA Survey of the Property;
(6) A copy of the leases or rental agreements for tenants of the Property and
any amendments and letter agreements relating thereto including any
license agreements and current financial statements on the tenant(s);
(7) Copies of all licenses, service contracts (including parking, elevator, HVAC
and landscaping maintenance contracts), management contracts, brokerage
agreements, permits, variances, insurance policies, maps, association or
property owner agreements, certificates of occupancy, building permits
and other documentation and evidence that the construction, present
use, occupancy and operation of the Property is authorized by and is in
compliance with all governmental regulations; certificates of occupancy
and similar type occupancy approval documents;
(8) Warranties (e.g., for vertical transportation, HVAC and other building
systems);
(9) Projected or actual Operating statements of the Property for calendar year
2007, 2008, 2009 and 2010 monthly statements to date;
(10) Allplans,structuraldrawings,architecturaland“asbuilt”drawings,including,
but not limited to, mechanical, electrical, air conditioning, landscape and
sprinkler drawings and specifications regarding the improvements, and
Million Dollar Broker
151
any soils, structural, geological, environmental, hazardous materials and
asbestos studies or reports relating to subsurface conditions, grading plans,
topographical maps arid similar data respecting the Property;
(11) Copies of property tax bills for the last three (3) years and copies of the most
recently available utility bills and similar records respecting the Property;
(12) A list of all personal property owned by or leased by Seller and used in
connection with the ownership or operation of the Property;
(13) A certificate of Seller certifying to Seller’s knowledge that there is no legal
or administrative action, proceeding, claim, arbitration or suit pending
before any court, agency or official, nor any such claim or action threatened
in writing, relating to the Seller, the Property or with respect to the validity
of any statutes, ordinances, regulations or restrictions or any permits
or approvals thereunder relating to the Property, nor any outstanding
contingent liabilities affecting the Property;
(14) To the best of Seller’s knowledge, a detailed written description of the
status of current tenant occupancies and future plans including any and
all proposals, agreements and correspondence outstanding with any
prospective tenants;
(15) All available historical environmental reports, Phase I’s and/or Phase II’s;
(16) Copies of any reports (such as physical, seismic, environmental or other
such reports), surveys or other information on any Matters that Seller may
have received as part of the current sales process for the Property; and
(17) Such other matters as agreed to in the Purchase and Sale Agreement.
Scott W Johnstone
152
Appendix G: Example Document – Deal
Process Timeline and Flowchart
ACTIVITY Duration Start Date
Strategic Planning 30 days
Assemble Core Team 15 days
Create Space Program 20 days
Timeline Creation 5 days
Identify Alternatives 5 days
Tour Properties 10 days
Short List Alternatives 5 days
Preliminary Cost Matrix 5 days
Develop Request for Proposal 10 days
Collate Responses 45 days
Financial Analysis 15 days
Finalize Space Plan Development 15 days
Tenant Improvement Pricing 15 days
Finalize Letter of Intent 15 days
Coordinate Legal Team 15 days
Purchase and Sale Agreements 30 days
Lease Document Negotiations 15 days
Finalize Construction Contracts 15 days
Construction / Project Mgmt. 75 days
Information Technology & Furniture
Acquisition 45 days
Move Coordination 2 days
Lease Abstract 7 days
12
Dec-11
Lease Process Timeline & Flowchart
January 1, 2011
10
Oct-11
11
Nov-11
8
Aug-11
9
Sep-11 May-11
6
Jun-11
7
Jul-11
5
*** All times estimated and subject to change and revision
1
Jan-11
2
Feb-11
3
Mar-11
4
Apr-11
C
o
n
t
r
a
c
t
N
e
g
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t
ia
t
io
n
P
r
o
je
c
t
Im
p
le
m
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n
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t
io
n
Month Number:
N
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s
A
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a
ly
s
is
M
a
r
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e
t
S
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r
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e
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t
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Million Dollar Broker
153
Appendix H: Example Document –
Capabilities Brochure – Tenant

CALL US TODAY FOR MORE INFORMATION
REGARDING OUR CONSULTATIVE APPROCH
TO COMMERCIAL REAL ESTATE SERVICES
Team Experience
Our Team has over 25 years of combined experience and has been responsible
for over $3 billion in real estate transactions throughout our award-winning
careers.
Team Capabilities
The combination of a sole proprietors mentality and attention to detail mixed with
institutional experience truly makes us the best single source solution for all of your
Corporate Real Estate needs.
- Lease Penegotlatlon
- Multlmarket Corporate Pepresentatlon
- Property Analysls + Space Optlmlzatlon
- Archltectural Pevlew
- Pelocatlon Analysls
- Slte Acqulsltlon
- Lmployee Locatlon Optlmlzatlon
- Constructlon Management
- Lease Admlnlstratlon
- Market Data & Analysls
- Property Analysls
- Lease Negotlatlons
Scott W Johnstone
President
949.555.5555ofce/ 949.555.5555cell
scott@bridgecre.com
CABroker #00950979
t 25 Years of Experience
t Specializing in Ofce Properties
t Tenant Representation
Hana Paradeiser
MarketingCoordinator
949.555.5555ofce/ 818.555.5555cell
h@bridgecre.com
t 10 Years of Marketing Experience
Deal Announcement:
Bridge Commercial Properties this week successfully represented Acme Widgit Corporation in the relocation of their corporate headquarters to
the 1234 Professional Center Drive, Newport Beach, California. The ten year lease transaction takes Acme Widgit Corporation’s ofces to 20,000
square feet and allows for their continued leadership role and growth in the widgit marketplace. The lease saved Acme Widgit Corporation nearly
$5,000,000 in rent over the term of their lease. Thank you Acme Widgit Corporation for your continued support. January 1, 2011
ACME WIDGIT
CORPORATION
Whether you are looking to renegotiate or renew your lease, relocate, expand or contract your ofce, our
team ls ready and commltted to helplng you make smarter, faster declslons, whlle maxlmlzlng market
leverage, reducing your costs and freeing your valuable time.
Scott W Johnstone
154
Appendix I: Example Document –
Market Newsletter

this issue
Building Spotlight
Executive Summary
Market Asesment
Broker Information
1
1
3
5
ISSUE
Q1
2008
A GUIDE FOR DECISION MAKING
BY: SCOTT JOHNSTONE
The national economy grew at a 1.8 percent annual-
ized rate in the frst quarter according to the advance
estimate of gross domestic product from the Bureau
of Economic Analysis. Consumer spending made the
biggest contribution, adding 1.9 percentage points,
although this was below the 2.8-point contribution
made by consumers in the fourth quarter. Inventory
additions and business spending on equipment and
software also contributed to growth. Late last year,
many economists raised their GDP forecasts in re-
sponse to the $858 billion package of tax cut exten-
sions and new tax cuts passed by Congress in Decem-
ber. But recently many have lowered their forecasts
due to rising energy prices and the uncertain outlook
for the Middle East, Japan and the Europe. The Em-
ployment Situation report, which the Bureau of Labor
Statistics will release Friday, May 6, will be even more
important than usual because it will reveal whether
the drags on economic the growth are afecting the
labor market, which is a major driver of demand for
commercial real estate.
ORANGE COUNTY OFFICE MARKET

ISSUE
Q2
2010


ISSUE
Q1
2008


ISSUE
Q1
2011
MacArthur Court
EXECUTIVE SUMMARY: Who is Driving the Bus?
Jobs: The unemployment rate in Orange
County was 8.9% in February 2011 and
below the year-ago estimate of 9.7%. This
compares with an unadjusted unemploy-
ment rate of 12.3% for California and 9.5%
for the nation during the same time period.
According to the State of California Employ-
ment Development Department, Orange
County increased overall by 16,300 payroll
jobs from February 2010 to February 2011;
the largest gains were 6,500 in leisure and
hospitality and 5,400 in professional & busi-
ness services. However, during that same
period, Orange County lost 2,000 jobs in
trade, transportation, and utilities. Chap-
man University is forecasting that 23,000
jobs will be added in Orange County in
2011.
PROJECT SPOTLIGHT:
MacArthur Court
Newport Beach, CA
92660
Twin 15-story travertine
marble towers and three
low-rise buildings provide
a premier environment
with ample surface and
structure parking, two-
story travertine lobbies,
palm-lined pedestrian
walkways and beautiful
landscaping.

Five buildings totaling
690,000 sq/ft
Easy access to the 405 and
55 Freeways and 73 Toll
Road

Ample surface and struc-
ture parking

Seconds to John Wayne
Airport
On-site café and banks
with ATM
On-site convenience store
and auto detailing

Rental Rates:
$1.95 - $2.45 FSG
Million Dollar Broker
155
Big Picture: The Orange County ofce maket contin-
ued to convey signs of recovery in the frst quarter of
2011. Both vacancy and availability decreased from
the previous quarter, and net absorption displayed
positive numbers for three consecurive quarters,
producing a total of over 1.23 million square feet of
positive absorption since the third quarter of 2010.
Demand, though, still weak by historical standards,
picked of a renewed interest in states transactions.
While these are positive indications, stability will
need to be sustained in coming quarters to be con-
sidered recovery.
Summary: We are beginning to see a decrease in the
amount of available space being added per quarter,
as well as an overall increase in investment sales ac-
tivity. As we enter into 2011, positive absorption con-
tinues, and with few new deliveries in the pipeline to
apply upward pressure on vacancy, the market has
begun to stabilize. We forsee a continued increase in
investment activity in the coming quarters as lenders
dispose of distressed assets. Lease rates are expected
to remain soft for the near future, and concessions
in the forms of free rent, reduced parking fees, relo-
cation funds and tenant improvement allowances
should continue in order to incentivize tenants to
act immediately. We should also see an increase in
leasing activity as many short-term deals come up
for renewal. As job creation continues and consumer
confdence stabilizes, the ofce market will continue
to recover.
p2
The Next Shoe to Drop: The dollar volume of direct
investment in commercial properties soared by 77
percent in the frst quarter of 2011 compared with
the frst quarter of 2010. Last year, the market was
depicted by a barbell with investors focusing on core
properties in primary, supply constrained markets at
one end, and distressed assets priced for a quick sale
at the other end. Attracted by higher yields, investors
now are taking a fresh look at properties in secondary
markets and properties below the trophy threshold.
Source: Real Capital Analytics
- Outstandlng levels of dlstressed assets were essen-
tially fat in the frst quarter compared with the fourth
quarter of 2010 on the heels of a 4 percent decline be-
tween the third and fourth quarters of last year. This
suggests that the level of distress may be topping out.
Source: Real Capital Analytics
- Plrst quarter returns for dlrect property ownershlp
totaled 3.36 percent, the fourth consecutive quarterly
increase of the current recovery cycle. The return in-
cluded two components: 1.52 percent from income
and 1.84 percent from appreciation. Source: NCREIF
- Publlcly traded PL|Ts returned 6.8 percent ln the ñrst
quarter, beating the 5.4 percent return posted by the
S&P 500. Sources: NAREIT, Bloomberg

This is a pretty good performance for an asset class
that, 24 months ago, was called “the next shoe to
drop.”
Notable Market Transactions:
Costa Mesa
Tenant: Hyundai
Size: 147,712 Square Feet
3200 Park Center Dr. - Lease
Laguna Hills
Buyer: Owen Commercial
Size: 36,000 Square Feet
35 Tesla - Sale
Mission Viejo
Buyer: JP Morgan Chase
Size: 52,091 Square Feet
20532 El Toro Road - Sale
Scott W Johnstone
156
p2
Vacant Space by Submarket
p3
Million Dollar Broker
157
p4
Seasonal ly Adjusted
Total
1998 65,308
1999 46,042
20 000
40,000
60,000
80,000
2000 43,608
2001 24,925
2002 (10,042)
2003 25 342
60 000
-40,000
-20,000
0
20,000
T
h
o
u
s
a
n
d
s 2003 25,342
2004 27,758
2005 34,250
2006 27,983
-120,000
-100,000
-80,000
-60,000
9
8
9
9
0
0
0
1
0
2
0
3
0
4
0
5
0
6
0
7
0
8
0
9 0 1 2
T
2007 (5,658)
2008 (33,825)
2009 (109,842)
2010 (9 396)
1
9
9
1
9
9
2
0
0
2
0
0
2
0
0
2
0
0
2
0
0
2
0
0
2
0
0
2
0
0
2
0
0
2
0
0
2
0
1
2
0
1
2
0
1
Source: U.S. Bureau of Labor Statistics
2010 (9,396)
2011 11,904
2012 37,177
Yearly Job Change, Orange County
Vacancy Rates by Submarket
Net Absorbtion Square Footage by Submarket
Scott W Johnstone
158
Seal Beach - Sale
Buyer: AIG Global
Size: 280,6113 Square Feet
Irvine - Lease
Tenant: Epicor Software
Size: 68,235 Square Feet
More Notable Market
Transactions:
Brea - Lease
Tenant: Bank of America
Size: 637,000 Square Feet
1310 Old Ranch Parkway
275 Valencia Ave
p5
SCOTT JOHNSTONE
President
Bridge Commercial Properties
CA License # 00950979
P 949.555.5555
C 949.555.5555
s@bridgecre.com
TEAM EXPERIENCE
TEAM CAPABILITIES
- Lmployee Locatlon Optlmlzatlon
- Constructlon Management
- Lease Admlnlstratlon
- Market Data & Analysls
- Property Analysls
- Lease Negotlatlons
HANA PARADEISER
Marketing Coordinator
Bridge Commercial Properties
P 949.555.5555
C 818.555.5555
h@bridgecre.com
- Lease Penegotlatlon
- Multlmarket Corporate Pepresentatlon
- Property Analysls + Space Optlmlzatlon
- Archltectural Pevlew
- Pelocatlon Analysls
- Slte Aqulsltlon
The information contained herein was obtained fromthird parties, and has not been independently verifed by the real estate brokers. Buyers/tenants should have the experts of their choice inspect
the property and verify all information. Real estate brokers are not qualifed to act as or select experts with respect to legal, tax, environmental, building construction, soils-drainage or other such
matters.
18101 Von Karman Ave.
Our Team has over 25 years of combined experience and has been respon-
sible for over $3 billion in real estate transactions throughout our award-
winning careers.
The combination of a sole proprietors mentality and attention to detail
mixed with institutional experience truly makes us the best single source
solution for all of your Corporate Real Estate needs.
Deal Announcement:
Bridge Commercial Properties this week successfully represented Acme Widgit
Corporation in the relocation of their corporate headquarters to the 1234
Professional Center Drive, Newport Beach, California. The ten year lease transaction
takes Acme Widgit Corporation’s ofces to 20,000 square feet and allows for their
continued leadership role and growth in the widgit marketplace. The lease saved
Acme Widgit Corporation nearly $5,000,000 in rent over the term of their lease.
Thank you Acme Widgit Corporation for your continued support. January 1, 2011
ACME WIDGIT
CORPORATION
Million Dollar Broker
159
Glossary: Industry Terminology
Abatement: Often and commonly referred to as free rent or early
occupancy and may occur outside or in addition to the primary term
of the lease.
Above Building Standard: Upgraded finishes and specialized
designs necessary to accommodate a tenant’s requirements.
Absorption: The rate, expressed as a percentage, at which available
space in the marketplace is leased during a predetermined period.
Also referred to as “Market Absorption”
Absorption Rate: The net change in space available for lease
between two dates, typically expressed as a percentage of the total
square footage.
Ad Valorem: According to value. This is a tax imposed on the value
of property (references a general property tax), which is typically
based on the local government’s valuation of the property.
Add-On Factor: Often referred to as the Loss Factor or Rentable/
Usable (R/U) Factor, it represents the tenant’s pro-rata share of the
Building Common Areas, such as lobbies, public corridors, and
restrooms. It’s usually expressed as a percentage, which can then be
applied to the usable square footage to determine the rentable square
footage upon which the tenant will pay rent.
Allowance Over Building Shell: Most often used in a yet-to-be
constructed property, the tenant has a blank canvas upon which
to customize the interior finishes to their specifications. This
arrangement caps the landlord’s expenditure at a fixed dollar amount
over the negotiated price of the base building shell. This arrangement
is most successful when both parties agree on a detailed definition
of what construction is included and at what price.
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Anchor Tenant: The major or prime tenant in a shopping center,
building, etc.
Annual Percentage Rate (APR): The actual cost of borrowing
money, expressed in the form of an annual interest rate. It may be
higher than the note rate because it represents full disclosure of the
interest rate, loan origination fees, loan discount points, and other
credit costs paid to the lender.
Appraisal: An estimate of opinion and value based upon a factual
analysis of a property by a qualified professional.
Appreciation: The increased value of an asset.
“As-Is” Condition: The acceptance by the tenant of the existing
condition of the premises at the time the lease is consummated. This
would include any physical defects.
Assessment: A fee imposed on property, usually to pay for public
improvements such as water, sewers, streets, improvement districts,
etc.
Assignment: A transfer by lessee of lessee’s entire estate in the
property. Distinguishable from a sublease where the sublessee
acquires something less than the lessee’s entire interest.
Attorn: To turn over or transfer to another money or goods. To
agree to recognize a new owner of a property and to pay him/her
rent. In a lease, when the tenant agrees to attorn to the purchaser, the
landlord is given the power to subordinate tenant’s interest to any
first mortgage or deed of trust lien subsequently placed upon the
leased premises.
Balloon Payment: A large principal payment that typically becomes
due at the conclusion of the loan term. Generally, it reflects a loan
amortized over a longer period than that of the term of the loan itself
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(i.e. payments based on a 25-year amortization with the principal
balance due at the end of 5 years). See “Bullet Loan.”
Bankrupt: The condition or state of a person (individual, partnership,
corporation, etc.) who are unable to repay its debts as they are, or
become, due.
Bankruptcy: Proceedings under federal statures to relieve a debtor
who is unable or unwilling to pay its debts. After addressing certain
priorities and exemptions, the bankrupt’s property and other assets
are distributed by the court to creditors as full satisfaction for the
debt. See also: “Chapter 11.”
Base Rent: A set amount used as a minimum rent in a lease with
provisions for increasing the rent over the term of the lease. See
also “Escalation Clause,” “Operating Expense Escalation” and
“Percentage Lease.”
Base Year: Actual taxes and operating expenses for a specified
base year, most often the year in which the lease commences. Once
the base year expenses are known, the lease essentially becomes a
dollar stop lease.
Below-Grade: Any structure or a portion of a structure located
underground or below the surface grade of the surrounding land.
Building Classifications: Building classifications in most markets
refer to Class “A,” “B,” “C” and sometimes “D” properties. While
the rating assigned to a particular building is very subjective,
Class “A” properties are typically newer buildings with superior
construction and finish in excellent locations with easy access,
attractive to credit tenants, and which offer a multitude of amenities
such as on-site management or covered parking. These buildings,
of course, command the highest rental rates in their sub-market. As
the “Class” of the building decreases (i.e. Class “B,” “C” or “D”)
one component or another such as age, location or construction of
the building becomes less desirable. Note that a Class “A” building
in one sub-market might rank lower if it were located in a distinctly
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different sub-market just a few miles away containing a higher end
product.
Building Code: The various laws set forth by the ruling
municipality as to the end use of a certain piece of property
and that dictate the criteria for design, materials, and type of
improvements allowed.
Building Load or “Core” Factor: Represents the percentage of
Net Rentable Square Feet devoted to the building’s common areas
(lobbies, rest rooms, corridors, etc.). This factor can be computed
for an entire building or a single floor of a building. Also known as
a Loss Factor or Rentable/Usable (R/U) Factor, it’s calculated by
dividing the rentable square footage by the usable square footage.
See also “Rentable/Usable Ratio.”
Building Standard: A list of construction materials and finishes
that represent what the Tenant Improvement (Finish) Allowance/
Work Letter is designed to cover while also serving to establish the
landlord’s minimum quality standards with respect to tenant finish
improvements within the building. Examples of standard building
items are: type and style of doors, lineal feet of partitions, quantity
of lights, quality of floor covering, etc.
Building Standard Plus Allowance: The landlord lists, in detail,
the building standard materials and costs necessary to make the
premises suitable for occupancy. A negotiated allowance is then
provided for the tenant to customize or upgrade materials. See also
“Work Letter.”
Build-Out: The space improvements put in place per the tenant’s
specifications. Takes into consideration the amount of Tenant Finish
Allowance provided for in the lease agreement. See also “Tenant
Improvement Allowance”
Build-To-Suit: An approach taken to lease space by a property
owner where a new building is designed and constructed per the
tenant’s specifications.
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: This type of expense is most often defined by reference to
generally accepted Bullet Loan: Any short-term, generally five to
seven years, financing option that requires a balloon payment at the
end of the term and anticipates that the loan will be refinanced in
order to meet the Balloon Payment obligation. Essentially, should
the refinancing not be available, often due to the property not
performing as anticipated, the borrower is “shot” and the property
is subject to foreclosure. An example of this is when a developer
borrows to cover the costs of construction and carry-costs for a new
building with the expectation that it would be replaced by long-term
(or “permanent”) financing provided by an institutional investor
once most of risk involved in construction and lease-up had been
overcome resulting in an income-producing property.

Capital Expenses: accounting principles (GAAP), but GAAP
does not provide definitive guidance on all possible expenditures.
Accountants will often disagree on whether or not to include certain
items.
Capitalization: A method of determining value of real property
by considering net operating income divided by a predetermined
annual rate of return. See “Capitalization Rate.”
Capitalization Rate: The rate that is considered a reasonable return
on investment (based on both the investor’s alternative investment
possibilities and the risk of the investment). Used to determine and
value real property through the capitalization process. Also called
“free and clear return.” See “Capitalization.”
Carrying Charges: Costs incidental to property ownership, other
than interest (i.e. taxes, insurance costs and maintenance expenses),
that must be absorbed by the landlord during the initial lease-up of a
building and thereafter during periods of vacancy.
Certificate of Occupancy: A document presented by a local
government agency or building department certifying that a building
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and/or the leased premises (tenant’s space), has been satisfactorily
inspected, and is/are in a condition suitable for occupancy.
Chapter 7: That portion of the Federal Bankruptcy code that deals
with business liquidations. Chapter 11 is that part of the Federal
Bankruptcy code that deals with business reorganizations.
Chapter 11: That portion of the Federal Bankruptcy code that deals
with business reorganizations. Chapter 7 is that part of the Federal
Bankruptcy code that deals with business liquidations.
Clear-Span Facility: A building, most often a warehouse or parking
garage, with vertical columns on the outside edges of the structure
and a clear span between columns.
Circulation Factor: Interior space required for internal office
circulation not accounted for in the Net Square Footage. Based upon
our experience, we use a Circulation Factor of 1.35 x the Net Square
Footage for office and fixed drywall areas and a Circulation Factor
of 1.45 x the Net Square Footage for open area workstations. See
also “Net Square Footage and “Usable Square Footage.
Common Area: There are two components of the term “common
area.” If referred to in association with the Rentable/Usable or
Load Factor calculation, the common areas are those areas within a
building that are available for common use by all tenants or groups
of tenants and their invitees (i.e. lobbies, corridors, restrooms,
etc.). On the other hand, the cost of maintaining parking facilities,
malls, sidewalks, landscaped areas, public toilets, truck and service
facilities, and the like are included in the term “common area”
when calculating the tenant’s pro-rata share of building operating
expenses.
Common Area Maintenance (CAM): This is the amount of
Additional Rent charged to the tenant, in addition to the Base Rent,
to maintain the common areas of the property shared by the tenants
and from which all tenants benefit. Examples include: snow removal,
outdoor lighting, parking lot sweeping, insurance, property taxes,
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etc. Most often, this does not include any capital improvements see
“Capital Expenses” that are made to the property.
Comparables: Lease rates and terms of properties similar in size,
construction quality, age, use, and typically located within the same
sub-market and used as comparison properties to determine the fair
market lease rate for another property with similar characteristics.
Concessions: Cash or cash equivalents expended by the landlord
in the form of rental abatement, additional tenant finish allowance,
moving expenses, cabling expenses or other monies expended to
influence or persuade the tenant to sign a lease.
Condemnation: The process of taking private property, without
the consent of the owner, by a governmental agency for public use
through the power of eminent domain. See also “Eminent Domain.”
Construction Management: The actual construction process is
overseen by a qualified construction manager who ensures that
the various stages of the construction process are completed in a
timely and seamless fashion, from getting the construction permit
to completion of the construction to the final walk-through of the
completed leased premises with the tenant.
Consumer Price Index (“CPI”): Measures inflation in relation
to the change in the price of a fixed market basket of goods and
services purchased by a specified population during a “base” period.
It’s not a true “cost of living” factor and bears little direct relation
to actual costs of building operation or the value of real estate. The
CPI is commonly used to increase the base rental periodically as a
means of protecting the landlord’s rental stream against inflation or
to provide a cushion for operating expense increases for a landlord
unwilling to undertake the record keeping necessary for operating
expense escalations.
Contiguous Space: (1) Multiple suites/spaces within the same
building and on the same floor, which can be combined and rented
to a single tenant. (2) A block of space located on multiple adjoining
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floors in a building (i.e., a tenant leases floors 6 through 12 in a
building).
Contract Documents: The complete set of design plans and
specifications for the construction of a building or of a building’s
interior improvements. Working Drawings specify for the contractor
the precise manner in which a project is to be constructed. See also
“Specifications” and “Working Drawings.”
Conveyance: Most commonly refers to the transfer of title to
property between parties by deed. The term may also include most
of the instruments by which an interest in real estate is created,
mortgaged, or assigned.
Core Factor: Represents the percentage of Net Rentable Square
Feet devoted to the building’s common areas (lobbies, rest rooms,
corridors, etc.). This factor can be computed for an entire building or
a single floor of a building. Also known as a Loss Factor or Rentable/
Usable (R/U) Factor, it’s calculated by dividing the rentable square
footage by the usable square footage.”
Cost Approach: A method of appraising real property whereby the
replacement cost of a structure is calculated using current costs of
construction.
Covenant: A written agreement inserted into deeds or other legal
instruments stipulating performance or non-performance of certain
acts or, uses or non-use of a property and/or land.
Covenant of Quiet Enjoyment: The old “quiet enjoyment”
paragraph, now more commonly referred to as “Warranty of
Possession,” had nothing to do with noise in and around the leased
premises. It provides a warranty by landlord that it has the legal
ability to convey the possession of the premises to tenant; the
landlord does not warrant that he owns the land. This is the essence
of the landlord’s agreement and the tenant’s obligation to pay rent.
This means that if the landlord breaches this warranty, it constitutes
an actual or constructive eviction.
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Cumulative Discount Rate: The interest rate used in finding present
values that when applied to the rental rate takes into account all landlord
lease concessions and then expressed as a percentage of base rent.
Dedicate: To appropriate private property to public ownership for
a public use.
Deed: A legal instrument transferring title to real property from the
seller to the buyer upon the sale of such property.
Deed in Lieu of Foreclosure: A deed given by an owner/borrower
to a lender to satisfy a mortgage debt and avoid foreclosure. See also
“Foreclosure.”
Deed of Trust: An instrument used in many states in place of a
mortgage by which real property is transferred to a trustee by the
borrower (trustor), in favor of the lender (beneficiary), to secure
repayment of a debt.
Default: The general failure to perform a legal or contractual duty
or to discharge an obligation when due. Some specific examples are:
1) Failure to make a payment of rent when due. 2) The breach or
failure to perform any of the terms of a lease agreement.
Deficiency Judgment: Imposition of personal liability on a
borrower for the unpaid balance of mortgage debt after a foreclosure
has failed to yield the full amount of the debt.
Demising Walls: The partition wall that separates one tenant’s
space from another or from the building’s common area such as a
public corridor.
Design/Build: A system in which a single entity is responsible for
both the design and construction. The term can apply to an entire
facility or to individual components of the construction to be
performed by a subcontractor; also referred to as “design/construct.”
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Depreciation: Spreading out the cost of a capital asset over its
estimated useful life or a decrease in the usefulness, and therefore
value, of real property improvements or other assets caused by
deterioration or obsolescence.
Distraint: The act of seizing (legally or illegally) personal property
based on the right and interest that a landlord has in the property of
a tenant in default.
Dollar Stop: An agreed dollar amount of taxes and operating expense
(expressed for the building as a whole or on a square foot basis)
over which the tenant will pay its prorated share of increases. May
be applied to specific expenses (e.g., property taxes or insurance).
Otherwise known as an “Expense Stop.”
Earnest Money: The monetary advance by a buyer of part of the
purchase price to indicate the intention and ability of the buyer to
carry out the contract.
Easement: A right of use over the property of another created by
grant, reservation, agreement, prescription or necessary implication.
It’s either for the benefit of adjoining land (“appurtenant”), such
as the right to cross A to get to B., or for the benefit of a specific
individual (“in gross”), such as a public utility easement.
Economic Feasibility: A building or project’s feasibility in terms
of costs and revenue, with excess revenue establishing the degree
of viability.
Economic Rent: The market rental value of a property at a given
point in time, even though the actual rent may be different.
Effective Rent: The actual rental rate to be achieved by the landlord
after deducting the value of concessions from the base rental rate
paid by a tenant, usually expressed as an average rate over the term
of the lease.
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Efficiency Factor: Represents the percentage of Net Rentable
Square Feet devoted to the building’s common areas (lobbies, rest
rooms, corridors, etc.). This factor can be computed for an entire
building or a single floor of a building. Also known as a Core Factor
or Rentable/Usable (R/U) Factor, it’s calculated by dividing the
rentable square footage by the usable square footage.
Eminent Domain: A power of the state, municipalities, and private
persons or corporations authorized to exercise functions of public
character to acquire private property for public use by condemnation,
in return for just compensation. See also “Condemnation.”
Encroachment: The intrusion of a structure that extends, without
permission, over a property line, easement boundary or building
setback line.
Encumbrance: Any right to, or interest in, real property held
by someone other than the owner, but which will not prevent the
transfer of fee title (i.e. a claim, lien, charge or liability attached to
and binding real property).
Environmental Impact Statement: Documents that are required
by federal and state laws to accompany proposals for major projects
and programs that will likely have an impact on the surrounding
environment.
Equity: The fair market value of an asset less any outstanding
indebtedness or other encumbrances.
Escalation Clause: A clause in a lease which provides for the rent to
be increased to reflect changes in expenses paid by the landlord such
as real estate taxes, operating costs, etc. This may be accomplished by
several means such as fixed periodic increases, increases tied to the
Consumer Price Index or adjustments based on changes in expenses
paid by the landlord in relation to a dollar stop or base year reference.
Estoppel Certificate: A signed statement certifying that certain
statements of fact are correct as of the date of the statement and
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can be relied upon by a third party, including a prospective lender
or purchaser. In the context of a lease, a statement by a tenant
identifying that the lease is in effect and certifying that no rent has
been prepaid and that there are no known outstanding defaults by
the landlord (except those specified).
Escrow Agreement: A written agreement made between the parties
to a contract and an escrow agent. The escrow agreement sets forth
the basic obligations of the parties, describes the monies (or other
things of value) to be deposited in escrow, and instructs the escrow
agent concerning the disposition of the monies deposited.
Exclusive Agency Listing: A written agreement between a real
estate broker and a property owner in which the owner promises to
pay a fee or commission to the broker if specified real property is
leased during the listing period. The broker need not be the procuring
cause of the lease.
Expense Stop: An agreed dollar amount of taxes and operating
expense (expressed for the building as a whole or on a square
foot basis) over which the tenant will pay its prorated share of
increases. May be applied to specific expenses (e.g., property taxes
or insurance).
Face Rental Rate: The “asking” rental rate published by the
landlord.
Fair Market Value: The sale price at which a property would change
hands between a willing buyer and willing seller, neither being
under any compulsion to buy or sell and both having reasonable
knowledge of the relevant facts. Also known as FMV.
Finance Charge: The amount paid for the privilege deferring
payment of goods or services purchased, including any charges
payable by the purchaser as a condition of the loan.
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First Generation Space: Generally refers to new space that is
currently available for lease and has never before been occupied by
a tenant. See also “Second Generation Space.
First Mortgage: The senior mortgage, which, because of its
position, has priority over all junior encumbrances. The holder of
the first or senior mortgage has a priority right to payment in the
event of default.
First Refusal Right or Right of First Refusal (Purchase): A lease
clause giving a tenant the first opportunity to buy a property at the
same price and on the same terms and conditions as those contained
in a third party offer that the owner has expressed a willingness to
accept.
First Refusal Right or Right of First Refusal (Adjacent Space):
A lease clause giving a tenant the first opportunity to lease additional
space that might become available in a property at the same price
and on the same terms and conditions as those contained in a third
party offer that the owner has expressed a willingness to accept.
This right is often restricted to specific areas of the building such as
adjacent suites or other suites on the same floor.
Fixed Costs: Costs, such as rent, which do not fluctuate in proportion
to the level of sales or production.
Flex Space: A building providing its occupants the flexibility of
utilizing the space. Usually provides a configuration allowing a
flexible amount of office or showroom space in combination with
manufacturing, laboratory, warehouse distribution, etc. Typically
also provides the flexibility to relocate overhead doors. Generally
constructed with little or no common areas, load-bearing floors,
loading dock facilities and high ceilings.
Floor Area Ratio (FAR): The ratio of the gross square footage of a
building to the land on which it’s situated. Calculated by dividing the
total square footage in the building by the square footage of land area.
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Force Majeure: A force that cannot be controlled by the parties
to a contract and prevents said parties from complying with the
provisions of the contract. This includes acts of God such as a flood
or a hurricane or, acts of man such as a strike, fire, or war.
Foreclosure: A procedure by which the mortgagee (“lender”) either
takes title to or forces the sale of the mortgagor’s (“borrower”)
property in satisfaction of a debt. See also “Deed In Lieu Of
Foreclosure.”
Full Recourse: A loan on which an endorser or guarantor is liable
in the event of default by the borrower.
Full Service Gross Rent: An all-inclusive rental rate that includes
operating expenses and real estate taxes for the first year. The tenant
is generally still responsible for any increase in operating expenses
over the base year amount. See also “Pass Throughs.”
Future Proposed Space: Space in a proposed commercial
development that is not yet under construction or where no
construction start date has been set. Future Proposed projects
include all those projects waiting for a lead tenant, financing,
zoning, approvals, or any other event necessary to begin
construction. Also may refer to the future phases of a multi-phase
project not yet built.
General Contractor: The prime contractor who contracts for the
construction of an entire building or project, rather than just a portion
of the work. The general contractor hires subcontractors, (e.g.,
plumbing, electrical, etc.), coordinates all work, and is responsible
for payment to subcontractors.
General Partner: A member of a partnership who has authority to
bind the partnership. A general partner also shares in the profits and
losses of the partnership. See also “Limited Partnership.”
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Graduated Lease: A lease, generally long term in nature, which
provides that the rent will vary depending upon future contingencies,
such as a periodic appraisal, the tenant’s gross income, or simply the
passage of time.
Grant: To bestow or transfer an interest in real property by deed
or other instrument, either the fee or a lesser interest, such as an
easement.
Grantee: One to whom a grant is made.
Grantor: The person making the grant.
Gross Absorption: A measure of the total square feet leased over a
specified period with no consideration given to space vacated in the
same geographic area during the same time period. See also “Net
Absorption.”
Gross Building Area: The total floor area of the building measuring
from the outer surface of exterior walls and windows and including
all vertical penetrations (e.g. elevator shafts, etc.) and basement
space.
Gross Lease: A lease in which the tenant pays a flat sum for rent out
of which the landlord must pay all expenses such as taxes, insurance,
maintenance, utilities, etc.
Ground Rent: Rent paid to the owner for use of land, normally on
which to build a building. Generally, the arrangement is that of a
long- term lease (e.g. 99 years) with the lessor retaining title to the
land.
Guarantor: One who makes a guaranty. See also “Guaranty.”
Guaranty: Agreement whereby the guarantor undertakes collaterally
to assure satisfaction of the debt of another or perform the obligation
of another if and when the debtor fails to do so. Differs from a surety
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agreement in that there is a separate and distinct contract rather than
a joint undertaking with the principal. See also “Guarantor.”
Hard Cost: The cost of actually constructing the improvements (i.e.
construction costs). See also “Soft Cost.”
Highest and Best Use: The use of land or buildings, which will bring
the greatest economic return over a given time, which is physically
possible, appropriately supported, financially feasible.
High Rise: In the Central Business District, this could mean a
building higher than 25 stories above ground level but in suburban
sub-markets, it generally refers to buildings higher than seven or
eight stories.
Hold Over Tenant: A tenant retaining possession of the leased
premises after the expiration of a lease.
HVAC: The acronym for “Heating, Ventilating, and Air-
Conditioning.”
Improvements: In the context of leasing, the term typically refers
to the improvements made to or inside a building but may include
any permanent structure or other development, such as a street,
sidewalk, utilities, etc. See also “Leasehold Improvements.” See
also “Leasehold Improvements” and “Tenant Improvements.”
Indirect Costs: Development costs, other than material and labor
costs, which are directly related to the construction of improvements,
including administrative and office expenses, commissions,
architectural, engineering, and financing costs.
Inventory: The total amount of rentable square feet of existing and
any forthcoming space (whether it be a tenant vacating space or new
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buildings coming on the market), in a given category, for example,
all warehouse space in a specified submarket. Inventory refers to
all space within a certain proscribed market without regard to its
availability or condition, and categories can include all types of
leased space such as office, flex, retail and warehouse space.
Judgment: This is the final decision of a court resolving a dispute
and determining the rights and obligations of the parties. Money
judgments, when recorded, become a lien on real property of the
defendant.
Judgment Lien: An encumbrance that arises by law when a
judgment for the recovery of money attaches to the debtor’s real
estate. See also “Lien.”
Just Compensation: Compensation, which is fair to both the
owner and the public when property is taken for public use through
condemnation (eminent domain). The theory is that in order to be
“just,” the property owner should be no richer or poorer than before
the taking.
Landlord’s Lien: A type of lien that can be created by contract or
by operation of law. Some examples are: (1) a contractual landlord’s
lien as might be found in a lease agreement; (2) a statutory landlord’s
lien; and (3) landlord’s remedy of distress (or right of Distraint),
which in not truly a lien but has a similar effect. See also “Lien.”
Landlord’s Lien or Warrant: A warrant from a landlord to levy
upon a tenant’s personal property (e.g., furniture, etc.) and to sell
this property at a public sale to compel payment of the rent or the
observance of some other stipulation in the lease.
Lease: An agreement whereby the owner of real property (i.e.,
landlord/lessor) gives the right of possession to another (i.e.,
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tenant/lessee) for a specified period (i.e., term) and for a specified
consideration (i.e., rent).
Lease Agreement: The formal legal document entered into between
a landlord and a Tenant to reflect the terms of the negotiations
between them; that is, the lease terms have been negotiated and
agreed upon, and the agreement has been reduced to writing. It
constitutes the entire agreement between the parties and sets forth
their basic legal rights.
Lease Commencement Date: The date usually constitutes the
commencement of the term of the Lease for all purposes, whether
or not the tenant has actually taken possession so long as beneficial
occupancy is possible. In reality, there could be other agreements,
such as an Early Occupancy Agreement, which have an impact on
this strict definition.
Leasehold Improvements: Improvements made to the leased
premises by or for a tenant. Generally, especially in new space, part
of the negotiations will include in some detail the improvements
to be made in the leased premises by landlord. See also “Tenant
Improvements.”
Legal Description: A geographical description identifying a parcel
of land by government survey, metes and bounds, or lot numbers of
a recorded plat including a description of any portion thereof that is
subject to an easement or reservation.
Legal Owner: The term is in technical contrast to equitable owner.
The legal owner has title to the property, although the title may
actually carry no rights to the property other than as a lien. See also
“Lien.”
Letter of Attornment: A letter from the grantor to a tenant, stating
that a property has been sold, and directing rent to be paid to the
grantee (buyer). See also “Attorn.”
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Letter of Credit: A commitment by a bank or other person, made at
the request of a customer, that the issuer will honor drafts or other
demands for payment upon full compliance with the conditions
specified in the letter of credit. Letters of credit are often used in
place of cash deposited with the landlord in satisfying the security
deposit provisions of a lease.
Letter of Intent: A preliminary agreement stating the proposed
terms for a final contract. They can be “binding” or “non-binding.”
This is the threshold issue in most litigation concerning letters of
intent. The parties should always consult their respective legal
counsel before signing any Letter of Intent.
Lien: A claim or encumbrance against property used to secure a debt,
charge or the performance of some act. Includes liens acquired by
contract or by operation of law. Note that all liens are encumbrances
but all encumbrances are not liens.
Lien Waiver (Waiver of Liens): A waiver of mechanic’s lien rights
signed by a general contractor and his subcontractors that is often
required before the general contractor can receive a draw under the
payment provisions of a construction contract. May also be required
before the owner can receive a draw on a construction loan.
Like-Kind Property: A term used in an exchange of property held
for productive use in a trade or business or for investment. Unless
cash is received, the tax consequences of the exchange are postponed
pursuant to Section 1031 of the Internal Revenue Code.
Limited Partnership: A type of partnership, created under state
law, comprised of one or more general partners who manage the
business and who are personally liable for partnership debts, and
one or more special or limited partners who contribute capital and
share in profits. However, one or more of the partners take no part
in running the business and incur no liability over and above the
amount contributed. See also “General Partner.”
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Listing Agreement: An agreement between the owner of a property
and a real estate broker giving the broker the authorization to attempt
to sell or lease the property at a certain price and terms in return
for a commission, set fee or other form of compensation. See also
“Exclusive Listing Agreement.”
Long Term Lease: In most markets, this refers to a lease whose term
is at least three years from initial signing until the date of expiration
or renewal option.
Lot: Generally, one of several contiguous parcels of land making up
a fractional part or subdivision of a block, the boundaries of which
are shown on recorded maps and “plats.”
Low Rise: A building with fewer than four stories above ground
level.
Lump-Sum Contract: A type of construction contract requiring
the general contractor to complete a building or project for a fixed
cost normally established by competitive bidding. The contractor
absorbs any loss or retains any profit.
Maker: One who creates or executes a promissory note and promises
to pay the note when it becomes due.
Market Rent: The rental income that a property would command
on the open market with a landlord and a tenant ready and
willing to consummate a lease in the ordinary course of business;
indicated by the rents that landlords were willing to accept
and tenants were willing to pay in recent lease transactions for
comparable space.
Market Study: A forecast of future demand for a certain type of
real estate project that includes an estimate of the square footage
that can be absorbed and the rents that can be charged. Also called
“Marketability Study.”
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Marketable Title: A title which is free from encumbrances and
could be readily marketed (i.e., sold) to a reasonably intelligent
purchaser who is well informed of the facts and willing to accept
such title while exercising ordinary business prudence. See also
“Encumbrance.”
Market Value: The highest price a property would command
in a competitive and open market under all conditions requisite
to a fair sale with the buyer and seller each acting prudently and
knowledgeably in the ordinary course of trade.
Master Lease: A primary lease that controls subsequent leases
and which may cover more property than subsequent leases. An
Executive Suite operation is a good example in that a primary lease
is signed with the landlord and then individual offices within the
leased premises are leased to other individuals or companies.
Mechanic’s Lien: A claim created by state statutes for the purpose
of securing priority of payment of the price and value of work
performed and materials furnished in constructing, repairing, or
improving a building or other structure, and which attaches to the
land as well as to the buildings and improvements thereon.
Metes and Bounds: The boundary lines of land, with their terminal
points and angles, described by listing the compass directions and
distances of the boundaries. Originally, metes referred to distance
and bounds referred to direction.
Mid-Rise: A building with between four and eight stories above
ground level although in a Central Business District, this might
extend to buildings up to twenty-five stories.
Mixed-Use: Space within a building or project providing for more
than one use (i.e., a loft or apartment project with retail, an apartment
building with office space, an office building with retail space).
Mortgage: A written instrument creating an interest in real estate
and that provides security for the performance of a duty or the
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payment of a debt. The borrower (i.e., mortgagor) retains possession
and use of the property.
Net Absorption: The square feet leased in a specific geographic
area over a fixed period-of-time after deducting space vacated in
the same area during the same period. See also “Gross Absorption.”
Net Lease: A lease in which there is a provision for the tenant to
pay, in addition to rent, certain costs associated with the operation
of the property. These costs may include property taxes, insurance,
repairs, utilities, and maintenance. There are also “NN” (double net)
and “NNN” (triple net) leases. The difference between the three is
the degree to which the tenant is responsible for operating costs. See
also “Gross Lease.”
Net Rentable Area: The floor area of a building that remains
after the square footage represented by vertical penetrations, such
as elevator shafts, etc., has been deducted. Common areas and
mechanical rooms are included and there are no deductions made
for necessary columns and projections of the building. (This is by
the Building Owner and Manager Association - BOMA, Standard).
Net Square Footage (S.F.): The space required for a function or
staff position. Also, see “Circulation Factor and “Usable Square
Footage.”
Non-Compete Clause: A clause that can be inserted into a lease
specifying that the business of the tenant is exclusive in the property
and that no other tenant operating the same or similar type of business
can occupy space in the building. This clause benefits service-
oriented businesses desiring exclusive access to the building’s
population (i.e. travel agent, deli, etc.).
Non-Recourse Loan: A loan, which bars a lender from seeking a
deficiency judgment against a borrower in the event of default. The
borrower is not personally liable if the value of the collateral for the
loan falls below the amount required to repay the loan.
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Normal Wear and Tear: The deterioration or loss in value caused
by the tenant’s normal and reasonable use. In many leases, the tenant
is not responsible for “normal wear and tear.”
Open Space: An unimproved area of land or water, or containing
only such improvements as are appropriate to the use and enjoyment
of the open area, and dedicated for public or private use or enjoyment
or for the use and enjoyment of owners and occupants of land
adjoining or neighboring such open spaces.
Operating Cost Escalation: Although there are many variations
of escalation clauses, all are intended to adjust rents by reference
to external standards such as published indexes, negotiated wage
levels, or expenses related to the ownership and operation of
buildings. During the past thirty years, landlords have developed the
custom of separating the base rent for the occupancy of the leased
premises from escalation rent. This technique enables the landlord
to better ensure that the “net” rent to be received under the lease will
not be reduced by the normal costs of operating and maintaining the
property. The landlord’s definition of Operating Expenses is likely
to be broad, covering most costs of operation of the building. Most
landlords pass through proper and customary charges, but in the
hands of an overly aggressive landlord, these clauses can operate
to impose obligations, which the tenant would not willingly or
knowingly accept.
Operating Expenses: The actual costs associated with operating
a property including maintenance, repairs, management, utilities,
taxes, and insurance. A landlord’s definition of operating expenses
is likely to be quite broad, covering most aspects of operating the
building.
Operating Expense Escalation: Although there are many variations
of operating expense escalation clauses, all are intended to adjust
rents by reference to external standards such as published indexes,
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negotiated wage levels, or expenses related to the ownership and
operation of buildings.
Parking Ratio or Index: The intent of this ratio is to provide a
uniform method of expressing the amount of parking that is available
at a given building. Dividing the total rentable square footage of a
building by the building’s total number of parking spaces provides
the amount of rentable square feet per each individual parking space
(expressed as 1/xxx or 1 per xxx). Dividing 1000 by the previous
result provides the ratio of parking spaces available per each 1000
rentable square feet (expressed as x per 1000).
Partial Taking: The taking of part (a portion) of an owner’s property
under the laws of eminent domain.
Pass Throughs: Refers to the tenant’s pro rata share of operating
expenses (i.e. taxes, utilities, repairs) paid in addition to the base rent.
Percentage Lease: Refers to a provision of the lease calling for
the landlord to be paid a percentage of the tenant’s gross sales as
a component of rent. There is usually a base rent amount to which
“percentage” rent is then added. This type of clause is most often
found in retail leases.
Performance Bond: A surety bond posted by a contractor
guaranteeing full performance of a contract with the proceeds to be
used to complete the contract or compensate for the owner’s loss in
the event of nonperformance.
Plat (Plat Map): Map of a specific area, such as a subdivision,
which shows the boundaries of individual parcels of land (e.g. lots)
together with streets and easements.
Power of Sale: Clause inserted in a mortgage or deed of trust giving
the mortgagee (or trustee) the right and power, on default in the
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183
payment of the debt secured, to advertise and sell the property at
public auction.
Precast Concrete: Concrete components (i.e. walls) of a building,
which are fabricated at a plant site and then shipped to the site of
construction.
Preleased: Refers to space in a proposed building that has been
leased before the start of construction or in advance of the issuance
of a, Certificate of Occupancy.
Prime Shell Space: This typically refers to first generation (new) space
that is currently available for a tenant that has never before occupied.
Prime Tenant: The major tenant in a building or, the major or anchor
tenant in a shopping center serving to attract other, smaller tenants
into adjacent space because of the customer traffic generated.
Pro Rata: Proportionately, according to measure, interest, or
liability. In the case of a tenant, the proportionate share of expenses
for the maintenance and operation of the property. See also “Common
Area” and “Operating Expenses.”
Punch List: An itemized list, typically prepared by the architect
or construction manager, documenting incomplete or unsatisfactory
items after the contractor has notified the owner that the tenant space
is substantially complete.
Quitclaim Deed: A deed operating as a release that is intended to pass
any title, interest, or claim that the grantor may have in the property, but
not containing any warranty or professing that such title is valid.
Raw Land: Unimproved land that remains in its natural state.
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Raw Space: Unimproved “shell space” in a building.
REO (Real Estate Owned): Real estate that has come to be owned
by a lender, including real estate taken to satisfy a debt. Includes real
estate acquired by lenders through foreclosure or, in settlement of
some other obligation.
Real Property: Land, and generally whatever is erected or affixed
to the land, such as buildings, fences, and including light fixtures,
plumbing and heating fixtures, or other items which would be
personal property if not attached.
Recapture: (1) When the IRS recovers the tax benefit of a deduction
or a credit previously taken by a taxpayer, which is often a factor in
foreclosure since there is a forgiveness of debt. (2) As used in leases, a
clause giving the lessor a percentage of profits above a fixed amount of
rent; or in a percentage lease, a clause granting the landlord a right to
terminate the lease if the tenant fails to realize minimum sales.
Recourse: The right of a lender, in the event of a default by the
borrower, to recover against the personal assets of a party who is
secondarily liable for the debt (e.g. endorser or guarantor).
Rehab: An extensive renovation of a building or project, which is
intended to cure obsolescence of such building or project.
Renewal Option: A clause giving a tenant the right to extend the
term of a lease, usually for a stated period of time and at a rent
amount as provided for in the option language.
Rent: Compensation or fee paid, usually periodically (i.e. monthly
rent payments, for the occupancy and use of any rental property,
land, buildings, equipment, etc.
Rent Commencement Date: The date on which a tenant begins
paying rent. The dynamics of a marketplace will dictate whether
this date coincides with the lease commencement date or if it
commences months later (i.e., in a weak market, the tenant may
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185
be granted several months free rent). It will never begin before the
lease commencement date.
Rentable Square Footage: Rentable Square Footage equals the
Usable Square Footage and the tenant’s pro rata share of the Building
Common Areas, such as lobbies, public corridors and restrooms.
The pro-rata share, often referred to as the Rentable/Usable (R/U)
Factor, will typically fall in a range of 1.10 to 1.16, depending on
the particular building. Typically, full floor occupancy will have an
R/U Factor of 1.10 while partial floor occupancy will have an R/U
Factor of 1.12 to 1.16 times the Usable Area.
Rentable/Usable Ratio: That number obtained when the Total
Rentable Area in a building is divided by the Usable Area in the
building. The inverse of this ratio describes the proportion of
space that an occupant can expect to actually utilize/physically
occupy.
Rental Concession: Concessions a landlord may offer a tenant in
order to secure their tenancy. While rental abatement is one form
of a concession, there are many others such as: increased tenant
improvement allowance, signage, and lower than market rental
rates and moving allowances are only a few of the many. See also
“Abatement.”
Rent-Up Period: The period of time, following construction of a
new building, when tenants are actively being sought and the project
is approaching its stabilized occupancy.
Representation Agreement: An agreement between the owner of a
property and a real estate broker giving the broker the authorization
to attempt to sell or lease the property at a certain price and terms in
return for a commission, set fee or other form of compensation. See
also “Exclusive Listing Agreement.”
Request for Proposal (“RFP”): The formalized Request for
Proposal represents a compilation of the many considerations
that a tenant might have and should be customized to reflect their
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specific needs. Just as the building’s standard form lease document
represents the landlord’s “wish list,” the RFP serves in that same
capacity for the tenant.
Right of First Refusal: See “First Refusal Right.”
Sale-Leaseback: An arrangement by which the owner occupant of
a property agrees to sell all or part of the property to an investor
and then lease it back and continue to occupy space as a tenant.
Although the lease technically follows the sale, both will have been
agreed to as part of the same transaction.
Second Mortgage: A mortgage on property that ranks below a
first mortgage in priority. Properties may have two, three, or more
mortgages, deeds of trust, or land contracts as liens at the same
time. Legal sequence priority, indicated by the date of recording,
determines the designation first, second, third, etc.
Second Generation or Secondary Space: Refers to previously
occupied space that becomes available for lease, either directly from
the landlord or as sublease space. See also “First Generation Space.
Security Deposit: A deposit of money by a tenant to a landlord to
secure performance of a lease. This deposit can also take the form of
a Letter of Credit or other financial instrument.
Seisen (Seizen): Possession of real property under claim of
freehold estate. This term originally referred to the completion of
feudal investiture by which a tenant was admitted into the feud and
performed the rights of homage and fealty. Presently it has come
to mean possession under a legal right (usually a fee interest). As
the old doctrine of corporeal investiture is no longer in force, the
delivery of a deed gives seisin in law.
Setback: The distance from a curb, property line or other reference
point, within which building is prohibited.
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Setback Ordinance: Setback requirements are normally provided
for by ordinances or building codes. Provisions of a zoning
ordinance regulate the distance from the lot line to the point where
improvements may be constructed.
Shell Space: The interior condition of the tenant’s usable square
footage when it’s without improvements or finishes. While existing
improvements and finishes can be removed, thus returning space in
an older building to its “shell” condition, the term most commonly
refers to the condition of the usable square footage after completion
of the building’s “shell” construction but prior to the build out of
the tenant’s space. Shell construction typically denotes the floor,
windows, walls, and roof of enclosed premises and may include
some HVAC, electrical or plumbing improvements but not demising
walls or interior space partitioning. In a new multi-tenant building,
the common area improvements, such as lobbies, restrooms, and
exit corridors may also be included in the shell construction. With a
newly constructed office building, there will often be a distinction
between improvements above and below the ceiling grid. In a retail
project, all or a portion of the floor slab is often installed along with
the tenant improvements to better accommodate tenant specific
under-floor plumbing requirements.
Site Analysis: The study of a specific parcel of land, which takes
into account the surrounding area and is meant to determine its
suitability for a specific use or purpose.
Site Development: The process of installation of all necessary
improvements, (i.e. installment of utilities, grading, etc.), made
to a site before a building or project can be constructed upon such
site.
Site Plan: A detailed plan, which depicts the location of improvements
on a parcel of land, which also contains all the information required
by the zoning ordinance.
Slab: The exposed wearing surface laid over the structural
support beams of a building to form the floor(s) of the building
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188
or laid slab- on-grade in the case of a non-structural, ground level
concrete slab.
Soft Cost: That portion of an equity investment other than the
actual cost of the improvements themselves (i.e. architectural
and engineering fees, commissions, etc.) and which may be tax-
deductible in the first year. See also “Hard Cost.”
Space Plan: A graphic representation of a tenant’s space
requirements, showing wall and door locations, room sizes, and
sometimes includes furniture layouts. A preliminary space plan
will be prepared for a prospective tenant at any number of different
properties and this serves as a “test-fit” to help the tenant determine
which property will best meet its requirements. When the tenant has
selected a building of choice, a final space plan is prepared which
speaks to all of the landlord and tenant objectives and then approved
by both parties. It must be sufficiently detailed to allow an accurate
estimate of the construction costs. This final space plan will often
become an exhibit to any lease negotiated between the parties.
Special Assessment: Any special charge levied against real property
for public improvements (e.g., sidewalks, streets, water and sewer,
etc.) that benefit the assessed property.
Specific Performance: A requirement compelling one of the parties
to perform or carry out the provisions of a contract into which he has
entered.
Speculative Space: Any tenant space that has not been leased
before the start of construction on a new building. See also “First
Generation Space.”
Step-Up Lease (Graded Lease): A lease specifying set increases in
rent at set intervals during the term of the lease.
Straight Lease (Flat Lease): A lease specifying the same, a fixed
amount, of rent that is to be paid periodically during the entire term
of the lease. This is typically paid out in monthly installments.
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189
Strip Center: Any shopping area, generally with common parking,
comprised of a row of stores but smaller than the neighborhood
center anchored by a grocery store.
Subcontractor: A contractor working under and being paid by the
general contractor. This is a worker, often a construction specialist,
such as an electrical contractor, cement contractor, etc.
Subdivision Plat: A detailed drawing, which depicts the manner
in which a parcel of land has been divided into two or more lots. It
contains engineering considerations and other information required
by the local authority.
Subordination Agreement: As used in a lease, the tenant generally
accepts the leased premises subject to any recorded mortgage or
deed of trust lien and all existing recorded restrictions, and the
landlord is often given the power to subordinate the tenant’s interest
to any first mortgage or deed of trust lien subsequently placed upon
the leased premises.
Surety: One who at the request of another, and for the purpose of
securing to him a benefit, voluntarily binds himself to be obligated for
the debt or obligation of another. Although the term includes guarantor
and the terms are commonly, though mistakenly, used interchangeably,
surety differs from guarantor in a variety of respects.
Surface Rights: A right or easement granted with mineral rights,
enabling the possessor of the mineral rights to drill or mine through
the surface.
Survey: The process by which a parcel of land is measured and its
boundaries and contents ascertained.
Taking: A common synonym for condemnation or any actual or
material interference with private property rights but it’s not essential
that there be physical seizure or appropriation.
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190
Tax Base: The assessed valuation of all the real property that lies
within the jurisdiction of a taxing authority, which is then multiplied
by the tax rate or mill levy to determine the amount of tax due.
Tax Lien: A statutory lien, existing in favor of the state or
municipality, for nonpayment of property taxes, which attaches only
to the property upon which the taxes are unpaid.
Tax Roll: A list or record containing the descriptions of all land
parcels located within the county, the names of the owners or those
receiving the tax bill, assessed values, and tax amounts.
Tenant (Lessee): One who rents real estate from another and holds
an estate by virtue of a lease.
Tenant at Will: One who holds possession of premises by
permission of the owner or landlord, the characteristics of which
are an uncertain duration (i.e. without a fixed term) and the right of
either party to terminate on proper notice.
Tenant Improvements: Improvements made to the leased premises
by or for a tenant. Generally, especially in new space, part of the
negotiations will include in some detail the improvements to be
made in the leased premises by the landlord. See also “Leasehold
Improvements,” “Work letter.”
Tenant Improvement (“TI”) Allowance or Work Letter:
Defines the fixed amount of money contributed by the landlord
toward tenant improvements. The tenant pays any of the costs
that exceed this amount. Also commonly referred to as “Tenant
Finish Allowance.
“Time is of the Essence”: Means that performance by one party
within the period specified in the contract is essential to require
performance by the other party.
Title: The means whereby the owner of lands has the just and full
possession of real property.
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191
Title Insurance: A policy issued by a title company after searching the
title and which insures against loss resulting from defects of title to a
specifically described parcel of real property, or from the enforcement
of liens existing against it at the time the title policy is issued.
Title Search: A review of all recorded documents affecting a
specific piece of property to determine the present condition of title.
Total Inventory: This is the total amount of square footage of a type
of property (i.e. office, industrial, retail, etc.) within a geographical
area, whether vacant or occupied. This normally includes owner-
occupied space.
Trade Fixtures: Personal property that is attached to a structure
(i.e. the walls of the leased premises) that is used in the business.
Since this property is part of the business and not deemed to be part
of the real estate, it’s typically removable upon lease termination.
Triple Net (NNN) Rent: A lease in which the tenant pays, in addition
to rent, certain costs associated with a leased property, which may
include property taxes, insurance premiums, repairs, utilities, and
maintenances. There are also “Net Leases” and “NN” (double net)
leases, depending upon the degree to which the tenant is responsible
for operating costs. See also “Gross Lease.”
Turn Key Project: The construction of a project in which a third party,
usually a developer or general contractor, is responsible for the total
completion of a building (including construction and interior design) or,
the construction of tenant improvements to the customized requirements
and specifications of a future owner or tenant.
Under Construction: When construction has started but the
Certificate of Occupancy has not yet been issued.
Under Contract: A property for which the seller has accepted the
buyer’s offer to purchase is referred to as being “under contract.”
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192
Generally, the prospective buyer is given a certain period of time in
which to perform its due diligence and finalize financing arrangements.
During the period of time the property is under contract, the seller is
precluded from entertaining offers from other buyers.
Unencumbered: Describes title to property that is free of
liens and any other encumbrances. Free and clear. See also
“Encumbrances.
Unimproved Land: Most commonly refers to land without
improvements or buildings but can also mean land in its natural
state. See also, “Raw Land.”
Use: The specific purpose for which a parcel of land or a
building is intended to be used or for which it has been designed
or arranged.
Usable Square Footage: Usable Square Footage is the area contained
within the demising walls of the tenant space. Total Usable Square
Footage equals the Net Square Footage x the Circulation Factor.
Also, see: Circulation Factor and Net Square Footage.
Vacancy Factor: The amount of gross revenue that pro forma
income statements anticipate will be lost because of vacancies,
often expressed as a percentage of the total rentable square footage
available in a building or project.
Vacancy Rate: The total amount of available space compared to the
total inventory of space and expressed as a percentage. Multiplying
the vacant space times 100 and then dividing it by the total inventory
calculate this.
Vacant Space: Refers to existing tenant space currently being
marketed for lease. This excludes space available for sublease.
Million Dollar Broker
193
Variance: Refers to permission that allows a property owner to
depart from the literal requirements of a zoning ordinance that,
because of special circumstances, cause a unique hardship. Included
would be such things as the particular physical surroundings, shape
or topographical condition of the property, and when compliance
would result in a practical difficulty and would deprive the owner of
the reasonable use of the property.
Warranty of Possession: This is the old “quiet enjoyment”
paragraph, which of course had nothing to do with noise in and
around the leased premises. It provides a warranty by landlord that
it has the legal ability to convey the possession of the premises to
Tenant; the landlord does not warrant that he owns the land. This is
the essence of the landlord’s agreement and the tenant’s obligation
to pay rent. This means that if the landlord breaches this warranty, it
constitutes an actual or constructive eviction.
Weighted Average Rental Rates: The mean proportion or medial
sum made out of the unequal rental rates in two or more buildings
within a market area.
Workletter: A list of the building standard items that the landlord
will contribute as part of the tenant improvements. Examples of
the building standard items typically identified include: style and
type of doors, lineal feet of partitions, type and quantity of lights,
quality of floor coverings, number of telephone and electrical
outlets, etc. The Workletter often carries a dollar value but is
contrasted with a fixed dollar tenant improvement allowance
that can be used at the tenant’s discretion. See also Leasehold
Improvements and “Tenant Improvements.
Working Drawings: The set of plans for a building or project that
comprise the contract documents that indicate the precise manner
Scott W Johnstone
194
in which a project is to be built. This set of plans includes a set of
specifications for the building or project.
Zoning: The division of a city or town into zones and the
application of regulations having to do with the structural,
architectural design and intended use of buildings within such
designated zone (i.e. a tenant needing manufacturing space
would look for a building located within an area zoned for
manufacturing).
Zoning Ordinance: Refers to the set of laws and regulations,
generally, at the city or county level, controlling the use of land and
construction of improvements in a given area or zone.
Glossary of Terms borrowed from several locations too many to
name: Thank you to all contributors. Note that these are generally
accepted terminology for our industry but that this should not be
construed as legal terminology and that we are not providing legal
advice. Please always consult an attorney when considering legal
advice.
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Million Dollar Broker
THE COMMERCIAL REAL ESTATE SENSATION
______________________________________________________ Change your life, change your perspective on wealth, and give you and your family what you’ve always dreamed of. Scott W Johnstone Founder of Commercial Real Estate Brokers Academy
www.commercialrealestatebrokersacademy.com

Liability No responsibility or liability is assumed or accepted by the author for any claimed financial losses and/or damages sustained to persons from the use of the information in this publication, personal or otherwise, directly or indirectly. While every effort has been made to ensure the reliability and accuracy of the information within, all liability, negligence or otherwise, from any use, misuse or abuse of the operation of any methods, strategies, instructions or ideas contained in the material herein, is the sole responsibility of the reader. By reading past this point, you are accepting these terms and conditions. A POWERFUL ENGLISH PAPERBACK First published in the United States in 2011 by Powerful English Copyright © 2011 Scott W Johnstone The right of Scott Johnstone to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs & Patents Act 1988. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, internet, electronic, mechanical, photocopying, recording or otherwise, without permission in writing from the publisher. ISBN-10: 9995736194 ISBN-13: 978-99957-36-19-4

ii

Ellis. Marilynn P. author. artist. leader. iii . She taught me passion. and the man I hope to be. She saved my life and led me to be a great father. courage.Dedicated to my late grandmother. poet. and unconditional love. and lover of all that’s beautiful. and the best mother anyone could ever have.

....81 Chapter Nine: Chapter Ten: Chapter Eleven: iv ............................. Choose Where and Whom to Work with Wisely...................... Set Measurable.....Contents Introduction .....................................7 The Ten Commandments of The Million-Dollar Broker ...........69 Commandment V.................. Personal............26 Commandment I.......................77 Commandment VII...79 Commandment VIII............... Be a Person You Can be Proud Of .... It’s a Marathon...............57 Commandment IV............37 Commandment II..............74 Commandment VI............. Specialize ..................... Be the Best ...........1 My Personal Story and My Passion for Overcoming the Odds .... Drink from “The Seven Buckets of Revenue” .... vi Chapter One: Chapter Two: Chapter Three: Chapter Four: Chapter Five: Chapter Six: Chapter Seven: Chapter Eight: The Secret Handshake of the Commercial Real Estate Broker...........46 Commandment III................. Build Lasting Relationships ............................ Business and Financial Goals and Review Them Quarterly .. Not a Sprint...............................

............................. Save and Invest Your Money and Have a Great Life ................................................ Letter of Intent-LOI ........... Give Back .............................................................................. Example: Market Newsletter ..118 D. Example: Office – User...... 93 -Appendix Example Documents: ..86 Chapter Thirteen: Chapter Fourteen: Live with No Regrets ...84 Commandment X..135 F................ Example: Office – Letter of Intent-LOI ................................... Have Fun.... Letter of Intent-LOI ......................... Example: Capabilities Brochure ...........Tenant ......Purchase.108 B............154 -Glossary: Industry Terminology ......... 159 v .......128 E.. 107 A.......... Example: Office – Investor -Purchase...............................................................................144 G................................................. Example: Exclusive Tenant Representation Letter .....89 About the author ...116 C.........153 I..152 H............ Example: Office – Request for Proposal-RFP................................................... Example: Broker Ethics Code“Broker Code of the West” .... Example: Deal Process Timeline and Flowchart .......Chapter Twelve: Commandment IX........

this book provides information previously inaccessible to anyone outside of the top brokerage firms. You can fulfill your calling in life. and become the person you are meant to be. Our society is in the middle of the greatest redistribution of knowledge and wealth in world history. . tremendous desire and tenacity. closed fraternity of commercial real estate is now open to anyone. until now. thus leaving a lasting legacy for both you and your family. Regardless of your gender. you can change your life forever. While living a purposeful. I am living proof that anyone in America or elsewhere. it is also the unvarnished truth.vi Scott W Johnstone Introduction This book is dedicated to changing your life by teaching you to become one of the top one percent of money earners in the country. yourself. can earn $1million per year in gross commissions in the commercial real estate industry. You can obtain financial freedom for you and your family. prior job experience. your life will have mattered. Packed with these strategies and tactics. and most importantly. I know from personal experience that by following these proven strategies. You can do all this while earning the respect of your family. you can give you and your family the lifestyle you all dream of. and lives in or around a commercial business hub. If this sounds far-fetched or hard to believe. who has a basic education. The once secretive. eventually allowing more time for the passions in your life. have been hidden behind the corporate walls of top commercial real estate brokerage firms. Those of us who are determined to change stations in life can ride this unprecedented wave of opportunity by learning the insider secrets that. You’ll have the ability to give back to society. fulfilling life. and education – you too can become a top commercial real estate broker. family background. community leaders. race. In the final appraisal.

coupled with their knowledge of various commercial deal structures. Brokers best represent their clients when they figuratively become part of their corporate team. They also assist retailers in finding the perfect location so their first ventures into business are successful. to provide strategic and tactical advantages that accomplish both financial and operational goals. Brokers usually are from a local major university .Million Dollar Broker vii Who or what is a commercial real estate broker and why use one? Commercial agents and brokers have provided commercial real estate solutions for facilities such as office. Often. as well as mitigate losses. since before the industrial revolution. The advantages a broker provides are innumerable just like any great business leader. they also serve as buffers between opposing parties who have a vested interest in maintaining long lasting relationships. Brokers are industry specialists who represent proprietors. enable them to negotiate the best possible terms for their clients. to members of the Fortune Five Hundred. warehouse. and others. retail locations. and covering all types of disciplines within the business. and investors in all their commercial sales and leasing needs. tenants. the broker leverages the valuable time of the company officers. They’ve helped both small and large companies. Their indepth and timely market knowledge. Not only do they serve as advocates for their clients. Brokers act as trusted advisors to owners or investors to help grow their portfolios. this literally translates to saving or making clients millions in a single transaction. allowing them to focus on their core business. The commercial brokerage industry of the past has been made up of nearly exclusively white males that had been recommended into one of the major firms. all the while earning a great living in good times or bad. during the heated battle during negotiations for deals in the millions or billions of dollars. and had gone through extensive training programs lasting one to two years. A good broker provides a friendly but unrelenting advocacy for their clients. ranging from the mom and pop store. Additionally.

they are usually brought into the business by a family member who’s a “legacy” in the industry. cold calling and attending meetings & presentations. the typical pay is $24. The duties of a new “Runner” are typically copying. or indentured servitude. A “Runnership” program lasts between one and two years and it is based on the notion that the best way to learn is though immersion with a senior broker for a lengthy period of time. One major firm not only puts you through a series of interviews with brokers. who help bridge the financial gap. This level of income is barely above the poverty line and most people who go through it require the financial and moral support of family or loved ones. If you’re finally hired. The top firms like competitive athletes and risk-takers for their competitive spirit and entrepreneurial predisposition. until much later in your training. During training.viii Scott W Johnstone and from one of the most powerful fraternities. binding. while simultaneously allowing senior brokers to get to know you. packaging. . This will later allow you to be successful on your own and make your millions. as typically trainers have a “listen but don’t speak” policy. and that this immersion in your mentor’s daily routine will teach you the finer points of the business. During the “Runnership”. You are then considered for what is normally called a “Runnership” program.000 per year. for the one to two years it takes to earn your stripes and complete your training. your aim is to bond with your trainer and learn as much as possible. you become a trainee in the research department learning the basics macroeconomic drivers of the business. managers and executives of the company but they also enroll you into an eight hour psychological battery of tests to determine whether if you match a psychological role mode based on the profiles of previously successful brokers. Runners do not participate at this stage. Alternatively.

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Ideally, the trainer has taught them the finer points of the industry, and has Imparted the skills and wisdom. They hope the acquired knowledge, as well as creating relationships that will allow the runner to stay afloat out on their own. In appreciation for a job well done often the runner is invited to join the trainer in a partnership. The average early stage tenured broker for one of the top five firms in the nation, on average, earn gross commissions of $1.1 million annually. Those gross commissions are then split with the house and paid out to the broker, after further splits with partners, if any. The top leading brokers in the top five firms average $3.6 million in gross commissions annually and also split their commissions accordingly. You may not have been born into the “right family” or gone to the “right” school or university but you have something that previous generations of prospective brokers never had. You have the Internet. All the data ever needed to succeed are at your fingertips. The step-by-step process of becoming a world-class broker offered to you through online training and this book. You have several series of audio and video training courses from world-class experts. Subscription-based online data service companies provide all the research and property data provided, only a select few in major firms previously had access to this in the past. Thanks to these expanded opportunities for self training, firms are willing to take you on with less human training, more virtual learning, and shorter or no “Runnership” campaigns. The world economy has made a fundamental shift toward paying the highest incomes to business leaders, who can provide knowledge, process, and execution in specific fields that include commercial real estate. Today’s knowledge and process based pay is disproportionate to the amount of money paid in the old “time for money model,” in which the worker is paid on an hourly scale. Time-for-money never allows workers a chance to get ahead of the financial curve. Today’s contact, knowledge, and process-driven pay that commercial brokers receive, allows for the community to be served at the highest level while providing the Broker a world class lifestyle enjoyed only by the top 1% of earners in the nation.

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I feel it’s my life’s mission to inform those in our society who are looking for a start or a change. I’m talking about a change that will provide true peace of mind to all of the hard working individuals out there looking to change their station in life, give back to the community, and give their families what they never had growing up. I’m not talking just about material things, I’m talking about things like the best education for your children, money for retirement, a home wherever you choose, and respect from your peers, your community and your loved ones. You see, I came from humble beginnings, and encountered some tough times when I was young I was far from privileged. My tough times started early, and I didn’t make it easier on myself by being a rebel and a “bad” kid. I saw what I didn’t want for my life and I was lucky enough to change it. I was blessed by a few people who gave me a shot at being a better person. I want to give that blessing to you, but you know what they say, “luck is the residue of hard work,” so if you’re ready to give it the effort, and work hard and smart, then I’m willing to show you how to become The Million-Dollar Broker.

Chapter One

The Secret Handshake of the Commercial Real Estate Broker
It’s February 2010. We’re in the biggest recession since the great depression. I look across the room of the banquet hall on “fight night” and instantly notice the nods and winks from the seasoned vets, and the boyish zeal of the rookies. They’re smoking cigars and cheering on the two boxers beating the hell out of each other – all for the entertainment of the group of 600 industry attendees – who were decked out in black ties. As I mingle through the smoke filled room to line up for another cocktail – my belly full of filet mignon and asparagus, topped off with fine red wine – I’ve no other thought than to fill my glass before last call. At the same time, a group of the top 20 to 40 guys are all headed to an after dinner spot where the single guys will meet up with the model hostesses that were hired to dress up the room by the event leaders that night. The married guys will show up as well to watch the games begin, while the ladies all vie for the highest status guys and the guys all play the game to do the same but status is less of a concern to the boys than beauty and sex appeal. Before we can get there, however, the lines of Mercedes and the occasional Maserati or Bentley have to be brought to their rightful owner. Those brave or dumb enough to drive after drinking, do so willingly – as this is a group of high-level risk takers, most of which were seasoned athletes. In addition, they all believe, to some degree, that they are invincible, or at least while the vodka is still streaming through their veins. The destination is a place well known for those in “the know” on Pacific Coast Highway, with a band of high-level young brokers who are on a mission to find a mate or at least a mate that night. A solid stream of S and SL class Mercedes Benz roll up to the after party spot. Upon arrival, the valet gives everyone the “secret handshake,” as he knows most of them by name.

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This is a well-known spot for young brokers -- many of whom make their own hours so they can choose to come in when they feel the need. Their only real bosses are their clients, and most of them are with their broker. The truth of the matter is that their clients were probably one of them not long ago and might have even trained the young bucks back in the day, as this small community of insiders is incredibly close nit. “He’s a great guy.” This is something you hear occasionally about people in the business and definitely something you want to hear frequently about yourself. Unfortunately, more often than not, you might hear a terrible story of a mistake someone made, as it can also be an industry of sharks, vying for position by knocking their competition, in order to better their position in the eyes of the small group of the important decision makers. Now most of the rest of the group that night, the seasoned vets, have taken the high road and found their way home by cab or learned their lesson years earlier not to go big and hurt yourself that night, as this is just another night. Your clients will respect you tomorrow just as they had the day before. These old dogs have learned to do the right thing. That is, by coming home to their wives and kids at a reasonable hour, telling the story of the night exactly as it happened. The wife already knows that the perfume she smells is that of the hostess coming in for a test probe to see what kind of guy he really is. He is the guy mentioned earlier. “He’s a great guy!” He is reliable and honest, trustworthy and candid, self-assured but not cocky. He might drive the nearly mandatory Mercedes, but it’s way beyond its warranty and he owns it free and clear, just as he owns his house and boat that rests in the bay, visible from his balcony up on the hill. This is the last thing he’ll see before he kisses his kids goodnight. Afterward, he settles in for a good night’s sleep so he can hit the office early in the morning to ensure he gets a jump on his day by leaving messages for all the hung-over young bucks he’s doing deals with that haven’t made it out of bed yet.

reaching out to those less fortunate than they are. daughters and sons. The story I just told you is true. Their focus is on making their lives the best they can be for their loved ones. don’t have as much to prove and are less focused than the younger guys on issues of status. but he is very close to me. They usually are involved in the community. Now the secrets of the industry are opening up to anyone that can access it and make sense of it and has the courage to take the leap. I grew up in the business with him and we have lived our lives in this industry for more than 25 years. . I won’t mention his name. as there are thousands of guys just like him in this little known industry of experts in commercial real estate. a decent year in a bad economy. The mission of these community leaders is to make their life worth living and to do it with purpose and drive. but the seasoned vets will quietly clear more than $2. have attended the right college or been in the right fraternity.Million Dollar Broker 3 The young guys will still make gross commissions on average this year of over $500. their wives. in the process making themselves better people. making millions for our clients. and are paid a percentage of every deal we close. This expertise has been passed down the line to us from generation to generation of experts. The “great guy” I refer to is real.000. all the while keeping their eye on the prize. not an hourly wage. intelligence and dignity. We are paid for our knowledge and our process. They are calmer. the prize being the love and respect of their family. The list of silver-spoon kids in the industry is long. His story isn’t uncommon. that need the help to carry on with pride and honor. Before now you had to be born into the right family with the right connections. and I know him and his family intimately.000 as the extra effort and focus a loving family brings makes all the difference.000. and those in their immediate families. That has been the way since the great earthquake of 1906 when Colbert Coldwell met Benjamin Arthurs and formed the greatest commercial real estate firm in history from the ashes of downtown San Francisco.

Less and less are we judged by last names as is the past. insight. will give you the step-by-step processes of how to become one of the best in the industry. Enter the online training experts who. Without the mentoring and lessons learned from those who have come before. as a result. All the while making lasting relationships with the leaders of industry in the community and enriching their lives with invaluable life experiences. character. the new economy broker may fail before he gets off the ground when faced with adversity or the ethical teachings of those who have come before him. minorities. they’ll make more money than they ever expected by closing deals in their community.4 Scott W Johnstone Enter the age of the Internet. This is the good news for all those brave enough to take on the challenge of changing your station in life. work ethic. some new age brokers might think this is a fast buck. It’s easy to make money in this industry when times are good it’s the measure of how well someone is trained when they are able to prosper in the down times like the example of my “good guy “friend I spoke of earlier in this chapter. . building a wealth of knowledge to use to better increase your income. The reality is that anything worth doing in life is worth doing well. increase your free time. honesty. with open platforms of information and online. get rich quick solution to the woes of our nation’s economic meltdown. It’s an exciting time for women. These open platforms of information are allowing for a diversity of people to enter the industry either on their own or with brokerage companies looking for volume through masses. enthusiasm. Some moral and ethical rules are left out. in a very short period of time. The bad news is that the information may be there but the lessons of the ages seem to be lacking. diligence. and underprivileged in the industry as the old-boy networks are now less relevant than knowledge. strategy and tactic. skill. By simply combining the rules of the industry with their own hard work ethic. for a small price. subscription based access to all the data one ever needs to be the best the industry has ever seen. choose who your boss is and make your own hours.

Too many get rich quick thinkers have come into commercial brokerage in the past ten years with information learned about the mechanics of the industry from lack of good training from these open platforms of information. intelligent advice. Too many get rich quick guys have made too many ethical mistakes and have said. The commercial brokerage industry and the clients we serve are typically extremely conservative in their approach to business and have the long game in mind while managing transactions. Unfortunately. and vendors. ethical.Million Dollar Broker 5 The recent lending crisis and subsequent massive job losses within the mortgage industry have created a mass migration of new age brokers who have come over to commercial real estate brokerage from mortgage lending. Not enough of them have come into the business with the right mental attitude towards fellow brokers. Make no mistake. clients. If you’ve been in the business long enough you’re now possibly the “wisdom” in the room given your historical perspective and this is even more valuable to clients so the “go slow and make a good decision” approach is more of what is required to make it in this business. and data delivery services. They can do a deal but they wreak . building relationships in the industry. and serving their community and families. and their own reputations. online trainers. those individuals who bring the mortgage lending mentality to commercial real estate typically die on the vine with such a mindset. This is the gut check one has to consider prior to giving any advice or recommendations. Additionally not enough psychological and social method has been brought to the industry by the trainers and it’s time for a change. with them have also come the bad habits of the mortgage lending industry which up until recently was all about churning through as many deals as possible with little or no qualification of the client. If you wouldn’t do the deal yourself then you should never recommend it to your clients or potential clients. clients. their firms. “I’ll take the money and deal with the consequences later. as we are typically the connection to the information on the street level. What I mean by long game is the “big picture” to doing business. our clients are looking to us for solid.” no matter what damage they do to coworkers.

are more approachable. The one’s whose moral compass is always pointing “North. It’s time for a change. I lived through the technological advances the industry has benefited from. In the next coming years of the commercial brokerage business. all the time. The ones who will lose in the future are those upstarts who haven’t learned the moral and ethical lessons of the past. I’ve worked alongside and been subject to the influx of the get rich quick thinkers and the havoc they create. and are visible leaders in the community. The ones who will succeed in the end are those who have been taught the wisdom of the past while embracing the technological advances of today and the future. I’ve trained. I came from the wrong family and from the wrong side of the tracks and through hard work and determination. have high integrity and authenticity. as well as those older “dinosaurs” who haven’t embraced the potential that technology and the internet brings. mentored. and formulas for success. succeeded in this very elite business. Those who are stuck in the past or those who are in the present but don’t have the historical lessons vital so not to repeat the mistakes from generations that have come before them are in trouble. . I was trained old school at two of the biggest firms in the world.” The ones who will win in the future are those who are more collaborative. I have been on top for the better part of 25 years in this business and know the most up to date techniques. as they haven’t learned the lessons of the past and haven’t received training to make good decisions. How did I come to these conclusions? The reason is that I have witnessed the way the business used to be and how it has evolved and I have had to evolve with it. and partnered with some of the best in the business and they have all gone on to live the lives of their dreams. Join me and let me help you do the same. tactics. as well as the moral and ethical lessons of the past. I have evolved with my own companies as only a small business owner can because it’s make–orbreak time. strategies. the ones who will win are those who are the long game thinkers.6 Scott W Johnstone havoc in the process.

bath session with Mr. but my mom and dad had done some serious damage to my young life. what?” “Your mother is about to ruin your life!” I wasn’t aware of it at the time. Grandma. For example. My parent’s marriage came about because my maternal grandfather was a devout Catholic. Bubble and my rubber duck. asking to talk about anything. he moved us to the San Francisco bay area onto the naval barracks. Evidently. my mother. “She’s going to ruin your life!” I’m thinking ‘huh? what do you mean?’ So I say.Million Dollar Broker 7 Chapter Two My Personal Story and My Passion for Overcoming the Odds I’m an eight-year-old. my now absent father entered the Navy and was based out of Oakland. a World War II flotilla and Aqua Man. toe head blond kid in late summer of 1969. and myself from the guy who started this mess. Peacefully enjoying my evening. Now I’m eight and that’s right about the age when you don’t want your Grandma or any other woman hovering over you. Glendale hills home. “why are you crying . So we’re back to the bathtub. naked. She asks me if she can talk to me about something. I have not a care in the world when my grandmother uncharacteristically barges in. I’m sunburned from the beach in Santa Monica in my grandparents 1913. condoms weren’t available to my 17-year-old dad when they did “it” at the local drive-in on their first date. bubbles fading and water getting colder by the minute. pre-bed. but she’s my world as mom and dad are out of the picture so I say “Ok. so having an abortion was out of the question. my great grandmother drove 16 hours round trip to the bay area to retrieve my brother. they were seventeen and senior’s in high school when they had me. visibly shaken and welling up with tears. Between this time and when I was born. After my dad ruffed up my mom a couple times.

“Your mom is breaking off her engagement to Chuck (her boss) and she’s now going to marry this Hispanic gentleman. Therefore. my grandparents bought a modest house for my mom and stepdad in a decent neighborhood some 20 miles away in Burbank where the Disney studios are. it’s known as the barrio for most of LA’s Mexican street gangs. It also included fights to defend my younger brother. crying session filled with fear and anxiety I’ll never forget. my grandmother was the sweetest woman you could ever hope to meet. The marriage was filled with violence. stabbings. Rather than move to the barrio. beat the shit out of me daily. wonderful cook. song writer. So moving away from her with my now 26-year-old flakey mom with her new drug dealing husband from the barrios of east LA to who knows where. she gave us the biggest gift of all – unconditional love. hide in the bushes from local gangs. . After enough physical abuse. scared the hell out of me and made bath time a traumatic. or kill me. and visits to the barrio on “family” gatherings. After all. You have to understand.convict out of San Quentin Prison. the badass locals would literally eat me alive. and unannounced visits from the local police.8 Scott W Johnstone Grandma?” She said. and the person who kept us on the right track. So my Grandma in very graphic detail explains all this to me and I start balling my eyes out not only for the fear factor but because I really don’t want to move away from her and the life I have. blond. poet. a heroin dealer and they want to move you boys to east Los Angeles. an ex. So for those who don’t know east LA. visits to the local minimum-security prisons to visit my step dad. and all around survival techniques that no nine-year-old should ever be required to learn. She fed us and told us the best bed time stories ever – where we were always the hero’s. and eventually turn me into either a white version of them. as well as myself. it doesn’t take a genius to figure out that East LA isn’t the place for a toe head. Most importantly. skinny white kid to show his face. my mom figured out that this was a bad guy and divorced him. So flash forward a bit. plus lessons on how to saw off shotguns. strife. She was cum lade at Penn State and a terrific artist.

We were back in bliss at Grandma’s: unconditional love. this meant I had to step in to be the surrogate father for my now two younger brothers while my mom was out looking for a new man.” One day an incident where. five days later. Now you have to realize. even though my mom made questionable decisions about men. we were around five and seven years old at the time and it left a distinct memory of the kind of guy he was and the idea of being shipped off to this man was almost as scary as moving in with Mr.” ‘Oh. He would wake us up to revelry every morning and pour cold water on us if we weren’t up by 7:00 sharp (during summer vacation!) Now if you were a normal kid you remember that the best part of summer vacation was sleeping in until whenever you felt like. I was expelled to continuation school for a prank where I put dry ice in my math teachers back pocket. I still loved her. fed up with it all.O.Million Dollar Broker 9 Unfortunately. basically living off MacDonald’s and whatever I could cook at fourteen. San Quentin. Well. One week into high school and I was summarily dismissed to where the other abandoned kids and misfits went to “learn on their own schedule. I was on a plane home. Even though she’d been absent a lot I still needed her in my life. This guy took great pleasure in the agony we felt. Oregon. Out of the frying pan and into the fire. three square meals a day. So. after a year-and-a-half of being told I was evil and living as an indentured servant. Needless to say. a ride . I’m sure channeling his navy days. This meant we survived off $100 a week. By the time I was 15 and a sophomore in high school. Shortly after we moved back in with my grandparents because my mom proved once again to be an unfit mother. shit’ I thought. or military father did to him. back to sunny southern California. Indeed. And all I knew of my dad was from spending week long visits with him during the summers in dreary Portland. along with a few physical confrontations and being knocked around. “You’re going to live with your father. I dowsed my mom with a glass of milk for who knows what and that was it. where his C.I called my mom and told her I would be the best kid ever if she would please take me back. I was pissed all the time as school became second to survival.

I put in my two years and just as I was about to transfer to the University of Oregon. it still wasn’t enough to overcome the three previous disastrous years of mediocre grades. and tuition. inviting me to come live with him in Eugene Oregon to attend Lane Community Junior College with the plan of eventually transferring to the University of Oregon. my dad announced to me that he. So with no other plan or opportunities. So what came next was an odd surprise. Therefore. Well that might have been a good deal for him but to me I had been busting my hump . studying or involved in sports. and the dream of becoming a doctor. which just happened to be where my dad graduated. A plan either devised by my grandmother or an altruistic move on my dad’s part came in the form of a phone call from my at the time estranged father. mainly volleyball. and new son we moving off to Portland.all because we simply were able to focus on being kids and good students which gained us the respect of our classmates and teachers. clothes gas. my coaches’ and math teachers’ Teaching Assistants. The deal wasn’t quite as good as presented as my tuition. after graduation and with much trepidation I set off for Oregon again. his wife.10 Scott W Johnstone to water polo practice at 6:00 am. too rainy I guess. From early in the morning to dark I was either in class. It would be a great thing. was my responsibility so I quickly found a job. according to him. calling was still in me and I was off to college. enrolled as a Biology major as the Dr. car. Portland was three hours away and if I wanted to continue to be supported with room. etc. I’d have to change my plan and move with them and attend a little known collage named Portland State University. This was my senior year in high school and although I pulled it together – water polo and swim team. board. as swimming wasn’t much of a sport in Oregon. great social life. room and board in his home was paid for but books. home on time. Now. good grades. To avoid conflict and confrontation I spent as much time on campus as possible. and good grades . my chances of entering a university were shot.

to this end. I said “Hey bro. I went along. We both had small single beds and both snored like hell but it was heaven compared to the couch and I was on my own in Newport Beach a block from the sand and the waves. So as soon as I got my first paycheck I thanked my brother and his roommates. bought them a case of beer and moved to an apartment a block off the beach and shared a room with a buddy I met who was looking to split the bills. California. etc. I’m headed home and need to sleep on your couch for thirty days while I get a job and figure out what I’m gonna do with my life. a town in Orange County. contacted my younger brother living in Costa Mesa.Million Dollar Broker 11 to go to the University of Oregon. So a new plan came to me. However. So I did just that and found a job in retail that paid the bills and was also doing the one thing I knew I could do which was sales. mean senior when they were sophomores in high school and I pretty much hazed them all the time. Another thing retail allowed me to do was to make commissions. unfamiliar town with no friends and a campus and staff I never was properly introduced to by my preoccupied “parents. All the while. but after pleading my case a couple times they said thirty days and that’s it. and move back home.” Things just did not work out. Moving to some new city simply to follow my dad’s life plan was not appealing. I saved $830. long story short. having done so in college to make ends meet. social life. . so I lasted about a week at this new school and all I could think of was that I was wasting valuable time in my life as this just wasn’t working out. Take my chances and make a life for myself. I still had to have a job to pay for my car. save a few bucks. clothes. I’ll take on more hours at work. Once again. as planned and had for two years been getting to know the town and the people etc. as I didn’t have the funds to venture out on my own.” He and his high school buddies weren’t very thrilled about the idea as I was the big. I was in a new. So I did just that. which if I hustled more than the average employee. allowed me to make a decent living and live above the poverty line. California near Newport Beach.

In retrospect. but for some reason. simple math. .” I thought? I had this burning desire to become more than a subsistence level retail guy. To this day. The girlfriend introduced me to one and a girl I worked with at Nordstrom introduced me to the other. and he was reading me as a prospect. as it happened. Enter three key people in my life. Or the trip where I ran away from home at fifteen for a month with a buddy to Wisconsin. Maybe it was the stories my Grandma told me when I was a kid where I was always the hero. where I saw the world as it really was: tough and hard and if you don’t take action to better your station you’ll be just another worker bee struggling to make ends meet. but he was a bit more reserved in his description as how to get a job as he was actually hiring a “Runner. whom I had just happened to meet at a birthday party my girlfriend took me to. So I started looking around and meeting as many people as I could who were successful who might point me in the right direction. I had visions of grandeur. it made all the sense in the world as when I would ask a question he would always come back with a question himself. I also knew that commission sales were what I was good at and that the higher the sales price the better. where he was from. My girlfriend and two guys I happen to meet through friends that happen to both work for the same company which at the time was called “Coldwell Banker”. Now I wasn’t stupid. The first guy named Bob sat me down and told me the inner workings of how to go about getting a job with his firm.” His first “Runner”. in late winter. I knew I had blown the whole Doctor thing and I knew I had to probably find a career in sales where I could get someone to give me a shot and teach me the ropes. I had no diploma. no matter what the odds. no fraternity. It’s not that that’s a bad thing. no relative in the business but he recommended me to Paul. Now. it just happened Paul and I also had a conversation about the business at the party prior to Bob’s and my talk. Now that scared the heck out of me and with my grandma’s help in overinflating my ego I knew I could do anything I put my head and my heart into. which by the way was almost impossible for a guy like me.12 Scott W Johnstone “So what’s next for me. these guys are two of my best friends and I’d throw myself in front of a bus for them if it meant saving their lives.

He laid it out for me as clear as a bell. tenacity. I would make it worth his while. eight new ties. desire or raw talent than me. He said. etc. right on time and dressed to the nines. I said something to the effect of. went to the same fraternity as Paul. we really got to know each other and came to find that we came from somewhat similar backgrounds and I could tell he liked my tenacity and work ethic and I really liked his brutal candor. He asked me what I did and at the time I was selling menswear at Nordstrom. as he was never going to find anyone with more drive. Well. socks etc. If I wanted a job I had to go through no less than eight interviews. and an eight-hour physiological test and then had to be recommended in by at least two current brokers that would vouch that I was a “good guy. I finally put two and two together and immediately called Paul.” He went on to say he already had a candidate ahead of me that he liked and that I would have to show him I could do a better job and make him more money than this other candidate. All the while. I need a new suit so I’ll come in to see you this Thursday and see if you can help me find something suitable. who by the way. two new pairs of shoes. “I’m not sure this store has anything that is my style. I went on to say that if he were to give me this chance he would have my undying loyalty for life and could treat me like a dog and I’d happily and willingly come back for more.” Paul was more of a fine Italian suit guy and Nordi’s at the time was a bit more conservative so I went about qualifying his tastes and finding out what he had in his wardrobe and then went about filling in the holes as every well healed man has to have at least the basics.” Now I was the king of hustle at what I did so I couldn’t be happier. . five new shirts. if he would be willing to sit down and talk. I needed someone like him on my team to help me get hired and show me the ropes.Million Dollar Broker 13 Well. Thursday came and Paul rolls up. Two hours later Paul left with six new suits. He said “Great.

” I could hardly contain myself. Always be completely honest.400 annually. Be blunt about your story of hard knocks but not too graphic. I turned to Paul and said what the heck are they doing to those poor trees. He said something I’ll never forget. The pay for Runners at the time was $12. His favorite game is the NBA but don’t bring up his wife and kids. by the way.14 Scott W Johnstone So I go about scheduling the interviews and before every one Paul would prep me for what type of guy the interviewer was like. so we get a head start. I can’t say enough about Paul. . pointed out the roadblocks. Wear this but not that. ability to learn fast. it will be one of the best decisions he’s ever made. I was working for a great retailer at the time and my $20-35. He likes this but not that. never puff. be humble but stick up for yourself. mentored me through the process and when it came time to make a decision between me and the other guy took me on a little ride in his car. Don’t let me down. and tell him if he goes with you. you’re gonna make millions off that land. you got the job and you start when we open our new office in two weeks. By the way. The guy virtually gave me the roadmap. First of all the car we were in was his bright red Porsche Cabriolet and we were driving by an old Orange grove where a backhoe was plucking trees out of the ground like a kid would pick weeds while doing his chores. He basically had the green light to hire either of us and I knew he had already had this talk with the other candidate and the little ride we took was through our territory to get my opinion of what I knew of commercial real estate. In fact. you’re past sales experience and relate it somehow to commercial real estate.” He said “you and me. tenacity. so I had to come up with a solution. Emphasize your desire. I had absolutely no business training. we’re the first hired. living in Newport Beach or for that matter Nome Alaska was far below the poverty level. Now to tell the truth I really had no idea what I was getting myself into.000 was pretty much automatic as long as I showed up and hustled but this was a totally new experience. I think I hugged the guy and did like 10 fist pumps because someone in my life finally saw something in me that I always knew myself and gave me a shot. “Kid. which. with a small $200 gas allowance.

let’s give it a shot. She and I had been paying for two separate apartments but really living in one. Behind me were the days of retail and ahead the promise of a real career where I’d have the opportunity to work with the top CEO’s and leaders of the community and become a fraternity brother in the biggest Brokerage firm in the nation. But let me tell you that cube was my castle. I had no idea what to expect and really no idea what I was doing.m. I’d be in the office at 6:00 a. It’s a lot of facts and figures. Now she had a roommate and that was cool with her because she liked the idea of a guy around for protection but was I ready to do this? This meant the potential of marriage and I was only 23 years old at the time. The thing of it is that the business isn’t brain surgery. So my first day at work I was scared to death. Six foot by six foot cubes with a little storage space for files a phone and that’s about it. Well the next year was one of the most brutal of my life. One thing I knew was maybe I didn’t have the pedigree but no one was going to outwork or out hustle me. Thank God I had Paul reassuring me that if I just listened to him and didn’t say anything stupid I’d get through training and be on my way to making my fortune.Million Dollar Broker 15 Enter my girlfriend. One thing I was able to convince Paul and my other interviewers was that because of my sales skills and experience that I could definitely make it through the training program in just a year and not the usual two-year program. greeted me and helped me fill out all the appropriate paperwork and get settled into my workstation or at the time they called them cubes. When we had special projects or presentations the next day I would literally work until 2:00 am and then sleep under my desk with a book propping up my head as a pillow and back at it at the crack of dawn. I waited in my car until the office manager who was the nicest lady. and out no later than 7:30 p. I loved her so I said to myself what the hell. We had been going out for a year or so and there was either the choice for me to go find a couple guy roommates or take the plunge and move in together. I was the happiest guy on the planet. because that’s what they were. So I show up for my first day and hour early and couldn’t even get in the building.m. mixed with client .

We were in the dark ages. Being friendly and helpful to the senior guys goes a long way and you want to make a good reputation for yourself because eventually you’re going to need the senior brokers to bring you into deals after your Runnership (that is if you’ve made a good impression) because this business is about interdependence. Back in the day we were called “Runner”s for a reason: we delivered proposals and documents because time was of the essence and there was no Fed-Ex. marketing. I suggested we meet briefly to review a survey of all the alternatives that met his parameters. I asked a few questions and sure enough. We didn’t have fax machines. invited my mentor to the meeting and sure enough after a brief tour. business development. receptionist. we found a better building for about 20% less than his current owner was proposing. business processes. Our secretaries typed on those IBM Selectric Typewriters with three copies of carbon paper. Internet. I was good at charming my way past the gatekeeper. free his time up to chase girls (he was single at the time). Then comes a lucky cold call. which was my specialty. and have a bit of fun. his landlord was taking him to the cleaners. or personal assistants and always tried to get a hold of the CFO or equivalent.000 square foot warehouse that they had been in for a 10 years but had no broker advising him on the market. but you know the one thing that hasn’t changed – cold calling.16 Scott W Johnstone psychology. and closing deals. The reason being he’s the guy responsible for the money and takes it very seriously. This is a fancy word for teaming to spread the work so you always have a consistent deal flow and not the spikes and dips the lone brokers’ experience. basic sales skills. . So one lucky day when the Gods were shining on me I got through to the right guy at the right time and sure enough he was about to sign a lease on a 110. Paul some incremental income. It’s either done in person by walking buildings while introducing yourself to a decision maker or by phone. So fortunately I work hard enough to make a good reputation for myself I dig up enough deals to make my mentor. or color copiers.

I had to invent the tools to make me the best in my market and make no mistake that was exactly my goal. cold called my ass off. excel. is the respect of the senior guys who might give me a shot of working together on a project and increasing my income. At this point I’m half way through my rookie year with all the other first year guys. Be the best or die trying. So I pulled out all the stops. I wrote a newsletter and sent it to all the owners. they throw me a big coming out on your own party.000 and having been living in near poverty. it was crunch time. Costar etc. If I wanted the brass ring. ““Runner”ship” program. Adobe. I get put on a couple small low income listings. Word. were non-existent. tenants. I drove every building in my market on weekends. I had to reach for it. met with all the successful brokers to get any insight I might have missed. Therefore.Million Dollar Broker 17 To make a long story short we closed the deal. earn a trophy saying “you’re the best first year guy that year. which at the time was unheard of as there weren’t even computers yet. Google. as I was only eight months into my training and my mentor was ecstatic and magnanimous enough to include me in on 20 percent of the commissions. met with every owner in my market. At this point. So that’s a big win but that’s not it. To make things better I had . which I was happy to be on but quickly realized it was really up to me to take what I learned and put it to work and get it done. So it’s a Sunday night and I’m watching the local news and there’s a story about a bank building burning down which just happens to be smack dab in the middle of my territory. took pictures. banks and anyone who would listen because if they at least new my name and associated it with me being an expert then I could at least have a better chance of getting in the door which was half the battle. I’m competing to make the most money and therefore. My share of the deal was $47. and do it harder than I ever had as a “Runner”. and built a database. I finish my one year training.” More importantly. to me that was a tremendous amount of money to receive all at one time. however. which he absolutely did not have to do. Basically.

Now one bit of information that will mean more to you later in the book is that I was trained as an “Industrial Broker. Now you have to understand the bank wasn’t the only tenant in the building. That chain of events alone made me gross commissions of $250.” That means I worked on warehouses and R&D facilities with companies who had need for such facilities. my trainer who gave me the knowledge to realize what to do when presented with an opportunity. After all the fanfare of that year had faded my realization was: “You’re only as good as your next deal. dedication. you’re exactly the person I need to talk to. All I had to do was to get to the office by 5:00 am. By the time my rookie year was over. I worked with manufacturers of nut’s and bolts . drive. of course. I rolled up in my suit and acted like I owned the place. my unrelenting passion for overcoming the odds and. we were off to find him a new location. make 30 copies for all the tenants in the building coming to their burnt down building and have enough cards to hand out so I could be their broker and help find them a new home. I was far and away “Rookie of the Year” but also number four in the office out of 45 other brokers. floor plans. It was perfect.18 Scott W Johnstone just put together a market package of all the competitive buildings in the area together with statistics on available space. They were one of 30 other tenants and I was handing out cards and market studies like they were hotcakes.” So I took some time to think about what I really wanted to be in this industry.000 that year and I still made over 20 other deals especially after I made a bit of a reputation for working hard and sharing the wealth. I was so busy I had to bring in two senior guys just to handle the paperwork and deal flow. For those who don’t know banking rules. photos. desire. Most of which were senior guys all wondering “how did this 24 year old kid do it?” So I chalked it all up to luck. walked under the fire tape and into the bank branch offices and asked for the president of the bank. well those rules state that a bank can’t close during normal operating hours for more than 24 hours and just like that. Now I’m not a fire engine chaser but to a young guy in the business it was perfect. I briefly introduced myself and he says to me kid. and an executive summary.

One day I’m at my cube. style. Now that’s not a knock on Industrial facilities or companies because they are the backbone of our economy. I bring this entire story up because of what happens next. simply because the time it takes to learn all the detail is so long that even considering making a change is daunting to say the least. tone. and widgets. way of communicating and level of professionalism is very different. Well I immediately notice that they all have big smiles on their faces and a feeling of relief completely baths me but I try not to show it. etiquette.’ They continue on to say. Almost everyone wears a tie. Because I had learned my craft in a newly developing market with rapid housing growth and lots of business migration. minding my own business. by contrast. the office administration manager comes to me and says that three senior managers want to see me right away. “Well Scott as you know you had a great year last tear and we can’t thank you enough for your hard work and dedication.Million Dollar Broker 19 and high tech weaponry. What the hell did I do? So I sheepishly walk into the room with the kind of body language that says whatever it is I’m sorry and I’ll never do it again. Their dress. ‘this isn’t bad so far. They make things and distribute them to the country and the world. Well that is a very specific vertical specialty and once you choose your field of expertise within the industry you usually never switch.” ‘Ok. clay pots.’ I think. However. Industrial clients. Well that’s exactly what I’m feeling. I was fortunate to have dabbled in both industrial properties and office buildings. the people working in the two different types of facilities are usually very different. “We have been thinking as a group that there is a hole in the production . Now you know that feeling you get when you’ve just been called into the principal’s office and you’re not sure what you did but you know it’s bad. wear overalls and jeans with work boots and it’s usually not a very clean environment. “So guys what’s up?” I say with a little confidence in my voice. Now office buildings have a very different type of clientele who go to work every day in these facilities. completely immersed in whatever I was into that day and out of the blue.

a Broker form New Orleans who was looking to migrate to California was my very first . So we shake on it and sure enough Carol. You see I had made myself read every economic paper on the industry. which I was currently part of. getting your own “Runner” is something tenyear vets only rarely receive let alone first year rookies.” I would be receiving my own “Runner?” You have to understand. I also knew that this was a huge opportunity as our office department was lacking a leader unlike the five super alpha males already vying for supremacy in the industrial division. free time. read every research paper on macro and micro economics. realign myself with the senior office team. “So guys what’s in it for me? It sounds daunting!” They go on to say I have their undying support and that I would be receiving my own “Runner. but like every good negotiator wanted to know what was in it for me. extra earners and peace of mind. “Well. and there is a consistent migration trend of residents because of increased housing starts and that’s going to mean a lot more office product being built in the next ten-year cycle. ‘a hole in the production team. just because I didn’t go to a big school or have a business degree I knew exactly what they were leading to. They went on to say that they would build the department around me and as long as I continued producing I’d continue to receive assistants and “Runner”s as they graduated and in doing so build my own little force of team mates and with that would come. Before I even said a word. What the hell is that?’ And they continue on. land values are on the rise here in South OC. the time it would take to build my brand as the expert in this new specialty and how much of a dip in income I might feel in the short run.20 Scott W Johnstone team.” I think to myself. here in the office. and we’d like to talk to you about it. I responded. created my own database and written my own newsletter. reporting on the statistics and trends in the market and I knew exactly what these guys were talking about and what they were about to propose. leverage. They wanted me to fill the hole in the office team and wanted me to lead the group. I was in.” Don’t get me wrong. I calculated the time it would take to retool my business.

brains. and on a 100-foot luxury . I trained many young Runners and always installed the mantra “Be the best. Pipeline on the North shore of Hawaii. I just naturally knew I would be among the top five producing brokers in the office and eventually surpass my mentor/trainer (who by the way was just ahead of me and never let me forget it!). I made it a point of introducing her to everyone and in short order we dominated the listing market and did more tenant representation business than any other team in our office. As the years went on. I went on to work for CB Richard Ellis for almost 14 years and those were the best times of my life. We’ve shared many great off-work times together. I’ve been fortunate to build great relationships with fellow brokers but also with the business leaders in the community. my teams and I were consistently the go-to guys for our market. and went on to make her fortune and we will be lifelong friends. Carol graduated from her training program two months early. Not from a place of arrogance. During those times and to this date. She has this wonderful infectious laugh that clients love. We’ve been big wave surfing in Fiji.” Now my mentor/trainer was occasionally a bit of a tyrant and I had a little of that in me. She had all the instincts of a seasoned vet but just lacked the market knowledge. Even better. I went on to receive a number award several times over the years. great instincts and easy on the eyes.Million Dollar Broker 21 “Runner”. We were the go to team when it came time to partner with investment brokers and we made far more money than we set our goals for. she was a young vet that really only had to be introduced to the market. but to prove to myself that I could overcome the odds and be the best. That year I was among the top five producers in the office again but the staff was getting growing. It was my passion. We hit it off right away and were an unstoppable force. but I always cared deeply for my teammates and protégés as well as coworkers as they were my extended family. moved to the Newport Beach office. The reason I knew this was going to happen was for one reason. I dedicated my professional life to being the best. which meant more competition (although that didn’t seem to matter). too.

California based Enfrastructure acquired New York based TechSpace. flexible office space. We still own and thank the stars we occasionally receive modest checks for our ownership shares even though we no longer have day-to-day operational duties with the company.techspace. and New York (three locations). We spent ten days with ten guys on a 173-foot Yacht in the Mediterranean. We’ve snowboarded from helicopters all over Canada and in the States. In 2000.22 Scott W Johnstone yacht in Cabo. We integrate world-class. Today. while sightseeing on Capri. even though I was out of the market for over three years. Los Angeles. Without the brokerage business. In June 2002. TechSpace has five locations throughout the United States: Orange County.” www. with the help of a few buddies we started a company called Enfrastructure and later bought and merged it with a company called TechSpace. a leading provider of alternative office space and infrastructure services to growing and established companies. I’m eternally thankful for the gifts the business has brought me. Enfrastructure formally changed its name to TechSpace to reflect the company’s value proposition and leverage the brand awareness built by TechSpace in other markets throughout the years. fortunately my reputation as a market leader and producer followed me and we shopped ourselves around . I would have never had the chance to meet and play with such great people. state-of-the-art technology services. I caught the brokerage bug again and called a couple of my buddies (one of which was an old Runner and Partner by the name of Greg) and we put our team on the market. Sardinia. This company is also a commercial real estate related company so the years in the business paid off here as well. You have to understand. enabling our customers to focus on their core business. and for that. San Trope. Majorca. In June 2003. We’ve skydived and shark dived is the same day in Hawaii.com After helping build TechSpace and making it profitable as Cofounder and EVP of Sales and Marketing. “TechSpace is the nation’s premier full-service facilities and infrastructure provider. and Ibiza. and business process outsourcing solutions.

Technology Entertainment.com I’m very proud of these achievements. Fortunately. “Bridge Commercial Properties is a commercial real estate brokerage firm dedicated to its core values. they are not the . Areas of specialty include corporate tenant representation. A leader in the industry. Grubb & Ellis. acquisition and disposition advisory services as well as asset marketing and leasing services in Orange County California. In short order. So in the worst economy since the great depression I took the leap to build Bridge Commercial Properties. we became one of the leading teams at Grubb and quickly built back our book of business and continued making the dollars expected in this industry.. Financial. I built Bridge Commercial Properties in January 2011.Million Dollar Broker 23 and found what was the best platform for our clients at the time in a well know company. All the things the bug tells you to do have finally inspired me to go for it. As a result. which are providing the highest ethical standards while delivering unsurpassed service and market knowledge. Bridge Commercial Properties has the combination of a sole proprietor’s attention to detail with institutional experience and knowledge. allowing our clients to make better.” www. “Give it another shot. I have a client base built up over 25 years and the drive of a 20 year old. the wisdom of a 50 year old and a family that inspires me to be the best I can be every day. Scott Johnstone. faster decisions and reducing their overall cost of operations.bridgecre. Fortune 500 Corporate and government clients. Do it your way”. Widely recognized for transaction services locally in Orange County he has also completed numerous complex real estate transactions in major US cities. However. Scott Johnstone has managed several brokerage teams representing. everyone from the small mom and pop startup company to public. They are true stretches for me as compared to where I came from. Eight years at Grubb & Ellis and I was happier than ever although the entrepreneurial bug was in my ear telling me to start my own company. Bridge’s founder possess over 25 years of commercial real estate advisory and brokerage experience with a total of over $3B in transactions.. Be your own boss.

and scuba dive. is 6’2” and won the JV football team MVP award last year.) So that’s my journey. had two wonderful kids. It’s that love that inspires me and those around me. This book is a small attempt to give back the gifts I’ve received and hopefully help people better their lives. Now I strive to give people more opportunity and experiences than they ever had as a kid. spearfishes. This is my unconditional love. I’m . My greatest calling in life is to pass those gifts onto others. My son is a 4. I made friends with most of the community leaders who are still my friends today. and grandmother’s unconditional love are my core. I taught myself to run a company and to lead and love openly. I pilot my own boat. He has a girlfriend who’s the sweetest girl in the world and just happens to be a “Volcom” fit model. the third I’ve owned in partnership with the greatest guy ever. Please don’t tell him I said this but is one of the calmest and thoughtful young men I have ever met. He surfs. (Shhh. She’s poised beyond belief for a 19 year old.24 Scott W Johnstone things that I’m most proud of or bring me the most joy in life. snowboards. I’m sure. and success. snowboard. and bought a home I never thought possible as a kid. like you. hard work. taught myself to surf. In addition. The knowledge and confidence that someone in my life cared and saw the best in me inspired me to do great things.0 student. overcoming the odds. She also trains kids how to ride horses and jump English and has her eye on owning her own online fashion company. friends. Jimmy U. the things that make you happiest in life are family and friends! My children. I have raised my kids to be community leaders. faith. In addition. Not only did I do modestly well in business but I also married. My daughter is a fashion model for the Ford Modeling agency and an honor student.. It’s a story that keeps on going every day but there is one thing I’ve now dedicated my life to. Such as giving my children the opportunity to shine and become great people with rich lives of their own. and ran Varsity track as a sophomore. One filled with strife. I traveled the world.

psychologically. your perspective on wealth and building a better future for yourself and your family. strategically. . One thing! This is not a get rich quick program. It doesn’t matter who you are as long as you want it badly enough. tactically. This is a life changer and anything worth doing is worth doing well. I was fortunate to have been given a shot. learn. no matter what. all the way. I’m going to give you the step-by-step process. but remember that it’s all worth it. I’ll be here for you as a mentor. In this book. someone in the industry trying to up your game or whomever. and act) the opportunity to do just what I did: build a fulfilling life and do it on your own terms. a worker in search of a change. We are living in tough times and it doesn’t matter if you’re a student.Million Dollar Broker 25 dedicated to giving anyone (who is willing to listen. So I welcome you to the journey to changing your life. and with my personal insights to be great in this business. This will take time.

There are almost an infinite number of firms out there and a hand full of major ones. He said. I.000. or ugly . Now I’m no one to preach and this isn’t some religious sermon but there’s a hard way to go through life and business and there’s an easy way.26 Scott W Johnstone Chapter Three The Ten Commandments of the MillionDollar Broker There are absolute undying truths for being the type of Broker who consistently produces $1. find an insider/mentor in each of the firms you’re thinking about. I’m also going to give you the lessons I’ve learned over a 50-year lifetime of how to be the best business person possible. I’m going to give you a brief look at the Ten Commandments and then dedicate a chapter to each. “It’s so much easier to swim with the current!” That is my first bit of advice: swim with the current.000 in gross commissions or more. As much as I’m going to give you lessons on how to be the best broker. and get to know them. but they really are life lessons for this business. Take them to lunch. The guy I mentioned in the first chapter practices them unconscientiously every day. A smart man once asked me why I chose to swim upstream. Pick their brain. As I mentioned before. Choose where and whom to work with wisely. as they are part of his character. So here we go. Do your homework. when the rest of the world is swimming downstream. ask them what’s good. They fall into what I call commandments. Now because of my upbringing I’ve usually chosen the hard way and if I can help you avoid those mistakes this book has done its job. If you need me to elaborate further contact me directly and I will be more than happy to do so. just do it intelligently. bad. there has been an influx of get rich quick guys in the industry and they rarely know – let alone practice – these commandments.

as they have the best perspective and knowledge.Million Dollar Broker 27 about where they work. The worries and fears will be there from time to time as with any job but the rewards of running your own show are indescribable. Now that’s a simplified version of it but I’ll get into the nuts and bolts of it in the next chapter. At least you’ll really know who you’re working for and you don’t split commissions with the house. as they have made it their business. Eventually you’re going to be your own boss but you might as well just pick up a great partner or two in the process. they are political beings and will only tell you what they want you to hear. So do your homework in advance and start weighing the options. have a good business plan. ask around. they’ll tell you everything. and process business. See my 6-CD series on. Now my financial runway came in the way of having built up a client base that follows me pretty much anywhere. so take your time. “How to Build Your Own Million Dollar Brokerage Firm” www. No pecking orders or layers of managers you have to kiss up to. you’re going to need enough financial runway to last you two years. Therefore. All you have to do is surround yourself with good people. That client base combined with my shares in TechSpace (I receive a small but important check bi annually) enabled me to set up my own shop. a good value proposition and a strong differentiator and things should go well.com . That’s why they are where they are. The broker with the best combination of all three wins. Usually. but a manager won’t. So make a broker friend or two within the firm and try to find one of the top producers. His interest is somewhat aligned with you because he makes money when you do. The alternative to working for someone else is to build your own company. The benefits are that you answer to yourself and your client’s alone. However. Everyone has a reputation. as this is a connection. information.commercialrealestatebrokersacademy. You’ll work twice as has you ever have for at least two years and maybe more depending on the economy. but it’s yours and the feeling of pride is worth all the sleepless nights because in the end if you follow the commandments you’ll make it and make it big. The downside is that these are tough times. Picking the right mentor and partners can mean the difference between being good and being great.

” I’ll give you as much insight into what I think are the best area’s to focus. as it should. If you’re going to commit to this industry. having better relationships and having the life you always dreamed of. preferences. 7. 3. It’s mainly commitment and some insight on how to do it and that’s where I come in. 1. personality and desires for your future. connections. Be the best. and advice from those in your market. intellect. This will be the biggest advantage to you making more money. Drink from the seven buckets of revenue. Specialize. IV. likes. Some specialties have less than others but for my specialty there . 2. 5. Generally. 8. geographic. It’s not that big of a difference from being good and being the best. and your background. but ultimately. Now there are several choices and you’ll have to find what best suits you. III. the following are the primary types of property specialists. 4. Office Properties Industrial Properties Retail Properties Land Sales Institutional Investment Sales Private Client Group Investment Sales Multi Family Investment Sales Hotel and Resort Sales In this chapter focusing on “Specialization.28 Scott W Johnstone II. I’ll show you the rules of the road the step-by-step process of being the best. There are primarily seven ways to make money in this business. 6. which I know you will. dislikes. you might as well commit to being the best: the go-to broker. you’ll decide based on a myriad of choices presented to you by your life experiences. This chapter will cover the most information in the book.

and life goals and review them quarterly. There will be times when cutting . in order to have the revenue you want. business. personal. There was a study of a large group of similar people. Corporate sale lease back. Exclusive tenant representation for lease. 2. financial. it’s the measure of the broker who can thrive when things are down. 3. only five percent (5%) followed through and actually practiced this process. Exclusively listing income property for sale. After a period of five years. Keep in mind I’m speaking from the perspective of an “Office Broker. Exclusively listing property for lease. 5. In the Chapter on Revenue. here is how an Office Broker can make money. Make no mistake. who were asked to do just this. I’d like to reference Tony Robbins loosely. Land sales. V. They were found to earn more than the entire rest of the study group combined and found to live richer. Exclusive user / buyer representation to purchase.Million Dollar Broker 29 are seven and that’s a good thing because this is a cyclic industry and there are different buckets of revenue that are robust in a down market but some that are not.” one who specializes in office buildings and land within my market and wants to take advantage of all the buckets of revenue my market offers. Need I say more? VI. Of the participants in the study. Exclusively listing owner occupied property for sale. 6. fuller more involved lives to boot. I’ll go into all the specialties and give relative examples of where they make money but for now. 7. all seven buckets of revenue will be available in the good times. 1. 4. so you should know all seven inside and out. a study was done on the group. Set measurable. This is a big money business and a very competitive one at that. However. Be a person you can be proud of. Ethics are a personal choice.

speaking poorly behind someone’s back or any number of tempting things will pay you big money in the short run but will ruin your reputation for the future. where we both met at the early stages of our careers. gave some advice to. telling half-truths. Reputation is one thing that you can never loose. The broker with the best reputations always is given more opportunity in the end and eventually this one issue will become a huge multiplier of income. you have just made an extra $100. I represented him and his father in a small deal for their first office space. backstabbing. If you want a real career and life filled with joy. you might do slightly less business. VII.000 that year.” you’ll get a great lesson on the do’s and don’ts and some etiquette lessons of the business. I have the right person. will be in a position to recommend a broker for a very lucrative assignment. they are it! Before you know it and without you even having to pitch the business. Be it good. someone who you were nice to. but remember: this is a marathon and not a sprint. This chapter is probably the most important of them all. and believe me. in a meeting taking place without your knowledge. hey. Build lasting relationships. One day. I went on to become a pretty good broker and he went on to make into Forbes as one of the top 40 wealthiest people under 40 in America. At the end of the day in the initial years. happiness and the respect of your family. be the best you can be and be a person you can be proud of. as I know you will. or happened to hit it off with or did something to change their life for the better. your peers and most importantly yourself follow this chapter as though it’s scripture for business. He and I both hit it off at a time when we both had nothing. 10 years from now.30 Scott W Johnstone corners. bad or hopefully great has everything to do with ethics and that little voice that speaks to you before any choice you’re faced with. I have a buddy named Scott who owns a few well-known companies. With assistance of a well-known document called “Code of the West. They are going to remember what you did and they are going to say. If you’re going to make this change in your life. puffing. I really .

but it’s not quick. you’ll win the race. This is a life changer. It’s going to happen. The sprinters in this business burn out quickly. then a midlevel vet.” Without hesitation. yet sometimes this is a “hurry up and wait” type of business. take short cuts. I’ll go into this more in the chapter to come. First. then a Rookie. not a sprint. and finally the go to broker. and learn as you go.Million Dollar Broker 31 had to go to bat for them against the owner because I had a feeling about their business. It’s a fact. you’re going to owe me twice the commissions you’ll make on this deal. I’ll do the deal with these guys. Remember you get out what you put in so you’re going to find that you’ll be putting your all into this and when that happens. IX. If this is your get rich quick solution then stop reading now. Now I will say that the time will fly by like no other industry you’ve been in. I said “yes. prepare properly. VIII. a career changer. Another adage would be: “It’s a chess match not checkers. and the stories of that friendship could fill several books. Have fun while saving money and have a great life! You’re going to make more money than you’ve ever thought you would. I mean it. It will all happen like a blur. “Ok. and hurt their reputations and their families. I really liked them and wanted them to catch a break. I have a “Type A” personality and am very impatient by nature. Now they had no money and the owner says to me. because life is short and you hear that adage often.” Think 10 steps ahead not two. If you take your time. They are perceived to be in it for the short run and that’s not what it’s all about. but if they go down and I’m left holding the bag. With this influx in income comes the desire to spend it like it’s a constant! Now over time and on average this will be true but until you’ve established yourself and have a full pipeline on a consistent basis.” That relationship has lasted 25 years. you’ll be a trainee. so take my advice and treat it like a Marathon. a perspective and wealth changer. It’s a marathon. time flies (but in a good way). do yourself the favor .

I’ll also discuss the ultimate killer in life: retirement. Someone recognizes your work and recommends you for a job. you’ll be prepared financially.32 Scott W Johnstone of learning the basics of saving and investing. but if you do. And even though you realize this (and your nervous system will learn to take it in stride). for some strange reason. You receive a community award that inspires your kids or someone close to you . I believe that charity begins at home so take care of the spouse and kids first. The secondary result is that giving to others has a mysterious way of giving back to you. etc. But don’t wait too long after being in the business to choose an organization or organizations that you can give your time to. X. some disaster comes your way. This is an all commission business and there are cycles both good and bad. or whatever. Become a board member of one of the local chapters of a major charitable organization. One person did that for me and I want to be that person for as many people that I can reach. not just money but your time. We’ll get into the various ways to live the good life while putting enough away to continue to do so if you. decide to leave the business. open a surf camp and hotel in Costa Rica. Please never do it. It’s why I’m writing this book. Give back Now this may seem cliché but the best feeling in the world is giving back to those less fortunate. build your own business. Most likely. The thing of it is that you can have all of those things and at the same time peace of mind that if. You’ll benefit from the knowledge that you’re making a difference in people’s lives. live in the best neighborhood. do it in style. you may have a wife who will drive you crazy unless she can see six zero’s or more in you financial statement at any given time. have a boat. never stop investing because there may come a day when you may want to sail the world for a year. Volunteer at your local church. Volunteer to be on a fundraising committee. Even after you’re the master of the universe. you’ll drive the car of your dreams. God forbid. I want those who never had the chance or the support to know there is an alternative and I’m going to give you a leg up. Become a Big Brother or Sister or prepare food on a regular basis for the homeless.

carry yourself with confidence and people will accept you. Q: Can I really do this? A: Absolutely. and can learn. It’s the notion of the movie “Pay it forward. they better. then YES! Q: Will my family support me? A: If you have one. and call in all your markers. Q: Is this a big change? A: Not any bigger than changing a job. I’m your first of many to come. Q: Will I be accepted? A: Be nice. Q: Do I have to wear a suit? . a high school degree.Million Dollar Broker 33 to do the same. just a regular real estate license. Q: Do I have the time? A: Make the time! Q: Do I have a mentor? A: Yes. Q: Do I need a special license? A: No. or they’ll be left behind and calling for a loan when you make it big. get roommates. People love to help others. Now this is the point in the book where you start to question yourself.” Good begets good and who knows before you know it you’ve made an impact on this world for the better and that’s what I believe to be all of our higher callings in life. It’s big but that feeling passes. If you want it bad enough it’s yours. Q: Will I have the cash until the revenue comes in? A: Find a way! Live cheap. Q: Do I have what it takes? A: If you have the desire.

$50 per month) • Costar Real Estate Information services. Until you’re the Alpha. Q: Will I have to get a new car? A: You’ll have to tour clients and it depends on how big of a shit box you currently have. so just focus on finding a good one wherever you land. Q: Can I get a job with one of the best firms? A: If they are hiring and if you follow my steps for interviewing. Q: Can I find the right trainer? A: You already have one in me. $215 per month.200). It’s basic blocking and tackling. • A website (there are hundreds of premade sites you can customize and they are free if you pay the monthly $50 hosting fee. Q: What are the steps to getting my own company going and getting results? . lease something cheap with four doors because in short order you’ll have the car you really want. Then you can wear anything you want. • a phone. • a web address and e-mail. Q: Can I compete? A: The competition is internal.) There are plenty of books that will walk you through the process. It’s not brain surgery. it will be hard not to want to hire you.34 Scott W Johnstone A: Yes. (Use Go Daddy. Never forget that. Q: What will I need if I start my own company? A: • Your real estate license in your state. a computer. (preferably an S Corp. If you need to. use an attorney about $1. • a bank account to receive and write checks. internet access • business cards ($50 online). • articles of incorporation with a fictitious business name. a desk.

.CommercialRealEstateBrokersAcademy. Q: I can’t do this. you can do anything. there are several ways and later. auto insurance and a Real Estate License in your state. A: Once I asked a psychologist buddy of mine about this question. and a learning a few new processes. Can you do this? Of course you can. organizational skill. “How to Build Your Own Million Dollar Brokerage Firm” Q: How long will it take? A: It will take about twelve to eighteen months to make real money on average depending how hard you work and what your dedication level is. Q: What documentation do I need? A: A driver’s license. Q: How do I get clients? A: Keep reading. Q: Do I need employees? A: Not if you’re with a firm. making new connections.com and get my 6 . Q: What technology will I need? A: A computer. relationships. Most firms supply the rest. They have all it takes. you’ll will yourself to do it. You’ll find the courage to say “What the hell am I waiting for?” If your reason for change is big enough. I’ll go into great detail. What you’re really saying is you don’t want to do this because you’re afraid of failure. cold calling and walking buildings introducing you and your services to the tenants and owners for a start. The answer is if you want it enough.CD Series. If you can mix in some charisma and a little fifth grade math.”.Million Dollar Broker 35 A: See www. this is unquestionably “do-able. Friends. This is simply making a job change or choice that takes a little sales skill.

build your team and I’ll help you accomplish the rest. I hadn’t graduated college but I did have a few things going for me. Number one was courage. I don’t know where you are in your life.36 Scott W Johnstone Let me tell you that I asked myself each and every one of these questions repeatedly prior to taking the plunge. This is the natural process of gauging risk versus reward. Second. Tell people about your desire to succeed and they will naturally get behind you. Build your courage. That one thing is all it takes. The rest will take care of itself. The third thing I had was desire. It’s hard to describe “it” but if you have “it. so I can’t answer these questions for you. I was a retail sales. as it’s a survival instinct. Have faith in yourself. I had that hunger . I also know this. . fuel your desire. I had very little financial resources when I made the plunge to learn this business. We have two basic forces driving us.000 per year with not much future ahead of me. employee making maximum $35. I came from the wrong side of the tracks. I had very little family support . I knew I had it in me and knew if given the opportunity I could do anything.” you know it. The best quality in people is that they naturally like to help others. plus I’ll help you find others who will advocate you. We have all heard of “fight or flight response” Flight is the fear part and fight is the greed part of this equation. They are fear and greed. Fear is always the dominant emotion. I had a mentor and I’m here to tell you that if you’ll have me then I’m honored to walk you through the process and be your mentor.that thing that drives you to prove to yourself that you can be better. But I do know this. This opportunity is worth fighting for.my depression era grandmother was the only one behind me emotionally.

don’t worry. There are hundreds of markets around the United States that have commercial bases of product that will support hundreds of brokers. land you sell for development etc. • • • • US Census Bureau www.Million Dollar Broker 37 Chapter Four Commandment I: Choose Where and Whom to Work with Wisely Commercial property exists to serve the residential base that surrounds it. unemployment.cushwake.com (market research section) www.000. available base of commercial property is constantly changing. California and we have a base of office space that is approximately 100. buildings you list. tenants you represent. population growth. The statistical data for major cities charting migration.000 square feet. and a positive population migration trend. Income is determined by how much market share you have. freeway systems. my base of product to work on was a mere 5. commercial and international airports.000. that the best of which will make a million dollars a year or more. Other contributing factors to the size of the Commercial Real Estate base in a given area are the number of shipping ports. It’s probably in your own back yard. neither is mine. railroads.cbre. residential development.census. It’s ok to be a big fish in a small pond or vice versus. Go to these websites to do your research on the best market for you.000. . I’m in Orange County. buildings you sell. which were some of my best.000 square feet.000 square feet and in my early years. free trade zones.com (market research section) www.gov list.gov www. just do your homework and find a market your comfortable living near and choose it.com (market research section) If your current city isn’t on the Census. I focus on a relatively small patch of office property of approximately 35.grubb-ellis.

it’s the person you work for as much as the company so choose well. office. and residential property sectors. Also. owners. This volume creates market knowledge that allows them to seize opportunities. intelligence. precisely accurate picture of global commercial real estate conditions and trends. speed the business process and creates the most thorough. your call will eventually be returned. investment services. experience. Every day. are tenacious. so do your research. industrial.38 Scott W Johnstone Go to www. and resources to help clients make informed real estate decisions. So be persistent and apologize for being a pest but be exactly that because tenacity is what he’s looking for. After leaving a few voicemails regarding how much you would like to come work for the firm. landlord and tenant representation. Each year. and you want the manager to remember your name as well as refer you to the broker himself. Below is a list of the top firms I’ve surveyed but results change based on the market you’re in. in markets around the globe. When your call is returned your sole goal is to get a recommendation and contact information for a top broker in the office who you can speak to about the business. retail. Next. The next step is to research all the major commercial brokerage firms in your area or the area you want to focus on.BridgeCommercialProperties. project management. Primary services include consulting. as every firm lists their brokers and managers. call them all and ask for the manager. You want to make an impression that you have desire. corporate solutions. property and asset management. . they complete thousands of successful assignments with clients from the gamut of industries. investors and developers worldwide. valuation and advisory services.com/realreport to view the latest version of our newsletter and understand the measurable metrics in my market. Colliers International provides a range of services to commercial real estate users. they apply their insight. You can also do this online. The organization serves the hotel. mixed-use. CB Richard Ellis is the global leader in real estate services.

integrated solutions to real estate owners. NAI Global professionals provide a full spectrum of services available to regional.000 worldwide employees. With 6.400 professionals throughout the U. Grubb & Ellis Company draws from a unique platform of real estate services. site selection and space location. Cushman & Wakefield assists clients in every stage of the real estate process. as well as internationally. selling. operational. Its 13. In fact. In response to changing client expectations and market conditions.. CBC possesses the largest geographic footprint in today’s commercial real estate marketplace. Grubb & Ellis Company is one of the largest commercial real estate services and investment companies in the world. leasing. assess each client’s needs and implement solutions that fit the client’s strategic. the organization comprises over 220 companies and more than 3. practice groups and investment products to deliver comprehensive. consulting. representing them in the buying. located in 231 offices throughout 58 countries. as well as providing strategic planning and research. NJ. and valuing of assets.000 professionals in more than 100 company owned and affiliate offices. Their more than 30. portfolio analysis.S. among many other advisory services. regional. financing. tenants and investors. The organization’s worldwide headquarters are in Parsippany. management.000 people in 750 locations in 60 countries serve the local. Coldwell Banker Commercial With a collaborative network of independently owned and operated affiliates. and investment services are supported by highly regarded proprietary market research and extensive local expertise. The firm’s transaction. and international clients via its . and global real estate needs of those clients. managing. growing the company in the process. and financial goals. national.Million Dollar Broker 39 Jones Lang LaSalle is a financial and professional services firm specializing in real estate services and investment management. they assemble teams of experts who deliver integrated services built on market insight and foresight. sound research and relevant market knowledge.

Cresa Partners. to more efficient management of their projects and leases worldwide.” The Sperry Van Ness organization of affiliates is the only brokerage firm that markets all properties on a national basis to a 100. Cresa advisors and project managers form partnerships with their clients. the company’s leading edge technology will support all their global moves. since the founding of the firm. TCN Worldwide is continuously improving its services and processes by anticipating the needs of members and their clients and utilizing the years of local expertise of the members. which will ensure the company’s long-term success and position the member firms as leaders within their local market. secondary and tertiary markets. In addition. 60 offices. The firm has 430 million square feet of managed space. to extracting value from the client’s portfolio. They provide an array of integrated corporate services and work to align its client’s real estate needs with their business plans.40 Scott W Johnstone global network of independent commercial real estate brokerage companies.000 locations. The company is also a dominant provider of Capital Markets and Corporate Services—serving more than 25. By representing tenants. Clients will have a primary point of contact. Because of its national reach that includes primary. from streamlining a business unit. the primary focus of has been to serve the best interests of tenants. the Sperry Van Ness Organization excels at seamlessly locating investment options on behalf of clients across the country while leveraging the power of all brokers — even those with competing firms. . they are service oriented. providing ongoing service that goes “beyond the deal. 23 national markets. not landlords. they are constantly developing and implementing the future innovations. and more than $17 billion in completed transactions for 2010.000strong brokerage and investment community. Cassidy Turley has advocated for clients for more than 100 years. they strive to ensure objectivity and avoid conflicts of interest. At the same time. Unlike traditional real estate firms. who will leverage all of NAI’s enterprise resources wherever they need them around the world. not transaction oriented.

retail leasing. In Europe. Latin America. Their 40year history of maintaining investor relationships in local markets enables them to be the best information source and transaction service provider nationally. Duke Realty has been a leader in commercial real estate development since its founding in 1972 in Indianapolis. Europe.300 employees. Indiana. and distinctive environments that meet businesses’ operating needs. they operate in the major UK commercial centers and principal mainland European cities. The Newmark Knight Frank partnership now operates more than 220 offices in established and emerging property markets on six continents. investment property sales. they have created an effective global platform from which to serve the property needs of their growing list of clients. corporate real estate services. Marcus & Millichap Real Estate Investment Services. and South America . a global real estate consultancy with extensive worldwide capabilities and coverage throughout North America. Africa and the Middle East. The foundation of its investment sales is the depth of their local market knowledge.. King Sturge is one of the largest international property consultancies with a network of over 210 wholly owned. and affiliated offices in 45 countries worldwide. innovative. Central. King Sturge has business partners in North.Million Dollar Broker 41 CORFAC International is an organization of independently owned commercial real estate services firms with local and regional expertise throughout the Americas. Newmark in January of 2006 formed a partnership with London based Knight Frank. tenant representation. property management and property consulting. has been the premier provider of investment real estate brokerage services. With a staff of 7. In the Americas. land sales. Europe. associated. CORFAC firms specialize in office. and Asia. Asia Pacific. since 1971. forming Newmark Knight Frank. R&D and industrial brokerage. From its first property—Building One in Park 100 Business Park on the northwest side of Indianapolis—Duke Realty has set the standard for providing high-quality.

Prudential Commercial real estate is the commercial real estate division of Prudential Real Estate and Relocation Services.42 Scott W Johnstone through King Sturge CORFAC International and Chain Links Retail Advisors. It’s a culture founded on trusting relationships. Collectively the members have been responsible for approximately $13. DTZ Barnicke acts as a broker to service tenants.2 billion in commercial real estate volume in 2009. The company has always valued individual merit but also understands that the aggregate of those individuals provides a result far more powerful. Studley’s success is derived from its rich history. DTZ Barnicke. ONCOR International is a premier global commercial real estate system. an integrated real estate brokerage franchise and relocation services business. developers.. nationally and internationally. headquartered in Toronto. Excerpts of this report were borrowed from Commercial Trainer. whose members include over 50 independent brokerages with over 170 offices in 32 countries. landlords. has 19 full service offices across Canada with an excess of 500 employees. but also it has fueled the explosive growth of group offices throughout the West and now moving east. coupled with its ongoing innovation and cutting-edge ideas. Inc. Mike Lipsey The next and most important step is to present yourself as a commodity to each of the finalist firms you choose to interview with because that should be your attitude. governments and institutions locally. Not only has Bill Lee’s profit-sharing concept proven enormously successful. Lee & Associates’ last year’s group of companies successfully completed transactions with a total value of nearly $7 billion. owners. investors. Their professionals are committed with integrity and professionalism. You’re going to be making .

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them money. You need to choose wisely and what they have to offer will be the determining factor. Do this with grace and a humble tone but remember you want to work for the right guy and the right company. So here are two sets of checklists to picking both. Brokerage Company Requirements: - A brand that is respected for their ethics and caliber of brokers. - Management teams who are proactive in the market and can help bring in business. - A network of brokers who you can give and receive referrals from multiple markets other than your own. - A property management wing of the company that you can refer business to and receive referrals from. - Multiple specialists in the office that you can refer business to and can receive referrals from in return. - An investment team that is known for being one of the best. Without this, you and your team will never realize a large portion of this type of revenue. - A friendly and cooperative group of specialists within your specialty who you’ll enjoy going to battle with every day and can see yourself collaborating with. - An administrative staff that is competent, caring and cooperative. - An administrative manager who actually likes brokers and is open, friendly, good to the staff and therefore maintains high moral. Furthermore, this manager’s first word cannot be “No” when you ask for a budget expenditure on behalf of a client. - A research department that cares about excellence and goes the extra mile for you because the best information can often make or break a deal.

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- A company’s bottom line should be healthy and not in the news constantly for speculation that they may headed for bankruptcy or sale. - A healthy budget to spend on client needs, signs, brochures, websites, mailers, open houses, presentation materials etc. - You don’t want to work in a shark tank, or with an office that has a few bad apples because they will make work miserable so ask the hard questions and choose wisely. Mentor/Broker Trainer requirements: - They should have done this before and been through the experience of training a new salesperson. - Their previous Runners/Trainees should say good things about them. - They should have enough variety and volume of business to keep you constantly busy and show you all the aspects of your chosen specialty. - They should treat you with respect. A good amount of friendly hazing is to be expected but there is a difference between friendly and mean spirited riding. - They should have a general business plan written for you for the year or two you’ll be there so you know what to expect and what is expected of you. - They should share their business plan and goals so you can be as effective in attaining those goals as soon as possible. - You and your team should have monthly review meetings that include prospects, deal flow, responsibilities, and revenue review. In addition, the meetings should include actual versus goal income year to date, prospective client hit lists and responsibilities as well as progress reports.

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- They should be an ethical and honor driven person. There’s nothing worse than getting a bad reputation for working for the wrong person before you’ve had a chance to prove yourself on your own. - They should be a good person and someone you can respect and get along with because you want to be motivated every day by the job at hand and not have to worry about the temperament of your mentor. - They should have a good work ethic and organizational skills and killer presentation skills. This is a huge game changer. It’s your job getting him in the room with the client; it’s his job to close the client. Killer presentation skills and instinct is right up there with the top attributes. - Salesmanship. This job is a sales position and you should never forget it. Your mentor should be able to teach you the finer points and you should always be learning the basics on your own.

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Chapter Five

Commandment II: Specialize
I previously touched on the various fields of specialty within the Commercial Brokerage world. In this chapter, we will discuss how you’ll choose your eventual specialty and what to expect from each. You’ll choose your field of specialty based on many factors. It may be as simple as it’s the only job available to you and so there you go. Hopefully, you’ll do a little research to match your choice with your innate skill sets and proclivity to the industry sector. You should do this while gauging your potential success based on market size, mentor, and company strength in the chosen fields of specialty. Once again the fields are as follows: 1. 2. 3. 4. 5. 6. 7. Office Properties Industrial Properties Retail Properties Land Sales Investment Properties, Institutional and Private Client Group Multi Family Investment Sales Hotel & Resort Sales

I’ll take a moment to explain each and give you enough knowledge to ask the right questions of your potential manager, mentor, and interviewers as well as to get a feeling for what your calling might be. 1. Office properties: Typically built in urban and suburban areas, these buildings are built for specific corporations to lease or own as their corporate headquarters. More often than not they’re built by a merchant developer. This person perceives a need for the building in the market based on supply and demand then purchases a parcel of land and build’s the building caliber to meet the needs of the consumer base in the area which are mostly companies who

most prestigious tenant with the best credit. Often. not just stock or a piece of paper. and a big marketing advantage to the landlord. as signage usually goes to the biggest. This is typically as much a major point of negotiation as it is a big branding advantage to the tenant. combined with research and extensive market knowledge to advise their clients to make a myriad of decisions that allow them to gain maximum profit while mitigating losses. Landlord representation Asset analysis Competition analysis Development of prospect profile Comparable transactions Development of pricing strategy Full-service property marketing Land analysis and sales Lease proposal negotiations Lease negotiations In-depth Market analysis . continuous income because they are tangible assets. the projects are multi-tenant buildings that are divided into various sizes to accommodate prospective tenants with the hope of leasing the building to 100% occupancy so to maximize the owner’s profits. Office real estate needs span a variety of aspects from small companies to national and international requirements. you’ll see the name of a major corporation on a sign atop an office building. Office professionals should collaborate as experts in their primary markets. More often than not. You may think they’re the sole tenant in the building and 90% of the time you’d be wrong. Make no mistake these are income producing properties that in the big scheme of international finance are a hedge against inflation and a source of solid.Million Dollar Broker 47 have a client/employee base in that area. These buildings cater to white-collar workers who are trying to present an image to their customers and shareholders while also building their brands. Typical office professionals have available to them property databases and reporting tools. knowing all aspects of owners and tenants needs.

48 Scott W Johnstone Tenant/ Owner occupier representation Property analysis Renewal strategy Comparative analysis Situation analysis Option development Project implementation Own vs. research and development. Industrial properties: Industrial Services is one of the largest brokerage service lines in the world. and marketing of speculative buildings and should be skilled at arranging build. the broker should match the financial. and national industrial markets. and handling land acquisitions/dispositions. distribution. infrastructure design. production processes. Highly skilled Industrial Brokers should have a proven track record in successfully marketing client properties for sale. A well-trained industrial broker should be able to meet the precise space utilization needs of their clients for manufacturing. providing site selection options. and global business practices. lease analysis Lease versus lease comparison and cost analysis Negotiation strategies Occupancy cost reduction program 2. Industrial Services should align client business strategies with customized real estate solutions under local market conditions. and warehouse facilities and land assignments. assembly. operational.tosuits for industrial facilities. lease or sublease and should also be particularly well versed at representing companies in relocations and/or expansions. Industrial professionals have a deep understanding of current and emerging technologies. regional. Industrial tenant representation: Current situation and business plan analysis Build-to-suit transaction services . They also should offer consulting on land planning. Supported by up-todate knowledge of local. and qualitative needs of clients with appropriate real estate opportunities.

Understanding these variations. Retail tenant representation: Every retailer is unique.Million Dollar Broker 49 Expert advice on land use provisions Access local and regional market data for comparative studies Lease versus buy analysis Land acquisitions Comprehensive property availability studies Situation analysis In-depth market summaries Proposal negotiations Lease negotiations Negotiation Strategies and tactics Industrial landlord representation: Sale/lease of existing facilities Sale/leaseback transactions Valuation studies Land acquisitions Property valuations Consulting services Asset Marketing 3. Retail properties: The retail Broker’s goal is simple. Retailing is much more than “space” or a “place to do business. It’s what allows you to help your clients make the right decision.” Retail real estate is an environment. And while the business drivers behind a retail real estate decision may be somewhat predictable. Retail experts should be ready and able to offer their clients insight into the latest market trends. including . Good research tools. is an important component of the value a good broker brings. Whether the people the retail broker serves have one location or one thousand. whether their interest is acquisition or disposition. It’s to partner with clients to understand business objectives and create innovative ways to optimize the value of real estate assets. the physical and psychological forces that conspire to create the ideal environment for each client vary significantly. no matter how subtle. you should have solutions to meet their individual needs.

Typical services you should provide as a retail tenant representation broker are: Key Market Identification Store Placement Strategy Site Selection Competitive Analysis Mapping & Demographic Tools Tenant Mix Synergy Trade Area Trends Consumer Profiling Market Potential Reports Deal Validation Warehousing and Distribution Services Demographic Reports Situation Analysis In-depth Market Summaries Proposal Negotiations Lease Negotiations Negotiation Strategies and Tactics Retail landlord representation: Retail property owners need and deserve a personalized approach delivered by professionals who partner with our ownership clients to maximize value by leveraging the capital they have invested . you’re your clients’ business partners. It’s this kind of knowledge that makes you much more than agents or brokers. Sales & Leasing Development Advisory Asset Services Investment Sales Capital Markets . demographic studies. and tenant mix comparisons are an invaluable part of your clients’ decision-making processes.50 Scott W Johnstone a competitive analyses.whether it’s a single market asset or a multi-market portfolio. institutions. We serve developers. and private investors with the following service offerings: Brokerage Services.

competitive land parcels and the regulatory environment. and maximize the market presence of listed properties through a robust database of qualified buyers and developers. Land investor and developer services: Land Services bring together local market knowledge. institutional and private client group: Investment Property Services provide customized. Build a group of professional friends that are tightly integrated across service lines that will be you’re go-to team when you have the right land buyer deal no matter what the zoning or use requirements. I highly recommend you assemble a collaborative team of specialists in retail. to assist landowners in formulating a strategy for maximizing the value of their real estate holdings. You become an expert on land entitlement and offer your extensive knowledge of local market conditions. 5. asset-appropriate . Land owner services: Land Services provides landowners with the comprehensive ability to evaluate the highest and best use of a particular land property. as well as the brokerage community.Million Dollar Broker Valuation & Advisory Services Consumer Marketing Research & Consulting Property Marketing Strategies and Tactics The areas of specialty retail brokers typically cover are: Anchor Retailers Entertainment Food & Drug Lifestyle Malls Mixed-Use Properties Neighborhood Centers Restaurants Urban Retail 51 4. Investment properties. serving the property needs of investors and developers. or industrial properties to market and sell land parcels directly to end users and developers. office. and providing a competitive advantage by capitalizing on market conditions.

Sales volumes declined about $6 billion from fourth-quarter 2010. multi-housing and hotels. Investment brokers are best to collaborate with local market-leading professionals specializing in office. Both groups differ in focus. as investment sales dollar volume jumped 40% in the first quarter over the same period last year. industrial. Multi-family investments: Apartment sales Investor interest in U.7 billion in first-quarter 2010 and just $3. owner/developers.76 billion in first-quarter 2009. according to CoStar Group data. Despite the heightened activity. REITs and entities with tax-sensitive exit strategies. multi-family properties continued at a healthy clip at the beginning of 2011. while The Private Client Group serves the unique needs of private and individual property investors. More deals closed than in any quarter since mid-2005. While leasing fundamentals are no longer improving at last year’s torrid pace.” Investment Property Brokers analyze market cycles. as well as numerous niche specialty practice brokers to maximize their sales and therefore income.000 multifamily sales transactions were recorded in the quarter at a total volume of $9. yet are identical in their dedication to client service. opportunity funds. 6.2007 market peak of $43 billion in the most recent quarter. anticipate trends and command capital in local regional and national markets. investor interest by all accounts remained sharp for quality apartment product. as the . Renter demand for apartment units remained solid in the first quarter. sales were just 22% of their mid. geographic coverage and property sector. Investment Property Services is segmented into two separate but integrated and complementary groups: The Institutional Group responds to the sophisticated needs of institutional clients. By integrating market research with online investor databases such as “Real Capital Markets. retail. compared with $6.4 billion. acquisition and recapitalization specialized by client type.52 Scott W Johnstone investment sales. Just fewer than 4.S. according to preliminary CoStar sales data. Investment Property clients include domestic and foreignbased individuals and institutional real estate investors.

over-year increase in the first quarter.4%. but it still took the top spot for multifamily investment dollars. followed by the San Francisco Bay Area ($600 million). unlike 2008 and 2009. about 35% of the $9.Million Dollar Broker 53 supply of new units continued to dwindle and the national apartment vacancy rate fell to 7. and Los Angeles logged the highest year. and Long Island ($400 million). Despite an uneven economic expansion. explained CoStar Senior Real Estate Strategist Michael Cohen.C. REITs purchased a total of $515 million in the quarter. D.-based company’s recent First Quarter 2011 Multifamily Review & Outlook. deeds in lieu of foreclosure and properties with high vacancy and/or deferred . That is good news for Commercial real estate and good news for apartment demand. Washington.to-date sales volume at $900 million. The top five multifamily markets accounted for $3. D.3 billion.” Cohen said. Institutions were the largest apartment sellers.C. who co-presented the outlook with White. Investor appetite for newer institutional-grade product in high. with $130 million in net purchases after subtracting dispositions. the outlook for the economy remains one of recovery and growth.4 billion in total sales volume. when larger transactions were difficult to finance and the limited pool of mostly local investors opted for smaller properties in suburban locations. Collectively.C.” said CoStar Real Estate Strategist Kevin White during the Washington. “Pricing has been strong in D. a decline of 100 basis points since late 2009. disposing of a net $354 million in assets.” The distressed transactions market.. an amount expected rise into 2012. REITs and private equity firms were the dominant net buyers of multifamily property in the first quarter. Phoenix ($500 million). including REO sales. Private equity player netted $117 million in sales. “Core investors are still very interested in paying up for stability and low volatility. those top markets saw a 15% year. “fundamentally. and CoStar remains optimistic about its prospects.barrier coastal markets is driving sales volume in recent quarters.

distressed trades exceeded 60% of all transactions. .000 and 23. Las Vegas. the percentage of distressed deals declined 5% from the previous quarter.3%). Baltimore and Denver. Salt Lake City. OCCUPANCY. respectively. Portland. In housing exposed markets like Tucson.000 units absorbed. The last two quarters have seen demand of 19. D. however. resulting in fewer rent concessions a strong effective rent growth in 2011. Seattle. showed distressed levels of 20% or less. The limited supply of Class A and B properties continues to generate the most demand. Louis will see modest increases in vacancy. Markets such as Richmond. Houston.000 units in the 54 largest markets in 2011. CoStar forecasts total supply additions of just 27. CA.. However. Marin/Sonoma counties. which was the strongest level of demand since 2005. Raleigh. and San Jose (7%). and Portland. led San Francisco (7. led by San Antonio. The East Bay. Three of the five top markets for rent growth in 2011 are in the supply constrained San Francisco Bay Area. Norfolk. followed closely by Phoenix. Honolulu and Boston round out the top five. accounted for about 21% of all multifamily sales volume in the first quarter. CoStar expects to see occupancy gains in 49 out of the 54 metros over the next three quarters. and St. Washington.000 units. northern New Jersey. While still quite high. Orlando. Jacksonville. RENTS RISE EVEN AS ABSORPTION SLOWS While the drop in the homeownership rate has led to higher absorption of apartments over the last five quarters. Washington. and San Jose. Raleigh. San Diego. and Atlanta. the pace has slowed from last year’s 167.C. Fresno. Cincinnati.54 Scott W Johnstone maintenance costs. Supply constrained markets like Boston. just one-third of the pre-recession average between 2003 and 2008. and CoStar expects distress levels to slowly drift down as fundamentals continue to improve.

The areas of specialty hotel investment groups typically cover are: Hotel Capital Markets Sales Investment Advisory Valuation Development Asset Management Global Gaming Golf and Resort Properties Leisure and Alternative Investment Pubs Operator Selection If your team is specifically dedicated to luxury. and golf and leisure properties worldwide. gaming. http:// www. . You should know the hotel market inside and out and strive to build client relationships that endure. Your Hotel group’s mission is to be the single strategic advisor to your clients for the provision of lodging real estate services focused on the acquisition and disposition of hotels. These brokers’ mission includes the acquisition and disposition of properties. Hotel & resort investment group: Your Group should understand the unique challenges and opportunities that come with investing in and divesting hotel properties. gaming.costar. investors.com/News/Article/Multifamily-Investment-LeasingFundamentals-Off-to-Solid-Start-In-2011/1288 7. Your specific Hotel Group should be comprised of a highly qualified team of professionals whose mission is to focus on the specific needs of their respective sectors within the lodging industry. resorts. your hotel group has the ability to bring specialized knowledge and experience to each and every deal. regardless of the client’s needs. golf and resort properties. and owners that trade in this space. Professionals who choose to specialize in this sector and devote their careers to following the properties. raw land zoned for development. Multi family report.Million Dollar Broker 55 As published by Costar’s May 18 2011.

This platform increases speed to market by allowing your teams to launch a comprehensive marketing campaign in a short period of time. Your synchronized approach to marketing brings your owner clients to the market – and your buyer clients to the opportunity – with unprecedented speed and efficiency. From a single asset in a local market. You anticipate trends. and leverage your network to help your clients realize their investment goals. to a sophisticated portfolio across multiple locations. professional approach. you’ll have to implement a shared platform that manages investor criteria as well as client and market information. property and facilities management. and financial services. project consulting. you’ll bring a unique perspective to the brokerage and appraisal of all hospitality real estate. you’re effectively putting the collective knowledge of the entire group to work for your clients.56 Scott W Johnstone appraisals. Information should be updated daily on a real-time basis to keep pace with the ever-changing environment. . each assignment benefits from your market-making ability. Combining your talents and experience. seize opportunities. By leveraging a combination of cutting edge technology and industry savvy team members. In order to efficiently manage the marketing process and ensure optimal exposure of an investment opportunity. Being successful in this highly specialized and volatile marketplace demands a dedicated.

why give up life for one thing. stern pertinacity. Fret for it. Faith. The thing I’m hoping you become is the best in your market in your selected specialty and not to the exclusion of all else although the poem may suggest that. You’ll Get it!!! Berton Braley Now Berton Braley is one of our most optimistic American poets and this is one of my favorites. confidence. Famished and gaunt. In retrospect I would add a bit more about the wisdom of . Plan for it. If I had to put into words the feeling and desire I had as I began my career these would have been them. And all that you scheme and you dream is about it. Strength and sagacity.Million Dollar Broker 57 Chapter Six: Commandment III: Be the Best! The Many Sides of Success If you want a thing bad enough To go out and fight for it Work day and night for it. His critics might say. Give up your time and your peace and your sleep for it. If life seems all empty and useless without it. If neither cold poverty. hope. If you’ll simply go after that thing that you want. Lose all your terror of God or man for it. If gladly you’ll sweat for it. If only desire of it Makes you hold all other things tawdry and cheap for it. Nor sickness nor pain Of body or brain Can turn you away from the thing that you want. With all your capacity.

or sometimes-financial analyst. Rome was not built in a day and neither will your empire but there are some basics to being great and this chapter will cover them. I highly suggest being part of one. and set out differentiators that set you apart from the competition. “Shoot for the stars and you’ll at least hit the moon. Try to align those skill sets and workload accordingly. document processor.58 Scott W Johnstone balance. Team Leader/Rainmaker. value proposition. I don’t care where the drive comes from but it should be from a place of good and the desire to be great. Define team roles: Define your team role and also team members’ roles if you are on a team. These are not secrets but tried and true methods for being great. organizational chart.” Well. First. you must adopt the mindset that you’ll be the best in something before you can actually do it. Read it daily! This is the most important commandment of all. Set specific goals both functional and financial. “Runner”. Think big and achieve it. As someone once said. this is your mantra. but in the beginning and until you’re up and running. Let’s cover some basic ground. as well as start thinking and building on the practices of “The Greats” that have gone before you. strategies and tactics. As I said I usually learn the hard way. 1. For me it came from a place where I felt inferior because of my lack of pedigree so I was going to prove that I was the best no matter what it took. Please take my advice to find a way of combining that burning desire to win at all costs with a win/win mentality and you’ll be great. So let’s go big. Everyone has his or her own likes and skill sets. . marketing coordinator/ administrative assistant. my motto is: Go big or go home. Write a business plan: Where do you want to focus your time? What specialty or niche within the market will you choose? What do you want to be? Create a mission statement. cold caller. as this will leverage the time of the team and make you all more money 2. If you are not on a team.

If you truly are a leader. no matter what. then the highest paid member on a team will eventually be you. Additionally. You’ll accomplish twice as much as anyone else and if you follow my guidance you will be working smart as well and your income will be reflective of both hard and smart work. and tone. Ethics: They have to be at your core. Be a leader through example and people will naturally want to follow you: This is most important when it comes to your clients. 3. Never speak poorly of someone else. Or you’ll eventually be the team leader. Don’t be a person that always put’s them selves in a position to get the credit. Your clients have hired you to lead them so that is exactly what you will do. the person you’re speaking to will think you would do it to them too.” If you’re talking poorly behind someone’s back. and roles already thought out for what you’re trying to achieve and it better work. You can’t leave out even the smallest omission or detail or nuance to a conversation or situation. Don’t puff to make you sound better or as though you did something you didn’t. . demeanor. “I really don’t know them. tactics. partners and employees follow your ideas: “May I make a suggestion?” People will naturally say “Yes!” You better have a full plan of attack. even if you messed up. Take credit for your 4. and forever. 5. materials.Million Dollar Broker 59 and more consistent money without the swings in income a lone soldier can experience. everyone in the room will naturally perceive it through your body language. Simply be silent or use an old southern adage. One little phrase will work wonders in having clients. If you can pull that off. no matter how tempting it is. you’ll be creating work habits that the best of the best adhere to and will follow you through your career. at least for the first year and the impression you make will last a lifetime. you’re a natural leader and you better earn it through example every day because the benefits will be incredible. If you have the personality and the ability to cold call and bring in business. strategies. Work ethic: Be in the office first and out last -. You have to always tell the blunt truth.

So here are some tips for being the most efficient million-dollar bill collector. D) Build new business relationships. You do so primarily so that you’re focused and ready to hit the ground running the next day. Calls. Time management: This industry is one of the most time intensive of any I can think of. A) Close or further active deals. Picture that you’re at the Staples Center or any indoor sports area and you have 15 minutes to collect as many 1 million dollar bills taped to the bottom of the seats.do’s in the following order of priority and in the context of the daily schedule below and you’ll be ahead of the game.. E) Build new personal relationships F) Mundane personal to-do’s G) Things easily delegated . The dollars on each deal are huge. The Staples Center is your territory and the 15 minutes is your career. You’re 100% commission compensated.60 Scott W Johnstone mistakes and vow to never do them again and then don’t. etc. go after them with a vengeance. Complete your to. meetings. The best brokers are always proactive.” 6. B) Find new opportunity C) Prepare and execute client presentations and meetings that day. How would you go about collecting the maximum possible? Would you move fast? Would you hire people to assist you? Etc. Every evening you must create a “To-Do” list for the next day. There are plenty of “Time Management Systems” but they all boil down to the following. Remember you get back what you put in so using your time wisely is an extremely important factor to your success. your income will suffer. Your time is your own but if you don’t use it wisely. Always maintain current client relationships. proposals. Well this business is the process of collecting the million dollar bills. but also so you can sleep at night.. See Appendix: “Code of the West. Don’t wait to get your to do’s done.

.m. Maintain your spiritual and emotional health: Read up on the various methods and choose one for you and make it part of your life. is for cold calling.m.7:00 p. If you need a software program to assist there are many out there. 10:00-11:45 a. is for cold calling on the phone or by walking buildings in your territory. buy yourself some new business wardrobe items etc. 11:45-1:30 p.Million Dollar Broker 61 Your daily schedule should be to use your time as follows keeping in mind the priorities above: 7:00-9:00 a. 8. 5:00-6:00 p. Maintain your energy level: Get on a healthy routine. exercise. take a weekend trip. have fun. is for completing random low priority to do items and writing the next days to do list and prioritizing them for maximum income potential. is for returning phone calls and getting out proposals that have been completed by your assistant. closing for meetings or generally building relationships and qualifying prospects for future business. drafting proposals and letters and general paperwork done and handling top priorities so you can focus on the rest of your day and you feel a sense of accomplishment to start the day. 6:00. is for initiating to-do’s. My recommendation would be ACT-CRE.m. 9.m. 1:30-5:00 p. Reward yourself for a job well done: Go have a great dinner. 7. get plenty of sleep. is for lunch with a client. college. or potential client as the social time with these people and the information and trust you’ll gain is invaluable. handing out collateral.m.m. Eat right. calls and emails.

Carry and use fully a PDA: Blackberry is my recommendation. always have a mastermind group of mentors you can always call on for opinions. Use whatever system works for you. the order you’re presenting. Keep a running journal: Mine is a spiral binder but I’m old school. Build a list of mentors: Even though I’ll be at the top of your list. Practice. Communicate in person or by phone: In this business the best way to get your point across is verbally because of tone. 17. There is a lot of paperwork in this business so create a system for keeping it all straight. If you have to pile papers keep the stacks neat by arranging them only by 90 degree angles. the assignment. Call in favors for recommendations prior. Suggest the agenda by sending a document well in advance. 13. the decision makers and all parties in the room. Get to know the players. 11.62 Scott W Johnstone 10. the competition. 15. All parties should have an agenda ahead of time and assignments to bring to the meeting. The purpose is to record notes on every phone call. Keep a clean and organized office: Being a slob who has a mess everywhere says you have a disorganized mind. body language. meeting. Meetings: With rare exception meetings should never go beyond an hour. 14. Find out hidden objections prior to the meeting. 12. Answering your phone: Answer with your full name in an upbeat and direct way with a tone that is customer service oriented and friendly. Leave nothing to chance! Practice. Pre-interview with the decision makers. Practice! 16. and discussion’s so you can remember what your action items are and for dispute clarification later if needed. and clear intent. Over prepare for presentations: Know the client. . the location.

(Customer Relation Management system) A good one is ACT-CRE. write it down and deal with it in the morning. Read the local Business Journal for leads. holiday. etc. Take all of this information and add it to a Database and CRM. Use it religiously to track data. You’ll increase your memory potential and be the undisputed fountainhead of information for your landlords and tenants. Be a decision maker: Weigh all the pros and cons and their long term affects and make the call in short order. 19. attain your CCIM accreditation. Always read Commercial real estate periodicals to stay on the top of your game. Know your market better than anyone else and act on the information: Using Costar. You’ll be surprised how many lasting friendships you’ll build in the process. Continued education: Continuously read and educate yourself on the more advanced techniques and software of the business. and day off for whatever time it takes to physically drive. Take them to lunch. dinner. tenant and landlord movement. Get to know your clients personally. Nobody does this anymore but you will and you’ll know your market better. Usually your subconscious will have the answer when you wake. 20. Learn how businesses run. Study every lease and sale comparable in your market on a weekly basis and commit the deal terms to memory. a bay cruise on your boat. a ski trip. When the time comes. building owner. 21. . and tenant in your chosen market. and walk into the building lobby to get a feeling for and create a memory of the building. This tool alone will put you in the top 10% as few have the diligence to keep it up while making prospecting calls etc. coffee. Leaders do this well. Get good rest: If a problem keeps you awake. take a photo. produce lists of every building. Read the paper daily for leads. whatever it takes to build a personal relationship. Use every weekend. Learn to read financial statements such as a P&L. It will be invaluable.Million Dollar Broker 63 18.

Walk buildings with collateral and ask for the decision maker and qualify them on the spot or close for the qualifying meeting. The best place to do this is in person so your first goal while prospecting is to “Close for the meeting. They’ll be impressed you did your homework. B. Study negotiating tactics. get a card and follow up with a call and an email with collateral.com. either while walking their building or on the phone. Afterwards. Converting them to a client: Whether it’s by a simple handshake or an “Exclusive Letter of Representation” after presenting against five other competitors. as these are extremely large deals and your opposing broker or owner has been doing this for a while and will have done their homework on every deal they work on.” If they aren’t available in a short period of time then qualify them on the spot. lease and purchase offer examples etc. The step-by-step process of the deal pipeline/sales cycle: all scripts. can handle their assignment and they trust you enough to commit to hiring you.commercialrealestatebrokersacademy. and Year-end public financial statement. conversion is an art which usually requires a step by step process of convincing the client you have done this many times. are available to you at www. 22. A. Prospecting: Find qualified potential clients by either calling them directly with a list of questions or a general script until you can work extemporaneously.64 Scott W Johnstone 10 Q. If you don’t get them in person. C. are the best in the business. presentation materials. proposals. . call and close for the meeting. Qualifying: Learn every intelligent question to ask at the first level of communication to determine if this is an actual potential client. Research every client before you meet with him or her. Tenant representation deal process: Become an expert in every aspect of this process and you’ll close more deals and make more money. analytical tools.

First. Perform an employee scatagram with their home zip codes and compare their drive times to the existing facility and consider where the optimal location may be. Additionally. the tenant should interview three space plan firms . Survey alternatives: Take all the information learned from the situation analysis and come up with a game plan and immediately begin execution on it. space optimization. the size of the various offices and work areas. an architectural space plan has to be developed to meet the client’s space needs taking into consideration. Find out what their one. This usually means choosing a geographic box and surveying the various available properties that meet their needs within that geographic box. You always want at least two real back up alternatives as the first choice building may be leased or sold during the process. Take that information and format it in an intelligent format. adjacencies. F. If the deal is at least $5. three.Million Dollar Broker 65 D. and specific notes on the real situation the building and owner are in which is gathered from the listing broker. special use areas. The proposal process: Select three to five potential alternatives for the client’s needs that would all work if they had to.000. Situation analysis: Sit with the decision makers after reviewing their lease or ownership situation. workflow. having at least three alternatives in the mix keeps all three owners honest and creates a truly competitive environment among the landlords. which should also include market information. Be sure you find out where the CEO and other decision makers homes are. and five year business goals are. During the proposal process. 90% of all location decisions take place because of where the owner or top decision maker lives. a few things have to be coordinated to come to terms with a landlord or seller. as well as their financial strength and align a strategy to their stated goals. There will naturally be a couple leaders and the client may just want to move forward on his favorite. E. floor plans. building information.

in either case it’s your job to perform several specific acts.66 Scott W Johnstone and choose one that will act as their advocate as the owner will pay for this but the tenant can accurately compare each facility on an apples to apples basis. Once you’ve negotiated to the owner’s “point of indifference” there may be several millions of dollars of difference from the beginning of the process to the end and that is a tremendous amount of value you’ve added for your client. Contract negotiations: Now you may be negotiating a Lease contract or a Purchase agreement although in either case a strong word of advice: You’re not an attorney and do not give legal advice . The alternative (if the deal is large enough) is to submit a “Request for proposal. Compare the LOI to the lease for accuracy of all business terms and dates. . Have a few good Real Estate contract law specialists you work with on a consistent basis and recommend them to your client. They will either use their own attorney or take your advice on your referral. Next in the proposal process is to budget the cost of construction to make sure you accurately negotiate the proper budget for construction of interior Tenant Improvements (TI’s). it’s time to either submit a proposal or LOI (Letter of Intent) on each building calling out all the terms you desire including rent and TI’s etc. G. The counter proposal process can go several rounds but ultimately your client will choose an alternative that works.ever. The dynamic is very different if you represent the Owner and your job is to add value through good market information so that he knows when to hold em and knows when to fold em so to speak. Some of which are: i. Far surpassing any fee received as part of the deal.” which creates a psychological turning of the tables. The distancer/pursuer relationship is flipped in your favor and the negotiating dynamic is very different. Next.

23. If it’s a sale. H. I. Coordinate the Architect. I cannot over emphasize this enough. the attorney. v. Gain this reputation and it will last a lifetime. the landlord will need to be invoiced and a check will need to be cut and delivered. The closing process: Drive all parties to execute the final document. 24. Introduce industry standard language surrounding building expenses and other market norms that will benefit your client. Follow up with exchanging fully executed versions of the final document and follow through with the construction process. iii. and perception is reality. I make the point that there is no advantage . Under promise and over deliver: Do this and you’ll always be perceived as the best. Don’t keep secrets from your team: I am a proponent of being a “no secrets” leader. the commissions will have been withheld in Escrow and escrow will issue a check to the Brokers of record upon close of escrow. Payment: Make sure that payment is made to the brokers of record. This is so simple but so effective. iv.Million Dollar Broker 67 ii. 25. contractor and your client to make sure they are on time and under budget so not to create delays or overage costs that will be billed to your client. If it’s a lease. Be reliable and always follow through: Do what you say and say what you mean. Work with the client and their attorney to negotiate terms that are not agreeable as his time may cost upwards of $450 per hour. Work closely with the Owner and his attorney to negotiate all terms and assist in overcoming disputes in an amicable way.

26. Learn the subtleties of each and do both well. Work hard and smart: They are two different things. 27. Be meticulous about detail: “The Devil is in the Details. Be continuously prospecting and adding new business.68 Scott W Johnstone to keeping secrets and there is a huge benefit to sharing all that you know especially in a team environment. You can always hire more employees but you can never hire new clients.” So is the money! 28. The collective is always smarter than the individual. .

00 over the term.F.000 for a period of ten years at an average rent of $2. The listing broker represents the Tenant.00 X 60 months X 4%= $120. $2.000 25.00 average rent/S.000 S.000 S.F. Example: 25. Brokers who perform such transactions are typically.000 S. the listing team signs a lease for $25. There are too many scenarios to compare so I leave them out. One thing I don’t get into in these examples is commission splits. 4% commission for the first 5 years and 2% for the second 5 years. or Retail specialists. 1. over the term.000 Total Commissions $180. Exclusive listing.F.F X $2. These are general rules of thumb for today’s markets and commissions vary from market to market and from specialty to specialty although these commission examples were taken from real life deals recently.00 X 60 months X 2%= $60. Office. Suffice to say that each deal may have a brokerage house and co broker to split commissions with although not necessarily if you own your own Brokerage firm. You and your team contract with an owner on an exclusive basis to market and lease the owners building.Million Dollar Broker 69 Chapter Seven Commandment IV: Drink from the Seven Buckets of Revenue The following are the most recognized revenue lines a broker can tap into. Industrial.000 . property for lease: This is a simple case of leasing space in your exclusive listing. Not every specialty can take advantage of all seven so I will give a real life example of a deal for each. After extensive marketing and negotiations. X $2. the type of broker that can participate and the math involved in the commissions paid. 120-month term of lease. Tenant. 25.

owner occupied property for sale.000 X 3 % = $660. At the close of escrow. you and your team value and prepare an Offering Memorandum. He has signed an exclusive listing agreement to sell the property. the underlying market. qualify the various buyers. The brokers meet with all interested parties and assist them in understanding the building.000. After several buyers make offers and the owner counters and does their diligence to choose the correct buyer. Hotel Investment. income property for sale: This is a case where we have a leased building and the owner wants to get the highest value for the building. The seller performs their “Due Diligence. Exclusive listing. counter offer. You enter into an “Exclusive Listing to Sell” contract. and enter escrow. Multi Family Investment. Exclusive listing. Office. take offers.000. market it. Broker commissions of 3%. Those who show interest receive a detailed Offering Memorandum. the brokers of record are paid through escrow.000.000 Total Commissions $660. The brokers who typically participate in these types of transactions are Institutional Investment. or Industrial and Retail specialists. $22. . Private Client Investment. The brokers of record are paid through escrow. and the value of the building. choose a buyer. This is a situation where the company who occupies the building wants to sell it for one reason or another.000 3. Private Client Investment.70 Scott W Johnstone 2. The buyer does their “Due Diligence.” releases their nonrefundable deposit and closes escrow on the property. prepare a preliminary flyer for all brokers and buyers to gain initial interest and get it out to your list of all brokers and investors using “Real Capital Markets” (an online buyer database and sales management process software program used in the investment community). Example: Building sale price $22. Hotel Investment.” releases their non-refundable deposit and closes escrow. You value the property. the two parties enter escrow. come to terms on a sale. The brokers who typically participate in these types of transactions are Institutional Investment. Office. Industrial and Retail specialists. Therefore.

F. The brokers who typically participate in these types of transactions are Office.000 S.000. Exclusive user/buyer representation to purchase. tenant pays an average of $2. you have entered into an “Exclusive Right to Represent” contract with a corporation or Tenant who occupies space. or Industrial and Retail specialists.00 per S.000 S. X $2. You negotiate a Purchase and Sale Agreement contract. you enter into an exclusive representation contract to represent a corporation/user. the commissions become more negotiable) $45.000. Exclusive tenant representation for lease.440 5. The brokers . at the collection stage. You assist with the buildings due diligence.Million Dollar Broker 71 Example: Building sale price: $45. commissions to the tenant representative broker will be similar to this example.20 per square foot for a period of five years. these are smaller properties although the commission percentage are usually higher proportionately to the compared to the price. Broker commissions of 2%. and agree on terms of the sale. In this example. As a result of the market being soft. Commissions for a five-year lease to the representative broker are 4% of the total rent paid. Please refer to the Tenant Representation Deal Process section of chapter six and follow all the steps thoroughly. (Typically. In this scenario. Afterwards.F. (PSA) and open escrow.F.F.000 ______________________________________________________ Total Commissions $900. negotiate an offer. Example: Your 98. X $2. 98. the owner pays a $2. You find the right property for your buyer.000 4.000 S. Typically. The broker of record is paid through escrow.000 $713.000. The buyer’s deposit becomes non-refundable and escrow closes.00 for Broker Bonus = Total Commissions $517.000 X 2 % = $900.440 $196. as buildings sale prices are larger. bonus for leases longer than three years. then present.20 X 60 Months X 4% = 98.

Private Client Investment.080.72 Scott W Johnstone who typically participate in these types of transactions are Private Client Investment. the first year’s rent is $2.10 per S.007 = $36.F. building.F. building X $275 per S.F.F. . tenant pays $2. Office.50 Triple Net (NNN) per S. Purchase price $275 per S. There is a direct correlation to the value of the building based of the capitalized value of the rent and the Internal Rate of Return using a 10 year discounted formula. X 12 months divided by . Office.10 per S. which most buyers evaluate using software called “Argus. Example: 120. over a 10-year term.000 purchase price X 3% = $1..000 S. X 6% = $ 330. and the commission is 3%. The brokers who typically participate in these types of transactions are Institutional Investment.F.000.” I highly recommend if you intend to sell Investment Grade property that you learn the “Argus” program and have an analyst on your team as an employee or use a freelance analyst as needed per job. Industrial and Retail. In this scenario you have contracted with the seller to sell a building that they occupy although they will pay the buyer rent to occupy the building for a ten-year period of time and in doing so.. X $2. creates an income producing property for the buyer.000 7.F.F.000 Total Commissions $ 330. or Industrial and Retail specialists. We have a parcel of land with a total size of 30 acres for sale. The brokers who typically participate in these types of transactions are Institutional Investment.F. Example: Building size 20.000 S. commission 6%. . Corporate sale.000 ______________________________________________________ Total Commissions $1. 120. The buyer agrees to pay a price equal to a 7% capitalization rate on first year income.000 S.080.F. know the program inside and out as your clients surely do. 20. In either case.000 6. Land sale: We saved the easiest for last. lease back..000 S.

613.000 and will be paid in 2011. Example: There are 43.600 ______________________________________________________ Total Commissions $2. Hotel Investment.600 Each of these examples are highly simplified. The deal is for their new world corporate headquarters facility.000. Office. X 5%= $2. Rick! .. in each acre and the price is $40 per S. with a commission of 5%.F. 30 X 43. here in Orange County. California. I have a great story of a good friend who just closed a Tenant Representation deal where he represented one of the largest bond funds in America. and accurately represent commissions paid daily in the real world in this industry.Million Dollar Broker 73 Private Client Investment. or Industrial and Retail specalists. which is to be built.Family investment.613.F.560 X $40 per s.f. The deal was negotiated on a ten-year lease and the commissions totaled over $7. Congratulations.560 S. Multi.

Why set goals? So you can clearly and precisely define what you want and then measure your progress.74 Scott W Johnstone Chapter Eight Commandment V: Set Measurable Personal. Furthermore. Financial. . According to studies the brain does not discern the difference between imaginary and real images and scenarios. Your brain will naturally seek to complete that picture by manifesting it in reality. Once you see the movie in your head clearly you can go about making the movie a reality. The process: What do you want for your life? Play out the movie in your head as you would dream it and then set 1. The next step is to break them down by categories. The human brain is an incredible machine. What does it taste like? What does it look like? Who is there standing next to you? Where are you living? Do this legwork and play this movie in your head constantly. Business. the brain is always seeking to complete a picture. So set goals and make a habit of viewing your internal movie. Step 1: Visualize and write down your lifetime goals: Visualizing the movie of your life gives you perspective that shapes your decision making process for life. and Life Goals. then Review Them Quarterly Setting goals gives you a vision of your future and a pathway to that vision. What would it feel like to obtain those goals? Envision yourself living the life you want. 3. The process keeps you focused and on track and reviewing them quarterly allows for changes in your life to be integrated smoothly. 5 and 10-year goals and life achievements.

3. Business – If this book isn’t clear enough about what you should be trying to achieve let me say it again. Happiness – Measure your overall happiness on a 1-10 scale.? Mental and emotional – Are you a well-balanced person -. make a plan.Million Dollar Broker 75 The following are the typical categories you should set specific and measurable goals for. Giving back – How do you make the world a better place? Find ways that fit your lifestyle and capabilities and act on them. Become “The Million Dollar Broker. Start with the end in mind. Personal – Do you want to marry? What type of person is a good choice for you to be your spouse? Do you want children? Personal expression – Do you want to be a writer. Education – Never stop learning. Learn ways to increase your happiness and rate it quarterly. artist etc. sports you may want to learn. Become a lifelong learner. Physical health – Athletic. 10 being best.both mentally and emotionally? Are you where you want to be? If not then. poet. You can add or take away from this as your lifestyle dictates.” Financial – These are bigger goals about overall wealth including investments and net worth. and 10 year goals drill down to quarterly milestones then set to do-lists daily: Make a daily action plan to further each goal by integrating them into your to-do . dietary. find out areas that need improvement. From your 1. Choose your topics and do it. weight. work backwards. Step 2: When setting goals. and set goals. 5.

You’ll maintain momentum and feel a sense accomplishment even if the financial goals that should follow have not materialized yet. • Be specific and precise: Be able to see. give four presentations for new business per month. Then put a reminder in your calendar to review them in 90 days and keep doing so. smell. etc. rich life and review the overall results quarterly. Reward yourself according to the magnitude of the goal. Make them as real to you as possible and try them on for size. • Make all your goals measurable: Review them and rank your achievements based on a percentage of your goal. Final advice: • Stay the course. Homework: Before you go the next chapter put the book down and do the goal setting exercise I described before picking the book up again. • Set Performance goals: For example. . Be diligent and have no excuses. and almost touch your goals mentally. Tell someone you’re actually doing it. and draw satisfaction from the progress. then you can keep control over the achievement of your goals.76 Scott W Johnstone lists so you maintain a balanced. If you base your goals on personal performance. • Prioritize: Just as you do with your everyday to-do’s make priorities. This makes it real. • Put them in writing: There is a special power to goals when you write them down and keep doing so every review period. schedule three business lunches per week. • Achieving goals: Take a moment and smell the roses. complete 20 cold calls per day.

Always exude selfconfidence. Next. Here are a few things I think are essential to “Be a Person You can be proud of. and move on. Make this a part of your being. It has been the demise of many ambitious and young brokers. Have self confidence: There is a balance one has to have here. Fall seven times. 4. Women respect them. Be one and you’ll forever respect yourself. Children need them. so to speak.” 1. 2.Million Dollar Broker 77 Chapter Nine Commandment VI: Be a Person You Can be Proud Of It’s the actions we take on a daily. learn from it. 3. look it up. Become a leader: The world requires them. and monthly basis that form the habits which determine our level of personal success and ultimately define who we are. Persistence and determination: Never give up. If your not familiar with the word or the story. weekly. get up. learn to take care of yourself and to be able to make it on your own. and never. learn to work as an interdependent team. . ever give in. as people will always follow the leader. Become independent then interdependent: First. But beware of hubris. Allow yourself to feel confident based on realistic perception of wins you’ve achieved as you go through life viewed through the perspective of your third eye or ego. Life is great when you know you can do both. get up eight. If you stumble and fall.

Focus: You can have all the drive in the world.” Everything about life is better when you put passion behind it. 9. Make it known to those that count and then execute. and always see your future as an opportunity to become better. . This is a choice. Hold it near and dear to your heart. 10. Know thyself: You’ll never truly understand others until you know yourself. Have faith things will always work out for the better. And it is ultimately who we are that determines how we react to life’s trials and tribulations.…you can do or be anything you can imagine. Disney. Never dwell on the past. Be tough: Know when to pick your battles but nobody respects a pushover. you’ll become lost.78 5. Bill Gates. 6. The shortest distance between two points is a straight line. etc. Passion: Have a passion for everything you do in life because you believe it’s noble. Rockefeller. 11. “Perception is reality. Even if we aren’t conscious of it. Scott W Johnstone Think big and imagine bigger: Read “Think and Grow Rich. So always be a person you can be proud of. Be ever diligently introspective. Henry Ford. 8. Be clear about your intentions: Know exactly what you want down to the smallest detail. it’s what we do that determines who we are.” Think. Always view challenges as opportunities and lessons. 7. Never let anyone or anything take it from you. but without focus. Be forever optimistic: You always have the choice of looking at your current situation as positive or negative.

. friends. See what they cherish in people. Learn how they accomplish their achievements in life. Become great at building both and live a rich life. • Know the company they keep. Be it employee. • Know them personally . Loyalty: According to the Myriam Webster dictionary. My #1 requirement of a friend or partner. • Know the allies and partners they built their empires with. Demonstrate that you’re trustworthy everyday and you’ll receive it in return. or best friend. “allegiance. Know your clients and friends: Know every aspect of your relationship base and each specific person intimately. Know how the company was formed. faithfulness to commitments and obligations”. vendor.Million Dollar Broker 79 Chapter Ten Commandment VII: Build Lasting Relationships Think about some of the similarities between business and personal relationships. where they live. Etiquette and emotional intellect are at the root of both so make sure you study both subjects thoroughly although there are a few points that must be in place to make them last. and where they vacation. Know the key employees and make friends or at least be friendly so they know you by name. how they structure each deal. They are different but the fundamentals are so similar and one often turns into another so pay attention. See if you have those qualities.their family. and how they philosophically operate their company. Trust: This is the cornerstone to every relationship.

80 Scott W Johnstone • Know their personal interests and if you share them open up and share a part of yourself. The greatest gift of this whole process is the possibility of making a new friend as we all need as many as we can get in life. First. Give more than you get: people will always want to do business with you. That should be the premise of all communication. Communications skills: Stephen Covey put’s this well. study communication skills as if your getting your masters degree in it and focus on “conflict resolution.” Collaboration: Always conspire to be interdependent with all whom you work with and focus on the win–win and you’ll close more deals. therefore making more money while building lasting relationships at the same time. you just might make a best friend out of a client and people like doing business with friends. . • Be a friend and help with advice or in any way possible. Although. seek to understand then to be understood.

• Pace yourself. prepare mentally by visualizing seeing the course in your mind. Like life. trainees. set back’s and big gains just as your career will be in commercial real estate. • Train for the race.Million Dollar Broker 81 Chapter Eleven Commandment VIII: “It’s a Marathon not a Sprint” I put this in quotes because I’m always saying this to my partners. Every marathoner will tell you that you have to build up your strength and endurance to become great. Most people are bystanders so at lease by committing to this endeavor you have at least chosen to run the race. Where will you begin? Where do you want to be by each stage of the race? Winning is irrelevant as you may be a great racer but there is always someone better so be happy with the fact that you’re in the race and achieving your personal goals. turns. this business is a marathon and not a sprint. Look at each day as a training session until you mentally are ready to go when the gun goes off at your starting line. Few people choose to prepare and commit to running a marathon. and friends when a critical stress moment comes or we have a set back or an especially big win over a short-term goal. The idea is run the race. There are mini races within the race and sprinting at certain sections of the course will be required but always remember the greater course and remember you don’t want to burn yourself out before the end of the race. There are several parallels and these are the ones I’ve seen and experienced firsthand: • First. The idea . Don’t get too high or too low emotionally as the road of life is long and filled with twists.

girl time. You’ll learn to be a master negotiator. You’ll feel a sense of achievement for reentering the race and having learned a lesson along the way. • If you see another racer fall. therefore becoming more efficient and running a smarter race.82 Scott W Johnstone is that you have used your energy wisely at each stage of the course and have some left over to reflect and enjoy at the end. adjust your mental plan for the race. Every smart “Runner” has to do this. access the damage. guy time. You’ll learn to build buildings. or they won’t finish the race. and thoughtfully continue while learning the lesson of what made you fall and commit to never doing it again. • If you stumble and fall behind then immediately and calmly get up. family time. . This is giving you the permission to take breaks. Vacations. you’ll pick up mental skills that you can use later in the race. You’ll learn to become a master conflict resolver etc. • Improve your technique as you continue further into the race. go to their aid and help them back into the race. • Along the way. • Draft off the faster “Runners” in the pack when you need a breather. • Take fuel and liquids along the way. and alone time will all replenish your fuel for the continuing the race. There is no shame in relying on the racers who are around you who are sprinting to pull you into their draft as the pack is always changing who becomes the leader and it will be your turn several times in the race to lead and pull the pack along. Don’t fret. The Karma Gods or whoever will shine upon you later in the race.…These skills can be related to technique but in the long run you can use what you’ve learned along the way to expand the meaning your life and become a world class “Runner” so to speak.

• Follow the right path. regroup. We’ve all seen it . If you go astray momentarily. The race will be continuing and the point is to be in the race and do your best but never allow your emotions to run too high or too low as this is a Marathon not a sprint. and calmly get back on track. • Make friends along the way as you’re in a pack of people doing what they love. They chose to do so. proud of. It’s always more rewarding when you can experience life with others bonded by a common goal. Appreciate the bystanders cheering you along. You’ve trained your entire life for it. as you’ll see many of them you know at the end of the race. ask for directions.the Olympian “Runner” who for one reason or another goes off the course only to realize they will never win nor achieve their goal and they quit the race in tears and disgrace.Million Dollar Broker 83 • Take note of your surroundings. You know where it is in your mind roughly. . as in any race. • In life. It’s your ultimate goal so run a race worth being proud of. please follow the course set before you. as they are there to support you. Acknowledge them all along the course and thank them with a smile and a nod. there is always a finish line. First. • Form alliances or a team so you run a smarter race and can become part of a greater team. Be friendly to those you’re running with you and make a point of getting to know them.

my work. investments. This will take the highs and lows out of the market as long as you don’t ever touch the money until after retirement. 1.” Make sure that all of your dividends are reinvested into the Mutual Funds you hold. trips. boat. Please speak to a good investment advisor but there are a few very basic principles that you must do. income. Then came along a little thing called divorce and over the next ten years nothing was the same. Although. How do you balance spending now and saving for later? First. Put it into a set of mutual funds that you adjust annually. Take advantage of the “miracle of compounding interest. Invest in Real Estate: Either put the extra money you have set aside for investments into commercial property you know for a fact is a screaming deal.84 Scott W Johnstone Chapter Twelve Commandment IX: Have Fun. 2. 4. family. Literally . I had it all in balance and I was having the time of my life. you’re making 100% return day 1. Save Money and Live a Great Life. monthly into a SEP IRA or directed investment account. Invest an equal amount. saving money balancing act. If you do the basics in this business and invest regularly while spending frugally compared to your income and carry little to no debt. If the company matches it. 3. I rebuilt well because I did the following. then all will be fine. home. If you don’t find any. and even concerts and sporting tickets were booked a year in advanced by my staff. Dollar Cost Averaging. Invest as much as possible in your 401k. then purchase . let me say I’m the right guy for this chapter. At 38 years old. I had a few million in net worth and everything was on cruise control. This is the eternal lifestyle vs. savings.

. etc. This should be a hard and fast rule. The ratio should be 3:1 (B:A). Spending vs. . Remember to set up account B as soon as possible as time is what counts.Establish automatic payments on all your debts to make sure you pay everything according to the plan.Establish an automatic investment plan for your retirement account that pays yourself first. learn to skydive. . and critical illness insurance. Then.Travel to exotic places. disability. saving: Manage it this way: Savings account A: For having a good time and maintaining the fun factor in your life.Buy a cool house in a great neighborhood. take the money you’ll have left over to fund account A. and not as restrictive as Account B. . The answer to the eternal money question is “Find Your Balance” because that’s what a great life is all about. retirement old age when Social Security eventually goes bankrupt.) In the end.Take out life. .Million Dollar Broker 85 a rental property on a regular basis (let’s say every 3-5 years. buy a boat. they will become income-producing properties and you’ll be collecting checks while on your boat. Live life like you mean it! Account A should be a lot smaller than Account B.Buy the car of your dreams. and have fun: . . Savings account B: This is for the future.

It’s all of our responsibilities to help those who have less than us. In addition to mentorship. I want to share them with you and hopefully have you take away some small sense that we all have a responsibility to “give back. friends. how much money we have made.” “The practice of altruism is the authentic way to live as a human being. Naked not only for clothing. we all have a greater responsibility to humanity. how many great things we have done. Homeless not only for want of a room of bricks -. too. I was naked and you clothed me. There is meaning in being everyone’s friend. our purpose is to live meaningful lives. The real source of peace amongst our families. We will be judged by ‘I was hungry and you gave me food to eat. but naked for human dignity and respect. and neighbors is love and compassion. to develop a warm heart. and it’s not just for religious people.” ~Dalai Lama “At the end of life we will not be judged by how many diplomas we have received. As human beings. I was homeless and you took me in.86 Scott W Johnstone Chapter Thirteen Commandment X: “Give Back” Through this industry. I’m not particularly religious but these words (which came from some of the greatest thinkers and philanthropists the world has known) say so much about the human condition. or an opportunity to shine. I was given an opportunity and I want you to give one.but homeless because of rejection. when the time comes. a kind word. need a leg up.” ~Mother Teresa . you’ll be given more than you’ll ever believe possible. but hungry for love. Hungry not only for bread. It’s all of our duty and responsibilities to remember where we came from not just where we are going.

. is ever wasted. It is when you give of yourself that you truly give. Jr. Most people are polite. but should it stop there? Einstein is probably one of the few whose contributions to society. We get a lot. I think “the more you give the closer you are to even. You only need a heart full of grace. but it doesn’t need to be so grandiose to meet his obligation. but not many are truly selfless. nameless. You don’t have to have a college degree to serve. When is the last time you did something for another person without expecting anything in return? What difference are you making in the lives of those around you? In your community! In the world! It starts with the little things. and some take too much. “What do I get?” with “What can I give?” in every situation.” ~William Wordsworth “You give but little when you give of your possessions. courteous and civil when it serves their selfinterest.” ~Kahlil Gibran “No act of kindness. his little.” ~Martin Luther King. You don’t have to make your subject and verb agree to serve.” ~Aesop “It’s every man’s obligation to put back into the world at least the equivalent of what he takes out of it. unremembered acts of kindness and love. and it’s selfish appetite is nearly insatiable. It all starts with replacing the question. “the more you give the more you get. “That best portion of a good man’s life. however small.because anybody can serve. There is a mentality of entitlement that has spread throughout the world..even fewer the equivalent of what they take.” and as Einstein says. Few give back more than they get . we should at least be striving to break even in this life. A soul generated by love. ~Albert Einstein .Million Dollar Broker 87 “Everybody can be great.” but I don’t think that’s true. Some say. science and the world could be argued as more than what he got or took.

Happiness never decreases by being shared. So long as we are loved by others.88 Scott W Johnstone “So long as we love we serve. And no one is useless while they have a friend.” ~Robert Louis Stevenson “Thousands of candles can be lighted from a single candle. I would almost say that we are indispensable.” ~Buddha “You cannot do a kindness too soon because you never know how soon it will be too late. and the life of the candle will not be shortened.” ~Ralph Waldo Emerson .

You learned a bit about my past. the will. We discussed the importance of setting and acting on measurable personal. The moral of my story is that if given the drive. We’ve learned what the lifestyle of the commercial broker can and should be if the work is done properly. how that path leads to failure. in order to maximize your revenue potential. We’ve reviewed the Ten Commandments of being a great broker.Million Dollar Broker 89 Chapter Fourteen Live with No Regrets Now this journey is coming to an end I want recap where we have been and give you a glimpse into the first steps of your future. and how we should avoid it at all costs. . We’ve learned that specialization is the key to success. We’ve heard the story of the get rich quick thinkers. and other life goals and how doing so and reviewing them on a regular basis will set you apart from 95% of people in the world. which is to make you a million dollar per year gross commission earner in commercial real estate. In addition. We went deep into the mentality of being the best and all of the best practices of the great brokers and how you can be the best in your market and specialty. as well as what each of the different specialists does on a consistent basis to be great. business. We reviewed the seven different buckets of revenue and how you should take advantage of as many of them as possible. and the work ethic anyone can overcome adversity and accomplish the goals of this book. financial. we’ve chosen where and with whom to work.

90 Scott W Johnstone We reviewed the importance of building lasting personal and business relationships and how they intertwine throughout your career and life to make your life the richest it can be. I received a call at my office one day. We learned that maintaining a balance of hard work. we’ve learned that the big picture of success is to share the gifts that the industry will afford you by being a great person and giving back. business. If you are already a licensed real estate agent your first step is to choose your market and begin calling the office managers of the major firms for the names of the top producers. relationships and the decision making process when faced with a short tem dilemma that may affect your life for the long run. But while writing this book I was thinking about the early days of my career. almost frantic voice of an oncology nurse in the San Francisco Bay area where my mom was living. Finally. If you don’t already have a Real Estate License. . It was the very somber. when the rest of my family was basically either poor or the closest thing to it without technically qualifying. DO IT! NO EXCUSES! One last story to leave you with that is bittersweet for me to tell as not many people have heard this and I haven’t thought of it much. fun and financial responsibility in this industry for the long run will lead to a great life for you and your family. It’s only a couple of hundred bucks and about four months of light homework in the evenings and your set for life. You will be setting lunch meetings with these brokers to pick their brains to choose a specialty and a home for your future business. We got into the philosophy of how viewing life as a marathon and not a sprint will give you the right perspective on money. apply for the classes and obtain your Real Estate License in your state. I’m giving you your first action item and homework assignment. No excuses.

“Hello. I was just pissed that she had completely abandoned me and my brothers. I told her. now living in Oregon. Flash forward nine years later.” as she may not make it through the night. I was an angry teen and there was a silence on the phone after she said. successful junior broker with money in the bank. as I was the oldest of three boys in our immediate family. Without a thought. She resurfaced in the San Francisco Bay area five years after the call to tell us she had been sick and was ok and living with some guy and that she was happy and in remission. met us.. I can only think that she thought somehow this would burden us. so to speak. Back to the call from the Oncology nurse and she (in a rushed and somewhat fatalistic voice) says that my family and I need to get there in 24 hours to say “goodbye. I visited a couple times with my live-in-girlfriend who was from that area and we saw her at her favorite bar a couple of times but it was never the same as when I was a kid and she was actively playing the role (or at least trying to play the role) of mom in my life. leaving me to be the father figure. It turns out that she had contracted breast cancer but for some reason didn’t want to share it with the family. So I sarcastically say it again and she didn’t really respond accept to ask for my grandmother.” and I came back with. Five years of not hearing from her and not knowing if she was sick or where she lived. I’m a 27-year-old. She called me as my senior year was just beginning and we hadn’t spoken in months and it happened to be my birthday. a nice place to live and a fancy car but my mom had pretty much dropped out of our lives since that call on my 18th birthday. She was at work. “Happy having a kid day!” I could hear her choke up and quietly tear up while trying to maintain her composure. As I said earlier in the book. my mom disappeared from our lives when I was a senior in high school. I called the airlines and bought the first flight out for my brothers and me to the bay area where my grandmother. so and the conversation ended with her saying goodbye.Million Dollar Broker 91 Now a few years earlier. My mom was in a coma induced by the Morphine to relieve the pain and the only thing she .

Now she’ll never meet my kids or enjoy holidays or family times again but she will always live in my heart. Now.commercialrealestatebrokeracademy. Take the leap. Never live with the regret that you never took action to make your life or your family’s life better. The time for change is happening all over the world and your time to make that change is now. ultimately.com . All I wish now is that I had a mom in my life to share the good times given to me. Now is your time. So go do it now! I’ll see you on the other side as a colleague with no regrets! I‘d love feedback on my website and would be happy to give further tips to make sure you achieve your ultimate goal. It doesn’t matter if you’re a student trying to figure out what your next step is or if you’re someone out of work or stuck in a dead end job. draw up your action plan based on the steps I’ve given you in this book and go out and change your world and your community. The economy can’t get much worse. Back to you! If you ever thought you could be better and do better for your family while making a mark on the world – now is the time. Draw upon your courage. Your greater calling is now.92 Scott W Johnstone would or could say was “I love you” repeating it after we would initiate the gesture. She at least was able to say goodbye by saying she loved me and that’s all I needed. I remember yelling and swearing at her. BUT first complete your homework assignment! Take action! www. She was 46 when she died and I’m now 49. My life is dedicated to making sure my kids’ lives are better than my and my brothers lives were growing up that I make up for the things I did that I regret and the words I wish I had never said. from the chance I was given by my buddy Paul. Those words were worth the world to me as she passed a few hours later in silence. saying the smart ass comment about “Happy Having a Kid Day” on my birthday. So that’s what I’m left with from her. I wish I could take it back.

Boston. possess over 25 years of commercial real estate advisory and brokerage experience. A leader in the industry.BridgeCommercialProperties. His areas of specialty include corporate tenant representation. California www. Los Angeles. technology.Million Dollar Broker 93 About the Author Scott Johnstone possesses over 25 years of commercial real estate advisory and brokerage experience. he has also completed numerous complex real estate transactions in major US cities. Widely recognized for transaction services locally in Orange County. President Bridge Commercial Properties January 2011 – Present Bridge Commercial Properties is a commercial real estate brokerage firm comprised of those dedicated to its core values. with a total of over $3 billion in transactions. Bridge Commercial Properties combines a sole proprietor’s attention to detail with institutional experience and knowledge. he has managed several brokerage teams representing entertainment. and asset marketing and leasing services in Orange County. which are providing the highest ethical standards while delivering unsurpassed service and market knowledge. thus allowing our clients to make better. Fortune 500 corporate and government clients. Scott Johnstone. and have accumulated over $3 billion in transactions. Their areas of specialty include corporate tenant representation. as well as asset marketing and leasing services in Orange County. acquisition and disposition advisory services.com . and San Francisco. such as Manhattan. Houston. acquisition and disposition advisory services. California. Bridge’s founder. Austin. faster decisions while reducing their overall cost of operations. financial.

enabling our customers to focus on their core business. Co-Founder & Executive Vice-President of Sales & Marketing TechSpace 2000–2003 Co-Founded in 2000. 2004-2008 ***Top 2 Office Brokers .techSpace. the company is a leading sponsor of real estate investment programs. The firm’s transaction. investment sales. ***Top Five Office Brokers Orange County. Enfrastructure formally changed its name to TechSpace to reflect the company’s value proposition and leverage the brand awareness built by TechSpace in other markets throughout the years. tenants. medical leasing. and investors.Newport Beach. and investment products to deliver comprehensive. California based Enfrastructure acquired New York based TechSpace. www. Our 5. institutional building marketing. and investment services are supported by highly regarded proprietary market research and extensive local expertise. a leading provider of alternative office space and infrastructure services to growing and established companies. In June 2003. practice groups. TechSpace is the nation’s premier full-service facilities and infrastructure provider. integrated solutions to real estate owners. and business process outsourcing solutions. 2008.owned and affiliate offices draw from a unique platform of real estate services.200 professionals in more than 100 company. We integrate world-class flexible office space.com . In June 2002. consulting. state-of-the-art technology services.94 Scott W Johnstone Senior Vice President Grubb & Ellis 2003–2011 Scott was a leader and top-producing broker for the Newport Beach office of Grubb & Ellis with an emphasis on office tenant representation. and user sales. Through its investment management business. Grubb & Ellis (NYSE: GBE) is one of the largest and most respected commercial real estate and investment companies in the world. management.

***South Orange County “Rookie of the year and number 4 in the Office 1988.Million Dollar Broker 95 Senior Vice President CB Richard Ellis 1986–2000 Scott acted as a leader and top producing broker focused on Orange County office properties working out of the Newport Beach office of CBRE. intelligence. 1997. Help the client make the most informed business decisions. experience. every employee in every office around the world lives by our corporate mission: Put the client first – always. We do not exist without our clients – and we never lose sight of this fact. we apply our insight. in markets around the globe. 1993. Every day. 1993. 1996. 1989-2000. 1995. Think innovatively. Deliver results. ***Top 10 Office Brokers Orange County. . we have more than 300 offices in 50 countries. 1994. 1994. and resources to help clients make informed real estate decisions. To that end. ***National Chairman’s Club Member. ***South Orange County Office Broker of the Year. but act practically. ***Top 5Brokers of the year South Orange County. CB Richard Ellis is the global leader in real estate services. Each year. we complete thousands of successful assignments with clients from a wide range of industries. Together with our partner and affiliate offices. ***South Orange County Broker of the Year. 1995. 1988-2000. Tailor our services to the client’s needs.

and video interviews with industry leaders on how they became and continue to be great. Commercial Real Estate Brokers Academy Commercial Real Estate Brokers Academy. in an effort to create an online. single source of educational products and services for entry level to senior level brokers looking to break into or increase their income in the commercial real estate industry. www.com was founded by Scott Johnstone. Founder. processes and collateral in the commercial brokerage industry. . Products and services include: • e-book: The Commercial Real Estate Broker’s Career Guide Book • Paperback Book: Million Dollar Broker: The Commercial Real Estate Sensation • 6 Disc Audio Training Series: How to Build Your Own Million Dollar Commercial Real Estate Brokerage Firm.96 Scott W Johnstone 2011-Present. a 25 year veteran of the commercial real estate industry. a Step-ByStep Process to Building your Own Company the Right Way • 6 DVD Series: How to Renegotiate a Commercial Real Estate Lease • Online Video Training Series: Building and Maintaining Your Commercial Brokerage Business at the Highest Level • Monthly Continuity Membership Video Series: The latest cutting edge presentations.CommercialRealEstateBrokersAcademy.

Million Dollar Broker 97 Testimonials “Although Scott is now a competitor. SVP. and has an array of testimonials that attest to these facts.” Jeffrey Moore. Chief Economist. I would definitely work with him again!” Bruce Carlin. Managing Director.Founder TechSpace “Scott is clearly one of the most capable (and therefore successful) commercial real estate brokers with whom I have had the pleasure . high Energy and fun to be around. In addition to being incredibly knowledgeable and detail oriented he’s a lot of fun to work with!” Debra Larsen. Senior Managing Director. CB Richard Ellis “I had the pleasure of working with Scott when he was a senior level broker at Grubb & Ellis. He provided excellent leadership in our effort to find and negotiate office space for the company. 2011 Robert Bach. Scott did an excellent job of listening to his clients and developing strategies that exceeded their expectations. Scott knows how to get the job done. Scott is a tenacious broker with a vast knowledge of the Orange County real estate market. He was responsive. Co. Grubb & Ellis “Scott is a true professional in the commercial real estate business.” Greg May. driven. He knows how to add value to any transaction. CompPartners “Scott Johnstone and I began our careers in Commercial real estate over 25 years ago. As one of the Company’s top producers. Executive Vice President. CEO. Grubb & Ellis “Scott is a consummate professional who consistently goes beyond what is expected to achieve superior results for his clients. and it concluded recently with a very fair and economically advantageous deal for CompPartners. when we worked together years ago when I was still a broker I always found him to be hard working. creative and productive.” April 27.

He and his team of experts were second to none when they represented our interests. Scott has worked on some of the largest tenant and landlord projects in Southern California and it’s his experience and expertise that makes him very valuable asset in guiding his clients through the transaction process from . I strongly recommend him and would be most pleased to provide further information as may be required in support of this solid professional.D.” Chris Schreiber. particularly when faced with challenging market conditions. Silicon Valley Bank “20 years ago.98 Scott W Johnstone to work. CCIM. “I have known Scott personally and professionally for over 20 years and he is driven. performance and execution. Johnstone. “Scott’s many years in the business of commercial real estate consulting has allowed him to be a trusted and highly credible advisor to many tenant and landlord clients in all aspects of complicated and structured transactions. Ph.” Michael Hall. He is a consummate professional and I would highly recommend him to all of my clients. I got my start in commercial real estate working as a “Runner” for Mr. Senior Vice President. CFO California Pacific Homes “Several of my technology clients worked with Scott during their expansion phase and he always impressed with his market knowledge.” Mark Breneman. strong work ethic and professionalism started me on my career path that I enjoy to this day.” Lyle McColloch. results oriented and has high integrity. Blue Water Grill restaurants “Scott has done an excellent job helping us lease and sell our office properties and with our relocation needs. Without reservation. His passion for the business. I recommend Scott Johnstone for commercial real estate needs.” Jim Ulcickas. Managing partner. CEO.

Maguire Properties “Scott is consistently on top of the market with intimate knowledge of all activity throughout Orange County. go-getter! He knows whose whom and is focused on getting the job done once he gets the deal.” Ann Forella. very personable and he instills confidence with his depth of knowledge and expertise. very professional and takes great care to listen and provide feasible solutions. Riviera Magazine “Scott is a great. Project Manager CT Realty Investors “Scott is a consummate professional -.” Stefanie Phan. “The Buddy Group” “Scott is experienced.” Raymond Polverini. Senior Asset Manager. Assistant Editor. hard working. My father might be the most well connected and reputable commercial real estate individual in Orange County. Fidelity National Title “Scott introduced us to several of his clients in which we recommended an audit of the Common Area Maintenance (CAM) . Account Executive Major Accounts Division. He has impeccable work ethic and his knowledge of commercial real estate in Orange County is remarkable. Scott is detail oriented. and he hired and believes in Scott.” Gregory Wertman.always prepared and polished. focused. He is a strategic thinker.” John Bendetti. sees the big picture and is a visionary. With compassion for people he is a pleasure to work with. highly personable. I would highly recommend Scott in the business of commercial real estate transactions.Million Dollar Broker 99 start to finish. He has been a great resource for me and remains a true professional. Leasing Director. Buie Stoddard Properties “Scott is the ONLY commercial real estate broker I recommend. He knows how to work hard and play hard and on top of that is a great dad!” Stacey Noonan. Director.

Property Manager. He is very professional and always delivers for his clients. Senior vice president.100 Scott W Johnstone charges. Buy.” Gregory Bloom. Lockton Insurance Brokers “Scott is an extremely detailed and driven broker. His follow through with his clients places his services above the rest. He brings his knowledge of the market and excitement for the industry to each transaction makes working with Scott a pleasure. Commercial Developer “I have worked with Scott on several projects over the years. I’ve found him to be honest. I would recommend him to any of my clients. he helped implement the deal after the fact to ensure what was negotiated was actually being done. LLC “I can always count on Scott to get the project leased/sold with expediency and at top value. President. I look forward to Scott’s support on future endeavors. Seal Science. CyberLease. CIP “I have known Scott both personally and professionally for many years. I highly recommend Scott and look forward to working with him on future investments.” Terry Barger. hard working and diligent with an excellent knowledge of the commercial real estate market in Orange County. Scott is a hard worker who somehow finds time to spend with his family.” Brent Rusick. Managing Member.” John Dobrott. Inc. .com. Scott has demonstrated constant professionalism. CEO Business Cards express “I have be acquainted with Scott for many years. and has always dedicated himself to both his clients and their needs.” Devon Stanke. He has been a consummate professional in all our various dealings. Not only did Scott do the deal. We were able to recover overcharges for the clients that most tenants never question.” John Racunas. Executive Vice President & General Manager.

Real Office Centers “Scott has been a great guy to work with.Million Dollar Broker 101 “In our dealings with Scott while he was at Grubb & Ellis. Gensler “As a commercial real estate attorney with 30 years+ experience. LEED AP.” “In addition to Scott being a talented broker he’s also an exceptional snowboarder!” Ronald McElroy.” Stevan Gromet. intelligence and resourcefulness. professionalism and integrity.” Lonnie Nadal.I really enjoy working with you!” June 29. Seeking and outing those Devilish clauses is an inherent strength Scott possesses and uses to perfection with each contract. many commercial brokers. I would highly recommend him. but refreshing to see. Owner. “The Devil is in the Detail” Never seems to be a burden for Scott but rather a favorite pastime.” Don Fraser. I recommend Scott to anyone who needs real estate services. Scott stands at the top of the list in terms of ability.” Ken Wink. Vice President. Ware Malcomb “I have had the privilege of working with Scott in the past while he was with CBRE. Our past business deals have been very successful. Gromet & Associates “As a Contractor. is a very seasoned professional with an attentive eye for detail. Scott’s attention to detail and diligence on behalf of his clients has been not only helpful. we were very impressed with his market knowledge. I believe this is why Scott maintains one of the best reputations in the business. we rarely see a broker follow through a project until completion. Senior Architect. Commercial Property Investor “I can’t imagine a better client trusted advisor and advocate than you Scott. He and his team are organized. has excellent . 2011 Sandi Warneke. Managing Principal. I have worked with many. Howard Building Corporation “Scott. knowledgeable and very professional. Vice President. Scott is an exceptional resource.

and can truthfully say he’s a great guy and someone I would look forward to working with on any opportunity. and consider him a valuable asset to our real estate holdings. This combined with his thick Rolodex allows Scott to get deals done at the highest level of execution. yet he brings fun and enjoyment to the process at the same time.” Trisha Navidzadeh. Sr. MM” Michael Merk. Virgin Galactic “Scott has a great team that continues to serve our real estate portfolio at the highest level. When we need an expert. We have know Scott over 20 years. I’m confident that should someone have the pleasure of working with Scott they would find it to be a very positive experience. CBRE .” Derek Dean.” Kelly Boyle. VP.” Charlie Christensen. “I have known Scott on both a professional and personal level for over 25 years. Marketing Consultant. we call Scott and his team.102 Scott W Johnstone communication skills. Griffin Related Properties “I’ve worked with Scott at CBRE and he is a conscientious commercial real estate professional. General Growth Properties “Scott has extensive experience in the commercial real estate field spanning over decades. Senior Asset Manager. and uses a broad network of business professionals to execute for his clients. He has always been a top producer and is committed to excellence service and superior market knowledge. I would highly recommend Scott on future assignments. Vice President. Grubb & Ellis/BRE Commercial “Scott is a true professional with a high level of integrity! I very much recommend his services. Space Agent.” James Fowler. He was a real pleasure to work with. Scott has the unique ability to act in a very professional manner.

Scott is a true professional. possessing expert knowledge. President Coldwell Banker Commercial “Scott has done an excellent job representing Mark IV Capital in South County for many years.Million Dollar Broker 103 “I’ve worked with Scott on numerous projects where he represented tenants in real estate transactions. Scott has consistently negotiated deals where we clearly saw benefits to the tenant with good TI budgets and aggressive rents. I would highly recommend Scott to anyone needing quality representation. Scott has always exhibited high levels of knowledge. professionalism and integrity. Senior Architect.” Paul Cate. tremendous experience. and creative insight. Each and every time the end result was positive for all parties. Ware Malcolm “I have had the opportunity to work with Scott several times over the years.” Ted Heisler. CFO Mark IV Capital .” Dawson Davenport. Scott has always been a team player and we certainly enjoy working with him.

The shoreline and the Gaviota Hills . Boy At The End Of The Pier The sun sinks below the rim of the sea. A place where I take my children now and where we bid our final farewell. mirroring the granite walls of the valley where there is a rock in the slow waters flow.104 Scott W Johnstone These are my two beautiful children on a farewell trip for my grandmother where we spread her ashes as requested in a secret place on the Merced River in Yosemite National Park. A place we discovered when I was a child on one of our many camping trips in this magnificent valley. A place where the mighty Merced slows to a peaceful flow . We didn’t have a lot of money as kids and camping was our favorite vacation time. “The rock” that we all swim to and warm ourselves on after the snow melted waters chill our bones. The rock that seems to have avoided times eventual test. Here is a poem my grandmother wrote about me some years ago that she published shortly after her last birthday at the age of 89.

Yellow hair stiff with salt. One still splashing in the bloody water. gray planks around him Are curled up remnants of peanut butter sandwich. eyeballs pink From the wind and flashes from the sunstruck sea. swells break Heavily against the wooden struts and spans.Million Dollar Broker Blur as misty vapor fills the early evening air. They nod their heads approvingly -. On the smooth. Pieces of orange rind and three empty Coke cans. The only one on the end of the pier. crosses 105 . except for runs To the rest room on the beach. All covered with sand and fish scales. a red penknife. An oblong plastic container Holds rusty pliers. Before the fog lifted. sunburned. A couple of trash fish lie by the pail. One by one. A Milky Way wrapped and a Frito bag. Chopped up for bait. And a square of plastic sponge Pierced by odd sized hooks. becoming An integral part of the wooden deck Till the next storm washes it clean. Two old men in dark zippered jackets and Baseball caps clean their fish in A trough by a faucet. glancing at The boy casting his line against the wind. Four sand dabs and two silver mackerel. fish blood and Stringy entrails now dried. A woman leaves a campsite. The water and the sky are darkening.tough little kid. The boy was the only one still fishing. A blue plastic bucket holds the day’s catch. He’s been here since early morning. the lights go on In the RV park across the beach. Skinny twelve-year-old kid. or The faucet on the pier for brackish water.

Head down. Slowly and reluctantly. Ellis . She embraces the boy and he pulls up his line. he follows her. body braced against the wind. Looking back over his shoulder At the dark blue sea. She walks quickly to the end of the pier. Secures the hook to the bail of the reel. He’ll be back in the morning. It is his passion. Marilynn P.106 Scott W Johnstone The windblown sand stinging like sleet.

Million Dollar Broker 107 Appendix A. Example: Market Newsletter . Example: Exclusive Tenant Representation Letter C. Example: Deal Timeline & Flowchart H. Example: Capabilities Brochure – Tenant I. “Broker Code of the West” B. Example: Office – Investor-Purchase. Example: Office – Letter of Intent-LOI E. Letter of Intent-LOI F. Example: Office – Request for Proposal-RFP D. Example: Office – User-Purchase. Letter of Intent-LOI G.

Clients When initially contacting a potential client. it’s improper to continue. they are encouraged to “pool their efforts. once all salespersons involved have discussed it fully with each other. If he mentions another broker at your office. Different Decision Makers In some cases. and the second salesperson should state that the client is “in good hands” and then immediately inform the original salesperson of the contact. they are obligated to immediately inform management of the problem. I. B. It should be noted. When first learning of the situation. two or more salespersons may learn that they are working independently with different decision makers within the same firm. however. he shall have no automatic right to represent that client on future transactions. C. firm to firm. shall render a decision as to who shall represent the client. who.” Should that not occur. D. Initial Contact . Expired Listing Protection When an exclusive listing expires or is cancelled and the contract is not given to another salesperson. and (b) whether this is a current relationship and specifically involved with the client’s current requirement. Commercial Real Estate Brokerage Practices A. that it might be beneficial to all parties to honor another salesperson’s prior relationship. in turn. the listing salesperson shall be honored as the exclusive agent within the firm for an additional . the client must be asked if he is working with any other broker within your office. Prior Relationships If a salesperson leases or sells a building to a client.108 Scott W Johnstone Appendix A: “Broker Code of the West” The definitive code of Ethics passed down from leader to leader. it should be immediately determined (a) who the other salesperson is. Should this be the case.

Properties where one of the salespersons is operating outside his geographical territory. which are serviced by two or more salespersons. 2. Representation of prospects after partnership/team termination. General A. in advance and in writing. II. a partnership or team. Purpose of the partnership/team. IV. Listings. when joining another salesperson(s). 2. Partnership / Teams A.” in writing. ideally in writing. B. It’s recommended that the partnerships or teams address. Understandings should be evidenced by written agreement.” 3. regardless of the number of salespersons in the partnership/team. Seven-Day Grace Period . Any commission split other than an equal distribution among members. if the listing salesperson has been actively marketing the property during the original listing period. 4. shall be treated as one person. III. Injecting Oneself in Deal Under no circumstances should a salesperson try to inject himself into a transaction initiated by another broker from the same firm. Treatment of deals resulting from partnership/team activities but not related to the designated requirement. merit an acknowledgement of the commission split on both the seller/lessor side and buyer/lessee side. Expected duration. Co-Listings A. 3. signed by all parties and could include: 1. Exclusions of previous clients. Variations and exceptions must be clarified “up front. Different treatment for “call-ins” versus “cold calls. E. 4. such issues as the following: 1. As a guideline.Million Dollar Broker 109 period of sixty days.

VI. At the end of that period. B. VII. it’s his or her duty to be explicit about their commission expectations. Such tactics include implying (or expressly stating) that another broker/salesperson. Sales personnel shall not use “negative selling” in an attempt to gain control of a client or property. Any understandings between salespersons shall be reduced to writing and signed by all parties. Sharing Information – Handling Potential Disputes A. Offers A. no further offers should be solicited. Dissatisfied Client Should a client inform one salesperson that or she is unhappy with the services of another salesperson. V. It’s the obligation of the listing salesperson to distribute the information within the appropriate offices in order to be honored as the listing agent within the same firm. Once an offer has been presented and accepted. One has a duty to inform all parties they may represent and receive approval from the parties in writing when one is in a situation to present multiple offers on one property.110 Scott W Johnstone A salesperson will have a period of seven (7) calendar days after taking a valid listing to present the listing to his prospective buyers/tenants. is not sufficiently qualified by experience or location to handle a particular requirement. C. Sales personnel are encouraged to share information freely. However. . this listing position does not apply to major properties. or office in the same firm. he or she must distribute the listing in the normal manner. If a salesperson expects to be compensated for sharing specific information (or clients). which are generally known to be available. such as development projects. Negative Selling A. the second salesperson should immediately inform the original salesperson and management. Open Listings Management must approve all open listings.

What should be prevented is broker/salespeople hearing of a requirement and purposely go to a different decision-maker — this is highly unethical. 3. Recommendation: Team up! B. Should situations arise that cause conflict and or confusion. VIII. Initial Contact — if a broker/salesperson in your firm is mentioned: 1. Do not review other brokers printed materials without the marketing broker’s permission and refrain from approaching inhouse agents unsolicited about properties that they have . If not active: “I’ll speak with ________ and one of us will get back to you. Contact with Potential Clients A. Whom Can You Call? Anyone who is not currently known to be working with a broker/salesperson in the same firm — at your discretion — no one who recently worked with a broker / salesperson in your firm. the brokers involved should immediately bring it to the attention of the other to “politely discuss” each side before going to management. Hot Off the Press / Marketing Materials A. If actively working together: “You’re in good hands. C. Different Decision-Makers — do as the code says. tell them you “stumbled on” their deal and ask if you can be of any assistance. C. Should any information be relayed to another broker within your office in or out of the specialty group meetings and the receiving broker learns differently about the information it should be relayed immediately to the broker providing the information and all questions should be directed to the information source before going direct to the client. IX.” 4.” 2.Million Dollar Broker 111 B. Recommendation: Talk to the salesperson.

unless your counterpart gives you permission. C. E. Full Commission and Bonus Commissions Don’t ask for them and don’t encourage your clients to give them unless absolutely necessary to get the project leased — don’t accept them when offered to you unless they are being formally offered to the entire community. Often time’s agents are given permission to discreetly or even exclusively market an asset.” X. leasing broker) is being marketed by another broker within the company. without the leasing agents involvement and our company comes off as being uncoordinated in our marketing efforts as a prospect might ask the leasing agent about a property he thinks the agent would naturally know is being offered for sale or lease. In this case.e. it’s the property of your trainer. B. . please do not approach the marketing broker until such times as he sends out an announcement encouraging others to participate in the process. Promotion of Fellow Salespeople Always promote a broker/salesperson in your firm for listings and tenant representation assignments! D. out of respect to the agent that generated the opportunity. if you uncover a deal or create a relationship. An exception might be a situation where a project handled by another broker (i. Runner / Trainer Relationship As a “Runner”. Direct Contact with Other’s Clients Don’t contact your counterparts’ clients in a deal. Dissemination of Information Don’t mail information to other people’s clients. However. B. the discovering agent should first approach the marketing broker and then management if the situation is “murky.112 Scott W Johnstone not yet openly marketed (aka “surfing the copy machine for leads”). Other Issues A.

H. and be accused by the old partner of cheating them. they created the opportunity by leasing it. . I. G. you should always ask. after nothing has happened. Soliciting listed Buildings The real estate code of ethics strongly prohibits soliciting already listed buildings. work on the deal at your risk without potential for payment.. K. You may screw up their deal and they should have a chance at the listing — unless. Past Discussions on Opportunities Comments like “let’s go after…” or “let’s work on. Plagiarism Always respect the creator of unique marketing tools. Owner – Tenant Conflict If a salesperson is representing a tenant on relocation.” should be documented or have a formal/verbal agreement unless both parties actively pursue the deal with regular discussion. one party will be reintroduced to the deal by another salesperson. Ask permission to copy something exclusive to them — especially if they were your trainer. you have a relationship with the landlord on the building and your firm does not list it. Too often. don’t call the landlord to solicit the listing without asking the salesperson first.Million Dollar Broker 113 F. J. especially if a fellow broker/salesperson is involved. Appraiser Calls Always support a fellow salesperson if an appraiser calls on one of their deals. Renegotiation of Lease Extensions and Options If a contract exists. of course.. Investment – Lease Scoop Never try to scoop a salesperson leasing a building by trying to sell it as an investment before they can — after all. work on the deal with them. L.

which is always a good idea first. Respect an open environment — it’s a privilege. and they have earned it • Besides. N. Administrative Support Desks If you oversee something regarding someone else’s business while at your administrative support’s desk — erase it from memory. Office Talk You can’t work on anything you overhear that wasn’t addressed to you. R. Seniority Respect the senior salespeople. you can’t call the owner regarding a sale. S. Exclusivity of Clients Listing to Listing This is a gray area — always honor current relationship and be fair to your fellow salespeople — use the relationship to your advantage T. Simultaneous Pursuit of a Deal . Unless you have a solidified relationship — or have had a meeting with the principal — you speak at your own risk. O. Listings If a salesperson has a lease listing. Q. P. even though they may be no older than you • It takes a lot to be successful here in the long run. Verbal Registration Don’t discuss a deal in hopes of getting others to back off. . they have probably helped you along the way and you’ll be senior yourself one day. Sign Calls Partners on the listing referenced share all sign call deals.Options • Team up • Continue until one party gets control — fairly • See your manager —.114 Scott W Johnstone M.

Million Dollar Broker 115 U. . Brokerage Team Restructuring If multiple salespeople from the same firm are working together on the same account. and one or more salespeople desire to either add a different salesperson. or otherwise restructure the current team. In no event shall a salesperson initiate any discussion with a client unless and until it has been resolved as outlined above. the salesperson initiating the change shall initially discuss the desired change with the current team and then if necessary with management.

sublease. lease amendment. brokers.116 Scott W Johnstone Appendix B: Example Document Exclusive Tenant Representation Letter January 1. Bridge Commercial Properties shall be protected on all properties submitted. Newport Beach. or set of escrow instructions is fully executed. CA 92660 John Doe CEO ACME Widgit Corporation 1000 Commonwealth Blvd. Bridge Commercial Properties will make all efforts to present to ACME Widget Company all pertinent information in detail as required throughout the decision making and transaction process. developers. CA 92660 949. Ste 1100 Newport Beach.555.555. In such event.5555 main 949. or purchase of a facility. Bridge Commercial Properties is authorized to negotiate on behalf of Acme Widget Company with owners. renewal.5555 fax RE: ACME Widget Company Representation: This letter confirms the agreement between ACME Widget Company and Bridge Commercial Properties as its sole and exclusive agent to aid in a contemplated relocation. This appointment shall become effective immediately and shall extend until a lease. 2011 Scott Johnstone Bridge Commercial Properties 4695 MacArthur Blvd. It is to be understood that either party upon thirty (30) days written notice may cancel this agreement. . and all interested parties to explore real estate opportunities that meet ACME Widget Company.

Million Dollar Broker 117 All documentation resulting from Bridge Commercial Properties efforts and negotiations is subject to ultimate approval by ACME Widget Company. or subleased by ACME Widget Company shall require that the owner. Commissions and/or fees to which Bridge Commercial Properties is entitled shall be paid by the owner. AGREED AND ACCEPTED: ACME Widget Company Bridge Commercial Properties By: ______________________ By _______________________ . or sub-Landlord compensate Bridge Commercial Properties with a market commission. landlord. or sub-landlord of the property purchased. landlord. leased.

5555 main 949.000 rentable square feet. Tenant shall be entitled to independently verify all measurements.BridgeCommercialProperties. Bridge Commercial Properties has been authorized to present the following Request for Proposal to Any Landlord (“Landlord”). The terms and conditions Tenant requests Landlord to respond to are as follows: 1.555. Newport Beach. Ste 1100 Newport Beach.5555 fax S@BridgeCommercialProperties. whereby Tenant would consider leasing space at 111 #1 Street.com RE: Scott W Johnstone President Bridge Commercial Properties 4695 MacArthur Court. All measurements.com REQUEST FOR PROPOSAL TO LEASE 111 #1 STREET. CA Approximately 50.555. Suite 100 Newport Beach. are to be determined in accordance with the standards set forth in ANSI Z65. CA (the “Project”). NEWPORT BEACH. CA Dear Tim: On behalf of The Acme Corporation. 2011 John Doe Any Brokerage Company USA 12345 Any Street. (“Tenant”). CA 92660 949. Newport Beach.com www. CA 92660 VIA EMAIL: johndoe@anybroker.1-1996. 2. 3. including those described above. Project: Premises: Square Footage: 111 Plaza 111 #1 Street. .118 Scott W Johnstone Appendix C: Example Document – Office – Request for Proposal-RFP January 1. as promulgated by the Building Owners and Managers Association (“BOMA Standard”).

electrical / mechanical / plumbing / engineering drawings. but shall not be limited to. programming. 9. telecommunications and computer cabling. Tenant requests that Landlord provide written information as it relates to the condition of the core and shell. but not limited to. construction drawings. 5. and equipment (FF&E). all profit. construction. 2011. cost for liabilities incurred by Tenant including but not limited to additional rent and/or penalties resulting from such delay.Million Dollar Broker 4. approval fees. The tenant improvement costs may include. Please propose the basic monthly rental rate during the lease term on a full service gross basis. Landlord shall deliver a Certificate of Occupancy to Tenant and grant a period of two (2) weeks prior occupancy to fixturize the Premises which would include. Delayed Occupancy Resulting from Landlord Delays: 7. fixtures. Core and Shell Description: . 119 The Lease Term shall commence upon substantial completion of the Tenant Improvements (as described below) and after a final certificate of occupancy has been issued with respect thereto. subject to a punch list. Landlord shall indemnify and hold Tenant harmless against any damages. the following: space planning. construction administration. overhead and general conditions. Rental Rate: Tenant Improvements: 10. Following completion of the Tenant Improvements. Early Occupancy: 8. installation of furniture systems. pricing drawings. anticipated to be July 1. design development drawings. Tenant requests that Landlord provide Tenant with a tenant improvement allowance sufficient to cover all costs associated with the build-out. reimbursables. Lease Term: Lease Commencement Date: Please provide a ten (10) year option. In the event the Tenant Improvements are not substantially complete for move in by Tenant on or before sixty (60) days from the Target Commencement Date. 6. city permits.

Option to Renew: Scott W Johnstone Tenant will require Landlord provide an allowance. So long as Tenant is not in default under the terms of the lease and with not more than nine (9) months and no less than six (6) months prior written notice. The base year of the lease for the purposes of calculation shall be 2012. The rent during the option term shall be 95% of the then fair market value for similar type properties in the general market area. The base year shall be grossed up to reflect 100% occupancy of the Project and any increases in operating expenses shall be capped on a noncumulative. Landlord shall provide in reasonable detail its calculation of Tenant’s pro rata share of project operating expenses by setting forth the ratio of the Premises. 13. Telephone/ Computer Cabling Costs. Tenant will require a list of operating expense exclusions to be incorporated into the lease agreement. Audit by Tenant: Landlord shall provide to Tenant in substantial detail each year. Operating Expenses: 14. Landlord shall also provide the average building occupancy for such year. Move Costs. Tenant shall have the option to renew the lease for two (2) additional periods of five (5) years each. Landlord shall show by account the total operating costs for the building and all adjustments corresponding to the requirements as set forth herein. And FF&E: 12. telephone/computer cabling costs. ratable square feet to project’s rentable square feet. Tenant shall pay its pro rata share of operation expenses and real estate taxes (“Operating Expenses”) associated with the Premises. calculations performed to determine the Project Operating Expenses in accordance with the applicable provisions of the lease. In addition. which will be used to assist Tenant with its move costs. non-compounded basis at three percent (3%) per year. and FF&E. in excess of the base year amount.120 11. .

for the use of Tenant and its clients and employees and other agents. 16. at its own cost and expense (without requiring that Tenant pay Landlord’s cost of complying with this provision) to audit or inspect Landlord’s detailed records each year with respect to the project operating expenses as well as other additional rent payable by Tenant pursuant to the lease for any lease year (not to exceed one time per year). All Tenant’s parking spaces shall be available free of charge and accessible 24 hours per day. consistently applied with respect to all project operating expenses for such lease year.000) rentable square feet leased. Relocation: 17. 15. First Right of Refusal: Tenant shall have the First Right of Refusal to lease any space that may become available in the building. When any space becomes available and Landlord has a bona fide interested third party.Million Dollar Broker 121 Tenant shall have the right. Landlord shall utilize. and cost utilized. every day of the year for the entire term of the Lease and any extensions thereafter. Landlord shall have no right to relocate Tenant’s Premises during the Lease Term. Expansion Space terms and conditions shall be co-terminus and consistent with the terms and conditions originally negotiated for the initial Premises incorporating a new base year for the purposes of Operating Expenses calculation. accounting records and procedures for each lease year conforming to generally accepted accounting principles. seven (7) days per week. a parking ratio of four (4) parking spaces per one thousand (1. Parking: . then landlord shall provide Tenant with written notification of such availability and Tenant shall have ten (10) business days to elect to expand into said Expansion Space. Tenant shall have.

15 per usable square foot. or about the Premises.m. After hours HVAC shall be provided at Landlord’s actual cost. The location of such equipment shall be in a mutually agreed upon location with specifications being provided by Tenant for Landlord’s reasonable review and approval. satellite dishes for Tenant’s exclusive use. Tenant’s standard operating hours during the term of the lease shall be Monday through Friday. Landlord shall have the express responsibility to advise Tenant of any toxic materials or hazardous wastes. maintenance. 6:00 a. including electricity. Ventilation & Air Conditioning (“HVAC”): 22. In the event your building is selected as a finalist. plumbing.m. Heating. 19. Tenant will require that Landlord compensate an architect of Tenant’s choice to complete a space program. Toxic Materials: . space plan and design development drawings at the cost of $0. Roof Rights: Scott W Johnstone Tenant shall have the exclusive rights to install and maintain on the roof of the building. space planning.. and construction drawings as well as coordinating all electrical. There shall be no construction administration fee of any kind. Architects/Space Planning: 20. Tenant’s architect shall complete all space programming. which are located in. and engineering drawings. 8:00 a. if any. to 8:00 p. to 1:00 p. caused by the use or installation of said satellite. and Saturday. Landlord shall not charge Tenant for said rights and Tenant shall be responsible for the installation.m. mechanical.m. insurance and removal of said satellite. including the damage to the building.122 18. Construction Administration Fee: 21.

In addition to suite entry and directory board signage. Americans with Disabilities Act: 27. Landlord shall maintain full replacement “all risk” property insurance on the Project with full waiver of subrogation and shall indemnify Tenant on the same terms as Tenant may agree to indemnify Landlord. conditioned or delayed. Non-Disturbance Agreement: 123 Landlord shall provide Tenant with a nondisturbance agreement reasonably acceptable to Tenant from any superior mortgagee of Landlord now and when that may come into existence at any time prior to the expiration of the term of the lease as a condition precedent to any obligation of Tenant to subordinate its interest to any such person.Million Dollar Broker 23. Insurance and Indemnity: 25. but not he obligation. at Landlord’s sole cost and expense. shall operate. Property management and Project Defects: 26. Tenant will require the right. Landlord. These costs shall not be part of the Tenant Improvement Allowance or contribute to increasing the operating expenses. 24. Sublease/Assignment: . Signage: 28. Landlord shall be 100% responsible for repair of any and all defects in the Project and Premises over the lease term. which shall not be unreasonably withheld. and maintain the Project and common areas in first class order. condition and repair throughout the lease term. to install building top and monument signage at the Project. Tenant shall have the right to sublease or assign all or a portion of the space to any subsidiary company without Landlord’s approval and all other subleases or assignments with Landlord’s approval. All costs related to compliance with the applicable provisions of the Americans with Disabilities Act of 1990 (ADA) shall be Landlord’s cost. manage.

The parties intend that neither shall have any contractual obligations to the other with respect to the matters referred herein unless and until a definitive agreement has been fully executed and delivered by the parties. liability. The parties agree that this Proposal is not intended . including attorneys’ fees. Holding Over 31. Security Deposit: Scott W Johnstone Tenant shall not be required to pay a security deposit. and two percent (2%) for the second five year of the full service gross lease value by Landlord as follows: One hundred percent (100%) is payable upon lease execution. In the Agreement. 30. Dual Agency Disclosure: This Proposal is intended solely as a preliminary expression of general intentions and is to be used for discussion purposes only. Commission Agreement: 32. Both parties are hereby notified of the Dual Agency and agree hereto. which represents both the Lessor and Lessee. and reasonable expenses. In the event Tenant remains an occupant of the Premises beyond the expiration of the lease term. Bridge Commercial Properties is representing the Tenant in this possible transaction. incurred by virtue of any action on its part giving rise to a breach of such warranty or a claim for such other fees. Lessor will be responsible for commission due to Bridge Commercial Properties pursuant to a separate written agreement. in connection with the proposed transaction and will agree to indemnify the other party for any other loss. Lessor and Lessee will each represent and warrant to the other that it has engaged no broker or intermediary other than Bridge Commercial Properties.124 29. and shall be paid a standard full commission of four percent (4%) for the first five (5) years. Tenant will agree to pay Landlord a hold over rent in the amount equal to 150% of the then rent payable.

Scott W. and look forward to receiving your response. either party may (1) propose different terms from those summarized herein.com CA License # 00950979 cc: Robert Rich. Prior to delivery of a definitive executed agreement. please feel free to contact either of us at your convenience. including without limitation. and without any liability to the other party. Johnstone Senior Vice President (949) 555-5555 s@BridgeCommercialProperties. any obligation to negotiate in good faith or in any way other than at arm’s length. 2011. (2) enter into negotiations with other parties. We appreciate your assistance and cooperation. This Proposal shall remain valid until January 10. and/or (3) unilaterally terminate all negotiations with the other party hereto. CEO.Million Dollar Broker 125 to create any agreement or obligation by either party to negotiate a definitive lease/purchase and sale agreement and imposes no duty whatsoever on either party to continue negotiations. Acme Corporation . If you have any questions. Regards.

Such items may leak or otherwise be released. Real estate agents have no expertise in the detection or correction or hazardous or undesirable items. Grubb & Ellis Company is not qualified to assist you in this matter or provide you with other legal or tax advice. and make proper disclosures. and asbestos has been used in components such as fire-proofing. Owners and tenants should consult attorneys and qualified design professionals of their choice for information regarding these matters. co-owners. minerals. water building components. floor tiles. they may include in transaction documents regarding the Property. above or below-ground containers or elsewhere in areas that may or may not be accessible or noticeable. roofing.. chemicals. purchasers and tenants. Such items may leak or otherwise be elsewhere in areas that may or may not be accessible or noticeable. . mold) or radioactive items (including electrical and magnetic fields) in soils. but not limited to. if any. changes may be required now. Consult your attorney regarding this matter. It is the responsibility of the Seller/Lessor and the Buyer/Tenant to retain qualified experts to detect and correct such maters and to consult with legal counsel of their choice to determine what provisions. hydrocarbons. The real estate brokers in this transaction are not qualified to advise you as to what. linoleum. Real estate brokers cannot determine which attorneys or design professionals have the appropriate expertise in this area. or biological hazards (including. HAZARDOUS MATERIALS AND TAX DISCLOSURE The Americans with Disabilities Act is intended to make many business establishments equally accessible to persons with a variety of disabilities.7 and other California laws. Buyers/Tenants have similar disclosure obligations. to disclose reports and surveys regarding asbestos to certain persons. modifications to real property may be required. State and local laws also may mandate changes. Sellers/Lessors are required under California Health and Safety Code Section 25915 et seq.126 EXHIBIT A Scott W Johnstone CALIFORNIA SALE/LEASE AMERICANS WITH DISABILITIES ACT. contractors. air duct installation. spray-on and tile acoustical materials. including their employees. if any. Expert inspections are necessary. some transformers and other electrical components contain PCBs. Sellers/Lessors and Buyers/Tenants have additional hazardous materials disclosure responsibilities to each other under California Health and safety Code Section 25359. Due to prior uses of the Property or in the area. Various construction materials may contain items that have been or may be in the future be determined to be hazardous (toxic) or undesirable and may need to be specifically treated/handled or removed. dry wall and plaster. the Property may have hazardous or undesirable metals (including lead-based paint). present and/ or future owners and/or operators. or in the future. Current or future laws may require clean up by pas. For example. heating and cooling systems.

Generally. Note that depending upon the structure of the transaction. if the last known address of the seller is outside of California or if a financial intermediary is used. the tax withholding liability could exceed the net cash proceeds to be paid to the seller at closing. Real estate brokers are not qualified to give legal or tax advice or to determine whether any other person is properly qualified to provide legal or tax advice. lease and other transactions can have local. Internal Revenue Cod Section 1445 requires that all buyers of an interest in any real property located in the United States must withhold and pay over to the Internal Revenue Service (IRS) an amount equal to ten percent (10%) of the gross sales price within ten (10) days of the date of the sale unless the buyer can adequately establish that the seller was not a foreigner. California poses an additional withholding requirement equal to three and one-third percent (3 1/3%) of the gross sales price not only on foreign sellers but also out of state sellers and sellers leaving the state if the sale price exceeds $100.000. SELLOR/LESSOR By: __________________________ Title: _________________________ Date: _________________________ BUYER/TENANT By: ___________________________ Title: _________________________ Date: _________________________ . withholding is required if the sales proceeds are distributed outside of California. generally by having the seller sign a Non-Foreign Seller Certificate. In the event of a sale. state and federal tax consequences for the seller/lessor and/or buyer/tenant. Consult your tax and legal advisor.Million Dollar Broker 127 Sale.

com www.5555 fax S@BridgeCommercialProperties.com Request For Proposal to Lease 111 #1 Street. 1. CA 92660 VIA EMAIL: johndoe@ anybroker.555. Sixty-Six (66) months.000 rentable square feet located in Suite 100 of the building (“premises”). 2011 John Doe Any Brokerage Company USA 12345 Any Street. CA 92660 949.com Delivered by email: johndoe@anybroker. Moving Allowance: . Building: 3. Ste 1100 Newport Beach.BridgeCommercialProperties.555. Suite 100 Newport Beach. we have been authorized to present this best and final lease counter proposal for your consideration.5555 main 949. Premises: Acme Corporation 111 #1 Street. Newport Beach. Newport Beach. Term: 5. 4. Commencement: 6. Suite 100 Newport Beach. Final square footage to be determined following approval of space plans. CA Dear John: On behalf of Acme Corporation (“Tenant”). California 92660 Approximately 10. Tenant: 2.128 Scott W Johnstone Appendix D: Example Document – Office Lease Letter of Intent-LOI January 1. The following sets forth a summary of the terms and conditions under which the tenant would enter into a lease for the above-referenced property.com RE: Scott W Johnstone President Bridge Commercial Properties 4695 MacArthur Court. Tenant shall receive a two-dollar ($2) per rentable square foot moving allowance. Upon substantial completion of tenant improvements. 2011 Jan 1.

A cap of four percent (4%) shall be instituted on annual operating expense increases over and above the prior year’s billing. insurance.20 $2.90 $2. . Tenant shall be excused from operating expense escalations for the initial twelve (12) months of the lease term. of which. The base year of the lease for the purposes of calculation shall be 2012. The four percent (4%) shall be based upon the total operating expenses for the project.90 $1. Rent shall be calculated on a full service gross basis as follows: Month(s) 1 2-11 12 13-24 25-36 37-48 49-60 61-66 Monthly rent per square foot $1. Operating expenses.80 $1. Operating Expenses: Tenant shall pay its proportionate share of operating expenses and real estate taxes (“operating expenses”) associated with the premises. and utilities shall be calculated with the standard accounting practices based on the building being ninety-five percent (95%) occupied.Million Dollar Broker 7. in excess of the base year amount. Tenant shall have industry standard audit rights of landlord’s operating expense accounting. Early Access: 129 Tenant shall be granted access to the premises up to fourteen (14) days prior to the commencement of the lease term free of all charges for the purposes of installing phone/data lines and furniture.10 $2. Base Rental Rate: 9.00 $2. tenant shall pay its pro-rata share. taxes.30 8.80 $0. The term “proportionate share” shall be defined through an equation in which the numerator shall be the number of rentable square feet of floor area in the premises and the denominator of which shall be the number of rentable square feet of all rentable square footage within the project.

M. if any profits. Tenant Improvements: Scott W Johnstone Landlord shall provide a tenant improvement allowance equal to $30. Landlord will have no recapture rights. . on Saturdays. to 6:00 P. state.130 10. Monday through Friday. excluding local.M. Heating. Tenant.M.00 per rentable square foot or turnkey. FF&E. building standard directory and suite signage for tenant. and federal holidays (to be defined in the lease). and 8:00 A. Tenant shall have the right to sublet or assign to a parent or.000) rentable square feet including two (2) reserved stalls free for the term.M. 11. Assignment & Subletting: 14.M. on Saturdays.. If the tenant improvement allowance is less than $30. Landlord shall provide. and 6:00 P. and tenant will be allowed to retain all. The current afterhours HVAC charges per the building are sixty-five dollars ($65. Tenant shall be entitled to sublease any or all of the premises. Security Deposit: 16.M. Please describe afterhours operating costs.00 per square foot.. shall pay landlord the prevailing after hours HVAC charges in excess of normal building Hours. Any consent required for assignment of subletting shall not be unreasonably withheld or delayed by landlord. landlord should provide at tenants cost monument signage for the project. Parking: 13. at tenant’s sole cost and expense. Access: Landlord shall waive the security deposit. at landlord’s cost. subsidiary or affiliate without landlord consent.M.M. The normal operating hours for the building HVAC shall be Monday through Friday from 8:00 A. – 1:00 P. Ventilating & Air Conditioning: 15. Tenant Signage: 12.-1:00 P. and from 8:00 A. and parking. tenant shall have the right to apply balance to offset rent. Building operating hours shall be between 8:00 A. whichever is greater. Additionally.00) per hour. Tenant shall be allotted four (4) spaces per one thousand (1. Parking shall be free for the term.

2011. As representatives for Acme Corporation. Sincerely. 18.m. and neither party shall be obligated until both parties have executed said Lease. These costs shall not be a part of any tenant improvement allowance or contribute to increasing operating expenses.Million Dollar Broker 131 17. This proposal shall remain open until 5:00 p.. Scott Johnstone President Bridge Commercial Properties CA Broker # 00950979 AGREED AND ACCEPTED: Landlord: By: _____________________ Acme Corporation: By: _____________________ Title: ____________________ Title: ____________________ Date: ____________________ Date: ____________________ . Jan 10. landlord shall pay Bridge Commercial Properties a commission equal to four percent (4%) of the total lease consideration and any customary leasing bonus due upon lease execution. 19. Only a fully executed lease agreement shall constitute a lease for the premises. Brokerage Commission: This proposal is not legally binding and shall not be construed as an actual lease. Americans with Disabilities Act Compliance: All costs related to compliance with the applicable provisions of the Americans with Disabilities Act of 1990 (ADA) shall be landlord’s cost. Hazardous & Toxic Landlord shall have the express responsibility to Materials: advise tenant of any toxic materials or hazardous wastes that are located in or about the premises.

Such items may leak or otherwise be released. heating. minerals. or may in the future be. Current or future laws may require clean up by past. State and local laws also may mandate changes. modifications to real property may be required. building components. HAZARDOUS MATERIALS AND TAX DISCLOSURE The Americans With Disabilities Act is intended to make many business establishments equally accessible to persons with a variety of disabilities. but not limited to. or in the future. hydrocarbons. if any. changes may be required now. dry wall. chemicals. or elsewhere in areas that may or may not be accessible or noticeable. Due to prior or current uses of the property or in the area. Owners and tenants should consult the attorneys and qualified design professionals of their choice for information regarding these matters. above or below ground containers. For example. spray-on and tile acoustical materials. Expert inspections are necessary. It is the responsibility of the seller/ lessor and buyer/tenant to retain qualified experts to detect and correct such matters and to consult with legal counsel of their choice to . air duct insulation. and cooling systems. mold) or radioactive items (including electrical and magnetic fields) in soil. or biological hazards (including. floor tiles. The real estate brokers in this transaction are not qualified to advise you as to what. Real estate brokers cannot determine which attorneys or design professionals have the appropriate expertise in this area. determined to be hazardous (toxic) or undesirable and may need to be specifically treated/handled or removed. Real estate agents have no expertise in the detection or correction of hazardous or undesirable items. roofing. and asbestos has been used in components such as fireproofing. the property may have hazardous or undesirable metals (including lead based paint). present and/or future owners and/or operators. and plaster. linoleum. water. However. some transformers and other electrical components contain PCBs.132 Scott W Johnstone CALIFORNIA SALE/LEASE AMERICANS WITH DISABILITIES ACT. Various construction materials may contain items that have been.

.000. lease and other transactions can have local. Section 25915 et seq. if the last known address of the seller is outside of California or if a financial intermediary is used. to disclose reports and surveys regarding asbestos to certain persons. Consult your attorney regarding this matter. including their employees. Internal Revenue Cod Section 1445 requires that all buyers of an interest in any real property located in the United States must withhold and pay over to the Internal Revenue Service (IRS) an amount equal to ten percent (10%) of the gross sales price within ten (10) days of the date of the sale unless the buyer can adequately establish that the seller was not a foreigner. Sale. they may include in transaction documents regarding the property. Consult your tax and legal advisor. California poses an additional withholding requirement equal to three and one. Sellers/lessors and buyers/tenants have additional hazardous materials disclosure responsibilities to each other under California Health and Safety Code Section 25359. and make proper disclosures. withholding is required if the sales proceeds are distributed outside of California. purchasers and tenants. Generally. contractors. Buyers/ tenants have similar disclosure obligations.7 and other California laws. Sellers/lessors are required under California Health and Safety Code. In the event of a sale. generally by having the seller sign a Non-Foreign Seller Certificate. if any. the tax withholding liability could exceed the net cash proceeds to be paid to the seller at closing.third percent (3 1/3%) of the gross sales price not only on foreign sellers but also out of state sellers and sellers leaving the state if the sale price exceeds $100. co-owners. Real estate brokers are not qualified to give legal or tax advice or to determine whether any other person is properly qualified to provide legal or tax advice. state and federal tax consequences for the seller/lessor and/or buyer/ tenant.Million Dollar Broker 133 determine what provisions. Grubb & Ellis Company is not qualified to assist you in this matter or provide you with other legal or tax advice. Note that depending upon the structure of the transaction.

134 SELLER/LESSOR By: _____________________ Scott W Johnstone BUYER/TENANT By: _____________________ Title: ____________________ Title: ____________________ Date: ____________________ Date: ____________________ Property Address: ___________________________________ .

CA.com www. The Purchase Price will be paid as follows: 2.000.5555 fax S@BridgeCommercialProperties. CA 92660 949.000).Million Dollar Broker 135 Appendix E: Example Document – Office User – Purchase. Purchase Price: 3. This Letter of Intent (“Letter”) to Purchase represents the basic terms and conditions under which John Smith. 2011 John Doe Any Brokerage Company USA 12345 Any Street.555. Suite 100 Newport Beach. Ste 1100 Newport Beach. (“Buyer”) would purchase the property referenced in Paragraph 1 below (the “Property”) from Condominium Developer (the “Seller”). 1.000 gross square feet in suite 110 located at 100 Office Condominium Center Drive. The purchase price (the “Purchase Price”) shall be One Million Dollars 00/100 Dollars ($1. CA 92660 Dear Nick. Letter of Intent-LOI January 1.com Scott W Johnstone President Bridge Commercial Properties 4695 MacArthur Court. CA 92660 VIA EMAIL: johndoe@anybroker. Newport Beach. Deposits/Payment of Purchase Price: .555.5555 main 949.com Re: Office Condominium Center. Suite 100 Newport Beach. The Property to be sold is approximately 2. which equals $500 per square foot. The Property: Office Condominium Center is a two story state of the art Office Building.BridgeCommercialProperties.

000) (the “First Deposit”). Escrow holder shall invest the first deposit in an interest bearing account selected by Buyer with all interest accruing credited to the Purchase Price upon the close of Escrow. (b) Upon expiration of the Contingency Period. The 2nd Deposit shall become liquidated damages and non.000. The First Deposit shall be invested by Escrow Holder in an interest bearing account selected by Buyer with all interest accruing credited to the Purchase Price upon the close of Escrow. (c) The balance of the Purchase Price shall be paid through Escrow in cash or by cashiers or certified check upon close of Escrow. Buyer will deposit with Escrow Holder the sum of One Hundred Thousand Dollars ($100.00) (the “2nd Deposit”). . The 2nd Deposit shall be invested by Escrow Holder in an interest bearing account selected by Buyer with all interest accruing credited to the Purchase Price upon the close of Escrow.refundable to Buyer and released to Seller upon its deposit into Escrow. Buyer will deposit with Escrow Holder the sum of One Hundred Thousand Dollars ($100. The First Deposit shall become liquidated damages and non-refundable to Buyer and released to Seller upon the expiration of the Inspection Period which shall be thirty (30) days from the opening of escrow. The First Deposit shall be applicable in full towards the Purchase Price. The 2nd Deposit shall be applicable in full towards the Purchase Price.136 Scott W Johnstone (a) Upon the opening of Escrow.

prior to the expiration of the Inspection Period. including the CC&R’s encumbering the project. Upon Seller’s request. promptly to Buyer. If Buyer’s inspections reveal any condition or information which is not satisfactory to Buyer. Purchase and Sale Agreement: 137 Seller shall deliver the Agreement to Buyer immediately after mutual execution of this Letter.Million Dollar Broker 4. Inspection Period: 6. Seller will afford Buyer reasonable access to the Property in order for Buyer to conduct inspections of a scope satisfactory to Buyer. to be at Buyer’s sole discretion. If Buyer is unable to secure said loan. Buyer shall have a total of Thirty (30) days from receipt of Due Diligence materials to conduct its due diligence investigation and waive contingencies. and any interest earned thereon. Buyer may give written notice to Seller that it elects not to purchase the Property. promptly to Buyer. If Buyer fails to notify Seller that Buyer elects not to purchase the Property by the end of the Inspection Period. the Title Company shall return the Deposit. then Buyer shall be deemed to have approved the condition of the Property and the Deposit shall become non-refundable and pass through to the Seller. Buyer shall promptly provide requested information of equity and financing sources to Seller for review and approval. Seller shall make available to the Buyer all documents and records in its possession that are reasonably required for Buyer to conduct its due diligence investigation. Financing Contingency: . Buyer and Seller shall enter into an Agreement within five (5) days of Buyers receipt of document. Buyer shall have Thirty (30) days from mutual execution of the Agreement to secure a loan commitment for a loan on market terms and conditions reasonably satisfactory to Buyer and waive the Financing Contingency. 5. and the Escrow Company shall return the Deposit. and any interest earned thereon.

Condition of the Building: 10. Each of the parties will pay one-half of the escrow fees. Pro-rations: . Each party shall be responsible for its own attorney’s fees and other costs associated with due diligence and completing the sale. Finished lobby and hallways Two elevators Two bathrooms on each floor – total of four (4) Electrical room with gears HVAC packages installed on the roof. The Buyer shall pay for the cost in excess of the CLTA policy to be provided by the Seller if Buyer desires endorsements or an ALTA policy. but not distributed Touch screen electronic directory board 9.138 7. express or implied. Closing Costs: Scott W Johnstone The close of escrow shall occur Sixty (60) days after the opening of escrow. with no representations or warranties by Seller. All pro-rations will be as of the Closing Date. Building shall be delivered in a warm shell condition to include: 1. Where Is” condition. 3. Failure to obtain said insurance or other matters required by the Buyer’s Lender to close escrow might constitute a default under the terms and conditions of the Agreement. 4. 11. Where Is: The property is to be purchased in an “As-Is. Post-Closing reconciliations will be made as described in the Agreement. Closing: 8. 2. 6. 5. As-Is.

Commission: Seller shall pay a commission in accordance with the Exclusive Listing Agreement with Bridge Commercial Properties. This obligation shall survive expiration or termination of this Letter. and reasonable expenses. Seller and Buyer will each represent and warrant to the other that it has engaged no broker or intermediary other than Bridge Commercial Properties. 13. Confidentiality: 15. in connection with the proposed transaction and will agree to indemnify the other party for any other loss. which shall be paid through escrow at the close of escrow. Hazardous Waste/ ADA: 14. which addresses Federal Law known as the Americans with Disabilities Act and disclosure requirements regarding hazardous waste materials. Please refer to the attached Exhibit A. Seller will be responsible for commission due to Bridge Commercial Properties pursuant to a separate written agreement. if any. Agency Disclosure: 139 In the Agreement. incurred by virtue of any action on its part giving rise to a breach of such warranty or a claim for such other fees. except for disclosure to persons assisting Buyer with this transaction and Buyer’s lender. . liability. including attorneys’ fees.Million Dollar Broker 12. Buyer shall keep confidential all information regarding the Property made available by Seller or Seller’s agent(s). and except as may be required by law. which represents the both the Seller and the Buyer.

Buyer and Seller will each represent and warrant to the other that it has engaged no broker or intermediary other than Bridge Commercial Properties. liability. and reasonable expenses. if any. as well as the condition and/or legality of the property. Dual Agency Disclosure: Please evidence your agreement that the foregoing represents an accurate statement of our present mutual intent by signing and returning a copy of this Letter to the undersigned no later than 5:00 PM. the soil. thereof. in connection with the proposed transaction and will agree to indemnify the other party for any other loss. 2010. Seller will be responsible for commission due to Bridge Commercial Properties pursuant to a separate written agreement. Broker Duties: Scott W Johnstone Buyer hereby acknowledges that they have been and are now advised by the Broker(s) to consult and retain their own experts to advise and represent them concerning the legal and income tax effects of this agreement. .140 16. the improvements and equipment therein. the condition of title thereto. and the existing or contemplated financing thereof and that the Broker(s) is/are not to be responsible for pursuing the investigation of any such matters unless expressly otherwise agreed to in writing by Broker(s) and Buyer or Seller. the intended and/or permitted usage thereof. Both parties are hereby notified of the Dual Agency and agree hereto. In the Agreement. the existence and nature of tenancies therein. any other outstanding agreements. which represents both the Buyer and Seller. the environmental aspects thereof. January 10. the survey thereof. 17. In the event this Letter has not been fully executed and returned to the undersigned on or before the above date and time it shall automatically expire and become null and void. incurred by virtue of any action on its part giving rise to a breach of such warranty or a claim for such other fees. including attorneys’ fees.

State and local laws also may mandate changes.com www. Scott W. modifications to real property may be required. The parties acknowledge that this proposal does not include all of the terms of the purchase agreement.BridgeCommercialProperties.com License #00950979 AGREED AND ACCEPTED: Buyer: John Smith Seller: Condominium Developer By: ________________________ By: ________________________ Exhibit A CALIFORNIA SALE/LEASE AMERICANS WITH DISABILITIES ACT. Respectfully. and is not intended to. changes may be required now. AND TAX DISCLOSURE The Americans With Disabilities Act is intended to make many business establishments equally accessible to persons with a variety of disabilities. The real estate brokers in this transaction are not qualified to advise you as to what. HAZARDOUS MATERIALS. if any. Johnstone President (949) 555-5555 S@BridgeCommercialProperties.Million Dollar Broker 141 Buyer and Seller acknowledge that this letter does not. constitute a binding agreement. or in the future. No party will be otherwise obligated or bound unless and until both parties have entered into the formal purchase agreement. .

chemicals. Expert inspections are necessary. the Property may have hazardous or undesirable metals (including lead-based paint). including their employees. and make proper disclosures. Note that depending upon the structure of the transaction. present and/ or future owners and/or operators. Sellers/Lessors are required under California Health and Safety Code Section 25915 et seq. and asbestos has been used in components such as fire-proofing. air duct installation. Such items may leak or otherwise be released. Grubb & Ellis Company is not qualified to assist you in this matter or provide you with other legal or tax advice. some transformers and other electrical components contain PCBs. Real estate brokers cannot determine which attorneys or design professionals have the appropriate expertise in this area. Consult your attorney regarding this matter. spray-on and tile acoustical materials. Sale. minerals. mold) or radioactive items (including electrical and magnetic fields) in soils. Due to prior uses of the Property or in the area. California poses an additional withholding requirement equal to three .. to disclose reports and surveys regarding asbestos to certain persons. if any. above or below-ground containers or elsewhere in areas that may or may not be accessible or noticeable. heating and cooling systems. contractors.7 and other California laws. Current or future laws may require clean up by pas. linoleum. Various construction materials may contain items that have been or may be in the future be determined to be hazardous (toxic) or undesirable and may need to be specifically treated/handled or removed. floor tiles. they may include in transaction documents regarding the Property. co-owners. Buyers/Tenants have similar disclosure obligations. hydrocarbons. Internal Revenue Cod Section 1445 requires that all buyers of an interest in any real property located in the United States must withhold and pay over to the Internal Revenue Service (IRS) an amount equal to ten percent (10%) of the gross sales price within ten (10) days of the date of the sale unless the buyer can adequately establish that the seller was not a foreigner. the tax withholding liability could exceed the net cash proceeds to be paid to the seller at closing. water building components. It is the responsibility of the Seller/Lessor and the Buyer/Tenant to retain qualified experts to detect and correct such maters and to consult with legal counsel of their choice to determine what provisions. Real estate agents have no expertise in the detection or correction or hazardous or undesirable items.142 Scott W Johnstone Owners and tenants should consult attorneys and qualified design professionals of their choice for information regarding these matters. purchasers and tenants. but not limited to. Sellers/Lessors and Buyers/Tenants have additional hazardous materials disclosure responsibilities to each other under California Health and safety Code Section 25359. state and federal tax consequences for the seller/lessor and/or buyer/tenant. roofing. dry wall and plaster. generally by having the seller sign a Non-Foreign Seller Certificate. For example. lease and other transactions can have local. Such items may leak or otherwise be elsewhere in areas that may or may not be accessible or noticeable. In the event of a sale. or biological hazards (including.

if the last known address of the seller is outside of California or if a financial intermediary is used.Million Dollar Broker 143 and one-third percent (3 1/3%) of the gross sales price not only on foreign sellers but also out of state sellers and sellers leaving the state if the sale price exceeds $100. SELLER/LESSOR By: __________________________ Title: _________________________ Date: _________________________ BUYER/TENANT By: __________________________ Title: _________________________ Date: _________________________ . Generally.000. Consult your tax and legal advisor. Real estate brokers are not qualified to give legal or tax advice or to determine whether any other person is properly qualified to provide legal or tax advice. withholding is required if the sales proceeds are distributed outside of California.

CA 926660 949. Suite 100 Newport Beach. CA 92660 APN 123-456-789.5555 fax CA License # 00950979 This letter summarizes the basic business terms and conditions upon which Acme CRE Investment Company Inc. (3) all personal property located at or used in connection with the operation and management of such property. Newport Beach. Suite 1000 Newport Beach.144 Scott W Johnstone Appendix F: Example Document – Office Investor – Purchase. CA 92660 Re: Purchase Offer. CA 92660 Dear Scott: John Doe Principle Acme CRE Investment Company Inc 111 First St. containing approximately 150. . There shall be parking spaces providing a 4/1. licenses. two-story office building and associated surface parking lot.000 square feet ratio of dedicated parking spaces. “Property”) from the current owner ABC Development Company (“Seller”).000 square feet of land and (1) improvement thereon. contracts and intangible property affecting the property (collectively.5555 main 949. including the approximately 40. and (4) all appurtenances. (2) all construction and other warranties associated with the property. 2011 Mr. permits. Letter of Intent-LOI January 1. or its assignee.555. (“Buyer”) would purchase the property located at 1111 Pacific Coast Highway. Scott Johnstone Bridge Commercial Properties 4695 MacArthur Court.555.000 square foot. Letter of Intent 1111 Pacific Coast Highway Newport Beach.

000) (“Additional Deposit”. Buyer shall increase the Initial Deposit by One-Hundred. CA 92660 APN # 123456-789.Million Dollar Broker 1. Purchase Price: .000) (“Initial Deposit”) with First American Title Company (“Escrow Holder”) concurrently with the execution of a definitive Purchase and Sale Agreement and Joint Escrow Instructions (“PSA”). B. with interest accruing and payable to Buyer.700. Upon the satisfactory approval by Buyer of the “Due Diligence Materials” (defined below).) (The Initial Deposit and the Additional Deposit will be collectively referred to as.000) shall be paid in cash upon closing through Escrow. The balance of the Purchase Price shall be Nineteen-Million-Seven-Hundred Thousand Dollars ($19. 2.andFifty-Thousand Dollars ($150. Property Description: 145 The property is described as a 40.000. the “Deposit”). Buyer shall deposit the sum of OneHundred-and-Fifty-Thousand Dollars ($150. subject to satisfaction of any remaining conditions to the closing. The Deposit shall become non-refundable upon Buyer’s removal or waiver of its contingencies as set forth in the PSA. The purchase price (“Purchase Price”) for the Property shall be Twenty Million Dollars ($20. Escrow Holder shall invest the Initial Deposit and the Additional Deposit in an interest-bearing account or other investment instrument designated by Buyer.000) payable as follows: A.000 SF Two Story Office building located at 1111 Pacific Coast Highway. Newport Beach.

and to make inquiries and investigations as Buyer deems necessary or appropriate. but not limited to. and escrow (“Escrow”) shall be opened with First American (“Escrow Holder”). Escrow shall close and the Grant Deed recorded (“Closing”) on the date that is Forty-Five (45) days after the Contingency Date. Escrow: Scott W Johnstone A. mechanical. Then the PSA shall automatically terminate. B. which Buyer will prepare in a timely manner.Buyer shall have the right to inspect and approve (i) all physical. During the period ending on the Contingency Date (“Contingency Period”). .146 3. and Buyer and Seller agree to execute such additional escrow instructions as Escrow Holder deems reasonably necessary or advisable in order to effect the terms of the PSA. (ii) each of the Due Diligence Materials and (iii) all books. and Escrow Holder shall return the Deposit (and all accrued interest thereon) immediately to Buyer: B. Buyer’s obligation to purchase the Property shall be conditioned upon satisfaction of each of the contingencies set forth in the PSA on or before the date (“Contingency Date”) that is Thirty (30) days after the later of (a) execution of the PSA or (b) delivery to Buyer of the last of the Due Diligence Materials set forth in the PSA. such items to include. the items set forth on Exhibit A attached to this. Contingencies: A. structural. The opening of Escrow shall be deemed to be the date upon which Buyer and Seller deliver executed counterparts of the PSA to Escrow Holder. records and files regarding the Property. seismic and all other aspects of the Property. In the event that Buyer does not affirmatively approve of the Due Diligence Materials on or before the Contingency Date. Upon execution of the PSA. 4.

The PSA shall contain standard terms and conditions that are typically found in an acquisition of this size and nature. contract or other agreement affecting the Property. Los Angeles. In addition. Suite 1000. calculations of floor areas and inspections of the improvements. pro-rations. title. which shall not be unreasonably withheld or delayed. including. but not limited to. D. or amend or terminate any of the same. All of Seller’s and Buyer’s covenants required to have been performed by the Closing shall have been so performed. assignments of tenant leases and marketing of the property post acceptance of this letter. but not limited to. the Buyer shall have the right to enter The Property to interview the property manager and tenants and to conduct reasonable tests and inspections deemed reasonably necessary or advisable by Buyer or its consultants including. C.Million Dollar Broker 147 Seller will cause its consultants to furnish Buyer with any information and copies of documents reasonably requested by Buyer during the Contingency Period. Seller shall not enter into any lease. and all representations and warranties of each of Seller and Buyer shall be current as of the Closing and no material changes in the physical of financial condition of the property shall have occurred as of the Closing . physical inspection. CA 90000 | (310) 555-5555 t | (310) 555-5555 f Seller representations and warranties. without Buyer’s approval. buyer: 12345 Big City Drive. Seller shall maintain the Property in good condition and repair and shall maintain adequate casualty liability insurance covering the Property until the Closing. E.

Financing Contingency: None G. amend or terminate any leases or contracts affecting the Property or take any other actions affecting the Property from the date of acceptance hereof through the earlier of (a) the Closing or (b) the termination of the Purchase Agreement. 6. title and recording charges. Failure of Buyer to approve any Due Diligence Materials on or before the Contingency Date (or such other date which may be expressly specified above) conclusively shall be deemed to constitute Buyer’s disapproval thereof. Notwithstanding the foregoing. and all escrow fees. . Marketing: Seller is prohibited from marketing. Seller shall not. enter into. Brokerage Each of Buyer and Seller shall pay for and indemnify Commissions. or anytime thereafter if Buyer waives contingencies and approves of the Due Diligence Materials. and the Deposit (and all accrued interest thereon) shall be returned to Buyer (and the Deposit shall also be returned to Buyer if Buyer’s closing conditions are not satisfied). Buyer and Seller shall each bear their own legal fees. Additionally. soliciting or accepting any offers from prospective buyers during the Contingency Period. conveyance taxes and all other closing expenses shall be borne or charged in accordance with customs of the Orange County market. F. Closing the other against any brokerage commission or Expenses: transaction fee owed as a result of the engagement by Buyer or Seller of a broker or other person in connection with this transaction. except that Seller shall pay a brokerage fee to Scott Johnstone of Bridge Commercial Properties. Buyer will have the right to market the Property for lease during this period. as agreed toby Seller and Broker in a separate agreement. Buyer’s obligations shall be further conditioned upon obtaining “clean” estoppels certificates (in a form reasonably acceptable to Buyer) from Seventy-Five (75%) percent of all the tenants and all of the major tenants. (“Broker”). 5. Estoppel Certificates.148 Scott W Johnstone Approval of the foregoing conditions shall be in writing signed by Buyer. without Buyer’s prior written approval.

during the course of negotiation of the PSA. By: ________________________ By: ________________________ . This letter shall not constitute a formal and binding agreement and shall not create any legal rights or obligations between parties. It is intended that all legal rights and obligations between parties be created under and governed solely by the PSA when the same is fully executed by Buyer and Seller. AGREED AND ACCEPTED: Buyer: Seller: John Doe. Notwithstanding the foregoing. nor to solicit offers for the acquisitions of the Property. incorporating the terms of this letter. Acme CRE Investment ABC Development Company Company Inc. Very truly yours. We look forward to working with you toward consummating this transaction. Buyer shall cause the PSA to be prepared. Seller agrees not to market the Property to other parties. Terms of Offer/NonBinding Affect: 149 The foregoing offer may be accepted by Seller by executing and returning a counterpart of this letter to Buyer on or before 5:00 p.m.Million Dollar Broker 7. 2011. together with such other customary terms and provisions and representations and warranties applicable to a transaction of this nature. Upon acceptance. on January 10. John Doe Principle Acme CRE Investment Company Inc.

elevator. brokerage agreements. building permits and other documentation and evidence that the construction. and . 2009 and 2010 monthly statements to date. at a minimum.150 EXHIBIT A Scott W Johnstone DUE DILIGENCE MATERIALS Buyer shall have had the opportunity to review and approve. (2) A copy of the bank statements for the property for the prior twenty four(24) months that reflect deposits that reconcile with rent amounts reflected on the rent rolls provided. Evidence that the Property complies with all applicable codes and The Subdivision requirements. certificates of occupancy and similar type occupancy approval documents. maps.including. landscape and sprinkler drawings and specifications regarding the improvements. each of the following: (1) A copy of a current rent roll describing the occupancy status of the Property as of the beginning of the current month as well as monthly rent rolls for each of the previous twenty four (24) calendar months. Copies of all licenses. A copy of the leases or rental agreements for tenants of the Property and any amendments and letter agreements relating thereto including any license agreements and current financial statements on the tenant(s).structuraldrawings. service contracts (including parking. air conditioning. certificates of occupancy. insurance policies. A current preliminary title report including the legal description of the Property. mechanical. but not limited to. together with copies of all documents referred to therein. (3) (4) (5) (6) (7) (8) (9) (10) Allplans. management contracts. electrical. A current ALTA Survey of the Property. occupancy and operation of the Property is authorized by and is in compliance with all governmental regulations. for vertical transportation.architecturaland“asbuilt”drawings. variances.. permits. present use. association or property owner agreements.g. HVAC and landscaping maintenance contracts). HVAC and other building systems). prepared by a First American (“Title Company”). 2008. Warranties (e. Projected or actual Operating statements of the Property for calendar year 2007.

structural. environmental or other such reports). nor any such claim or action threatened in writing. agreements and correspondence outstanding with any prospective tenants. and (17) Such other matters as agreed to in the Purchase and Sale Agreement. (11) Copies of property tax bills for the last three (3) years and copies of the most recently available utility bills and similar records respecting the Property. (13) A certificate of Seller certifying to Seller’s knowledge that there is no legal or administrative action. seismic. ordinances. proceeding. environmental. a detailed written description of the status of current tenant occupancies and future plans including any and all proposals. (14) To the best of Seller’s knowledge. . the Property or with respect to the validity of any statutes. (12) A list of all personal property owned by or leased by Seller and used in connection with the ownership or operation of the Property. arbitration or suit pending before any court.Million Dollar Broker 151 any soils. agency or official. nor any outstanding contingent liabilities affecting the Property. relating to the Seller. geological. grading plans. surveys or other information on any Matters that Seller may have received as part of the current sales process for the Property. (16) Copies of any reports (such as physical. claim. Phase I’s and/or Phase II’s. (15) All available historical environmental reports. regulations or restrictions or any permits or approvals thereunder relating to the Property. hazardous materials and asbestos studies or reports relating to subsurface conditions. topographical maps arid similar data respecting the Property.

2011 Month Number: ACTIVITY Duration Start Date 1 Jan-11 2 Feb-11 3 Mar-11 4 Apr-11 5 May-11 6 Jun-11 7 Jul-11 8 Aug-11 9 Sep-11 10 Oct-11 11 Nov-11 12 Dec-11 Needs Analysis Strategic Planning Assemble Core Team Create Space Program Timeline Creation 30 days 15 days 20 days 5 days 5 days 10 days 5 days 5 days 10 days 45 days 15 days 15 days 15 days 15 days 15 days 30 days 15 days 15 days 75 days 45 days 2 days 7 days Market Survey Deal Point Negotiation Contract Negotiation Project Implementation Identify Alternatives Tour Properties Short List Alternatives Preliminary Cost Matrix Develop Request for Proposal Collate Responses Financial Analysis Finalize Space Plan Development Tenant Improvement Pricing Finalize Letter of Intent Coordinate Legal Team Purchase and Sale Agreements Lease Document Negotiations Finalize Construction Contracts Construction / Project Mgmt. Information Technology & Furniture Acquisition Move Coordination Lease Abstract *** All times estimated and subject to change and revision .152 Scott W Johnstone Appendix G: Example Document – Deal Process Timeline and Flowchart Lease Process Timeline & Flowchart January 1.

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Appendix H: Example Document – Capabilities Brochure – Tenant

Team Experience Scott W Johnstone
President 949.555.5555 office / 949.555.5555 cell scott@bridgecre.com CA Broker #00950979 25 Years of Experience Specializing in Office Properties Tenant Representation

Our Team has over 25 years of combined experience and has been responsible for over $3 billion in real estate transactions throughout our award-winning careers.
Team Capabilities

Hana Paradeiser
Marketing Coordinator 949.555.5555 office / 818.555.5555 cell h@bridgecre.com 10 Years of Marketing Experience

The combination of a sole proprietors mentality and attention to detail mixed with institutional experience truly makes us the best single source solution for all of your Corporate Real Estate needs.

Deal Announcement: Bridge Commercial Properties this week successfully represented Acme Widgit Corporation in the relocation of their corporate headquarters to the 1234 Professional Center Drive, Newport Beach, California. The ten year lease transaction takes Acme Widgit Corporation’s offices to 20,000 square feet and allows for their continued leadership role and growth in the widgit marketplace. The lease saved Acme Widgit Corporation nearly $5,000,000 in rent over the term of their lease. Thank you Acme Widgit Corporation for your continued support. January 1, 2011

ACME WIDGIT CORPORATION
CALL US TODAY FOR MORE INFORMATION REGARDING OUR CONSULTATIVE APPROCH TO COMMERCIAL REAL ESTATE SERVICES

Whether you are looking to renegotiate or renew your lease, relocate, expand or contract your office, our leverage, reducing your costs and freeing your valuable time.

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Appendix I: Example Document – Market Newsletter

ISSUE

Q2 Q1
2010 2011 2008

MacArthur Court

this issue
Building Spotlight 1 1 3 5 Executive Summary Market Asesment Broker Information

PROJECT SPOTLIGHT: MacArthur Court Newport Beach, CA 92660
Twin 15-story travertine marble towers and three low-rise buildings provide a premier environment with ample surface and structure parking, twostory travertine lobbies, palm-lined pedestrian walkways and beautiful landscaping.

A GUIDE FOR DECISION MAKING BY: SCOTT JOHNSTONE

ORANGE COUNTY OFFICE MARKET

EXECUTIVE SUMMARY: Who is Driving the Bus?
The national economy grew at a 1.8 percent annualized rate in the first quarter according to the advance estimate of gross domestic product from the Bureau of Economic Analysis. Consumer spending made the biggest contribution, adding 1.9 percentage points, although this was below the 2.8-point contribution made by consumers in the fourth quarter. Inventory additions and business spending on equipment and

Jobs: The unemployment rate in Orange
County was 8.9% in February 2011 and below the year-ago estimate of 9.7%. This compares with an unadjusted unemployment rate of 12.3% for California and 9.5% for the nation during the same time period. According to the State of California Employment Development Department, Orange County increased overall by 16,300 payroll jobs from February 2010 to February 2011; the largest gains were 6,500 in leisure and hospitality and 5,400 in professional & business services. However, during that same period, Orange County lost 2,000 jobs in trade, transportation, and utilities. Chapman University is forecasting that 23,000 jobs will be added in Orange County in 2011.

Five buildings 690,000 sq/ft

totaling

software also contributed to growth. Late last year, many economists raised their GDP forecasts in re-

Easy access to the 405 and 55 Freeways and 73 Toll Road Ample surface and structure parking Seconds to John Wayne Airport On-site café and banks with ATM On-site convenience store and auto detailing Rental Rates: $1.95 - $2.45 FSG

sponse to the $858 billion package of tax cut extensions and new tax cuts passed by Congress in December. But recently many have lowered their forecasts due to rising energy prices and the uncertain outlook for the Middle East, Japan and the Europe. The Employment Situation report, which the Bureau of Labor Statistics will release Friday, May 6, will be even more important than usual because it will reveal whether the drags on economic the growth are affecting the labor market, which is a major driver of demand for commercial real estate.

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The Next Shoe to Drop: The dollar volume of direct investment in commercial properties soared by 77 percent in the first quarter of 2011 compared with the first quarter of 2010. Last year, the market was depicted by a barbell with investors focusing on core properties in primary, supply constrained markets at one end, and distressed assets priced for a quick sale at the other end. Attracted by higher yields, investors now are taking a fresh look at properties in secondary markets and properties below the trophy threshold. Source: Real Capital Analytics tially flat in the first quarter compared with the fourth quarter of 2010 on the heels of a 4 percent decline between the third and fourth quarters of last year. This suggests that the level of distress may be topping out. Source: Real Capital Analytics

Big Picture: The Orange County office maket continued to convey signs of recovery in the first quarter of 2011. Both vacancy and availability decreased from the previous quarter, and net absorption displayed positive numbers for three consecurive quarters, producing a total of over 1.23 million square feet of positive absorption since the third quarter of 2010. Demand, though, still weak by historical standards, picked of a renewed interest in states transactions. While these are positive indications, stability will need to be sustained in coming quarters to be considered recovery. Summary: We are beginning to see a decrease in the amount of available space being added per quarter, as well as an overall increase in investment sales activity. As we enter into 2011, positive absorption continues, and with few new deliveries in the pipeline to apply upward pressure on vacancy, the market has begun to stabilize. We forsee a continued increase in

totaled 3.36 percent, the fourth consecutive quarterly increase of the current recovery cycle. The return included two components: 1.52 percent from income and 1.84 percent from appreciation. Source: NCREIF

investment activity in the coming quarters as lenders dispose of distressed assets. Lease rates are expected to remain soft for the near future, and concessions in the forms of free rent, reduced parking fees, relocation funds and tenant improvement allowances should continue in order to incentivize tenants to

quarter, beating the 5.4 percent return posted by the S&P 500. Sources: NAREIT, Bloomberg This is a pretty good performance for an asset class that, 24 months ago, was called “the next shoe to drop.”

act immediately. We should also see an increase in leasing activity as many short-term deals come up for renewal. As job creation continues and consumer confidence stabilizes, the office market will continue to recover.

Notable Market Transactions:
20532 El Toro Road - Sale Mission Viejo Buyer: JP Morgan Chase Size: 52,091 Square Feet 35 Tesla - Sale Laguna Hills Buyer: Owen Commercial Size: 36,000 Square Feet 3200 Park Center Dr. - Lease Costa Mesa Tenant: Hyundai Size: 147,712 Square Feet

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Vacant Space by Submarket

000 60.Million Dollar Broker 157 p4 Vacancy Rates by Submarket Net Absorbtion Square Footage by Submarket Yearly Job Change. Bureau of Labor Statistics .000 -120.983 (5.658) (33.904 37.000 -60.000 -100. Orange County Total Sea sona l l y Adj usted 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 65.250 27.396) (9 396) 11.042) 25.000 T Thousands 199 98 199 99 200 00 200 01 200 02 200 03 200 04 200 05 200 06 200 07 200 08 200 09 2010 2011 2012 2010 2011 2012 Source: U.758 34.925 (10.842) (9.308 46.000 60 000 -80.608 24.S.177 80.042 43.000 20.000 20 000 0 -20.825) (109.342 25 342 27.000 -40.000 40.

555. Real estate brokers are not qualified to act as or select experts with respect to legal.com The information contained herein was obtained from third parties. Buyers/tenants should have the experts of their choice inspect the property and verify all information. Newport Beach. environmental. and has not been independently verified by the real estate brokers.555.000 square feet and allows for their continued leadership role and growth in the widgit marketplace. January 1. soils-drainage or other such matters. .158 Scott W Johnstone p5 TEAM EXPERIENCE More Notable Market Transactions: 275 Valencia Ave Brea .235 Square Feet Deal Announcement: Bridge Commercial Properties this week successfully represented Acme Widgit Corporation in the relocation of their corporate headquarters to the 1234 Professional Center Drive. The ten year lease transaction takes Acme Widgit Corporation’s offices to 20. The lease saved Acme Widgit Corporation nearly $5.555.Lease Tenant: Epicor Software Size: 68. TEAM CAPABILITIES 18101 Von Karman Ave. tax.555. The combination of a sole proprietors mentality and attention to detail mixed with institutional experience truly makes us the best single source solution for all of your Corporate Real Estate needs.5555 h@bridgecre.Lease Tenant: Bank of America Size: 637. Irvine .5555 C 818.6113 Square Feet ACME WIDGIT CORPORATION SCOTT JOHNSTONE President Bridge Commercial Properties CA License # 00950979 HANA PARADEISER Marketing Coordinator Bridge Commercial Properties P 949. California.5555 C 949. Thank you Acme Widgit Corporation for your continued support.5555 s@bridgecre.000.com P 949.000 in rent over the term of their lease.000 Square Feet Our Team has over 25 years of combined experience and has been responsible for over $3 billion in real estate transactions throughout our awardwinning careers. 2011 1310 Old Ranch Parkway Seal Beach .Sale Buyer: AIG Global Size: 280. building construction.

. which can then be applied to the usable square footage to determine the rentable square footage upon which the tenant will pay rent. This is a tax imposed on the value of property (references a general property tax).Million Dollar Broker 159 Glossary: Industry Terminology Abatement: Often and commonly referred to as free rent or early occupancy and may occur outside or in addition to the primary term of the lease. Allowance Over Building Shell: Most often used in a yet-to-be constructed property. Absorption: The rate. such as lobbies. expressed as a percentage. typically expressed as a percentage of the total square footage. Above Building Standard: Upgraded finishes and specialized designs necessary to accommodate a tenant’s requirements. It’s usually expressed as a percentage. This arrangement is most successful when both parties agree on a detailed definition of what construction is included and at what price. This arrangement caps the landlord’s expenditure at a fixed dollar amount over the negotiated price of the base building shell. Also referred to as “Market Absorption” Absorption Rate: The net change in space available for lease between two dates. at which available space in the marketplace is leased during a predetermined period. it represents the tenant’s pro-rata share of the Building Common Areas. and restrooms. the tenant has a blank canvas upon which to customize the interior finishes to their specifications. Add-On Factor: Often referred to as the Loss Factor or Rentable/ Usable (R/U) Factor. public corridors. Ad Valorem: According to value. which is typically based on the local government’s valuation of the property.

To agree to recognize a new owner of a property and to pay him/her rent. In a lease. loan discount points. Attorn: To turn over or transfer to another money or goods. sewers. loan origination fees. Assignment: A transfer by lessee of lessee’s entire estate in the property. etc. it reflects a loan amortized over a longer period than that of the term of the loan itself . This would include any physical defects.160 Scott W Johnstone Anchor Tenant: The major or prime tenant in a shopping center. Appreciation: The increased value of an asset. Generally. when the tenant agrees to attorn to the purchaser. streets. Appraisal: An estimate of opinion and value based upon a factual analysis of a property by a qualified professional. usually to pay for public improvements such as water. “As-Is” Condition: The acceptance by the tenant of the existing condition of the premises at the time the lease is consummated. and other credit costs paid to the lender. etc. improvement districts. Assessment: A fee imposed on property. Balloon Payment: A large principal payment that typically becomes due at the conclusion of the loan term. Distinguishable from a sublease where the sublessee acquires something less than the lessee’s entire interest. building. expressed in the form of an annual interest rate. the landlord is given the power to subordinate tenant’s interest to any first mortgage or deed of trust lien subsequently placed upon the leased premises. Annual Percentage Rate (APR): The actual cost of borrowing money. It may be higher than the note rate because it represents full disclosure of the interest rate.

See “Bullet Loan.” “C” and sometimes “D” properties. Building Classifications: Building classifications in most markets refer to Class “A.” Base Year: Actual taxes and operating expenses for a specified base year. attractive to credit tenants. Class “B. See also “Escalation Clause. location or construction of the building becomes less desirable. See also: “Chapter 11. most often the year in which the lease commences. the lease essentially becomes a dollar stop lease. of course.” “C” or “D”) one component or another such as age. Bankruptcy: Proceedings under federal statures to relieve a debtor who is unable or unwilling to pay its debts. These buildings. Class “A” properties are typically newer buildings with superior construction and finish in excellent locations with easy access.” Bankrupt: The condition or state of a person (individual. and which offer a multitude of amenities such as on-site management or covered parking. Once the base year expenses are known. partnership.” “Operating Expense Escalation” and “Percentage Lease. or become.” “B.e. payments based on a 25-year amortization with the principal balance due at the end of 5 years). As the “Class” of the building decreases (i. corporation. the bankrupt’s property and other assets are distributed by the court to creditors as full satisfaction for the debt. etc. command the highest rental rates in their sub-market. due. Below-Grade: Any structure or a portion of a structure located underground or below the surface grade of the surrounding land. While the rating assigned to a particular building is very subjective.Million Dollar Broker 161 (i. After addressing certain priorities and exemptions.e. Note that a Class “A” building in one sub-market might rank lower if it were located in a distinctly .) who are unable to repay its debts as they are.” Base Rent: A set amount used as a minimum rent in a lease with provisions for increasing the rent over the term of the lease.

” Build-Out: The space improvements put in place per the tenant’s specifications. See also “Tenant Improvement Allowance” Build-To-Suit: An approach taken to lease space by a property owner where a new building is designed and constructed per the tenant’s specifications. etc.). Also known as a Loss Factor or Rentable/Usable (R/U) Factor. Building Load or “Core” Factor: Represents the percentage of Net Rentable Square Feet devoted to the building’s common areas (lobbies.162 Scott W Johnstone different sub-market just a few miles away containing a higher end product. lineal feet of partitions. the building standard materials and costs necessary to make the premises suitable for occupancy. A negotiated allowance is then provided for the tenant to customize or upgrade materials. Takes into consideration the amount of Tenant Finish Allowance provided for in the lease agreement. . rest rooms. quantity of lights. Building Standard Plus Allowance: The landlord lists.” Building Standard: A list of construction materials and finishes that represent what the Tenant Improvement (Finish) Allowance/ Work Letter is designed to cover while also serving to establish the landlord’s minimum quality standards with respect to tenant finish improvements within the building. This factor can be computed for an entire building or a single floor of a building. quality of floor covering. etc. materials. Examples of standard building items are: type and style of doors. Building Code: The various laws set forth by the ruling municipality as to the end use of a certain piece of property and that dictate the criteria for design. in detail. See also “Work Letter. and type of improvements allowed. corridors. See also “Rentable/Usable Ratio. it’s calculated by dividing the rentable square footage by the usable square footage.

the borrower is “shot” and the property is subject to foreclosure. insurance costs and maintenance expenses). other than interest (i. financing option that requires a balloon payment at the end of the term and anticipates that the loan will be refinanced in order to meet the Balloon Payment obligation. Certificate of Occupancy: A document presented by a local government agency or building department certifying that a building . Capitalization: A method of determining value of real property by considering net operating income divided by a predetermined annual rate of return. taxes.” Carrying Charges: Costs incidental to property ownership. Essentially. but GAAP does not provide definitive guidance on all possible expenditures. Capital Expenses: accounting principles (GAAP).e. Accountants will often disagree on whether or not to include certain items. that must be absorbed by the landlord during the initial lease-up of a building and thereafter during periods of vacancy.” Capitalization Rate: The rate that is considered a reasonable return on investment (based on both the investor’s alternative investment possibilities and the risk of the investment). often due to the property not performing as anticipated. An example of this is when a developer borrows to cover the costs of construction and carry-costs for a new building with the expectation that it would be replaced by long-term (or “permanent”) financing provided by an institutional investor once most of risk involved in construction and lease-up had been overcome resulting in an income-producing property.” See “Capitalization. should the refinancing not be available.Million Dollar Broker 163 : This type of expense is most often defined by reference to generally accepted Bullet Loan: Any short-term. Used to determine and value real property through the capitalization process. Also called “free and clear return. generally five to seven years. See “Capitalization Rate.

the cost of maintaining parking facilities. Chapter 7 is that part of the Federal Bankruptcy code that deals with business liquidations. the common areas are those areas within a building that are available for common use by all tenants or groups of tenants and their invitees (i. Examples include: snow removal. most often a warehouse or parking garage. and the like are included in the term “common area” when calculating the tenant’s pro-rata share of building operating expenses. Common Area Maintenance (CAM): This is the amount of Additional Rent charged to the tenant.). etc. malls.35 x the Net Square Footage for office and fixed drywall areas and a Circulation Factor of 1. . and is/are in a condition suitable for occupancy. Chapter 11: That portion of the Federal Bankruptcy code that deals with business reorganizations. On the other hand.e. Circulation Factor: Interior space required for internal office circulation not accounted for in the Net Square Footage.45 x the Net Square Footage for open area workstations. restrooms. See also “Net Square Footage and “Usable Square Footage. Clear-Span Facility: A building. insurance. Chapter 11 is that part of the Federal Bankruptcy code that deals with business reorganizations. Common Area: There are two components of the term “common area. public toilets. in addition to the Base Rent. property taxes. has been satisfactorily inspected. landscaped areas. sidewalks. outdoor lighting.164 Scott W Johnstone and/or the leased premises (tenant’s space). we use a Circulation Factor of 1.” If referred to in association with the Rentable/Usable or Load Factor calculation. Based upon our experience. corridors. to maintain the common areas of the property shared by the tenants and from which all tenants benefit. truck and service facilities. lobbies. Chapter 7: That portion of the Federal Bankruptcy code that deals with business liquidations. parking lot sweeping. with vertical columns on the outside edges of the structure and a clear span between columns.

The CPI is commonly used to increase the base rental periodically as a means of protecting the landlord’s rental stream against inflation or to provide a cushion for operating expense increases for a landlord unwilling to undertake the record keeping necessary for operating expense escalations. this does not include any capital improvements see “Capital Expenses” that are made to the property. See also “Eminent Domain. It’s not a true “cost of living” factor and bears little direct relation to actual costs of building operation or the value of real estate. Concessions: Cash or cash equivalents expended by the landlord in the form of rental abatement. without the consent of the owner. age. (2) A block of space located on multiple adjoining .Million Dollar Broker 165 etc. Most often.” Construction Management: The actual construction process is overseen by a qualified construction manager who ensures that the various stages of the construction process are completed in a timely and seamless fashion. additional tenant finish allowance. and typically located within the same sub-market and used as comparison properties to determine the fair market lease rate for another property with similar characteristics. use. Comparables: Lease rates and terms of properties similar in size. by a governmental agency for public use through the power of eminent domain. moving expenses. from getting the construction permit to completion of the construction to the final walk-through of the completed leased premises with the tenant. construction quality. cabling expenses or other monies expended to influence or persuade the tenant to sign a lease. which can be combined and rented to a single tenant. Contiguous Space: (1) Multiple suites/spaces within the same building and on the same floor. Consumer Price Index (“CPI”): Measures inflation in relation to the change in the price of a fixed market basket of goods and services purchased by a specified population during a “base” period. Condemnation: The process of taking private property.

.” Conveyance: Most commonly refers to the transfer of title to property between parties by deed. Also known as a Loss Factor or Rentable/ Usable (R/U) Factor.” had nothing to do with noise in and around the leased premises. Working Drawings specify for the contractor the precise manner in which a project is to be constructed. The term may also include most of the instruments by which an interest in real estate is created. it constitutes an actual or constructive eviction. now more commonly referred to as “Warranty of Possession. or assigned. See also “Specifications” and “Working Drawings. It provides a warranty by landlord that it has the legal ability to convey the possession of the premises to tenant. it’s calculated by dividing the rentable square footage by the usable square footage. This is the essence of the landlord’s agreement and the tenant’s obligation to pay rent. a tenant leases floors 6 through 12 in a building).. Contract Documents: The complete set of design plans and specifications for the construction of a building or of a building’s interior improvements. rest rooms. corridors. mortgaged. Covenant of Quiet Enjoyment: The old “quiet enjoyment” paragraph.” Cost Approach: A method of appraising real property whereby the replacement cost of a structure is calculated using current costs of construction. Core Factor: Represents the percentage of Net Rentable Square Feet devoted to the building’s common areas (lobbies. etc. This means that if the landlord breaches this warranty.166 Scott W Johnstone floors in a building (i. uses or non-use of a property and/or land.). the landlord does not warrant that he owns the land.e. This factor can be computed for an entire building or a single floor of a building. Covenant: A written agreement inserted into deeds or other legal instruments stipulating performance or non-performance of certain acts or.

2) The breach or failure to perform any of the terms of a lease agreement. The term can apply to an entire facility or to individual components of the construction to be performed by a subcontractor.” Deed of Trust: An instrument used in many states in place of a mortgage by which real property is transferred to a trustee by the borrower (trustor). See also “Foreclosure. Demising Walls: The partition wall that separates one tenant’s space from another or from the building’s common area such as a public corridor. Some specific examples are: 1) Failure to make a payment of rent when due. Default: The general failure to perform a legal or contractual duty or to discharge an obligation when due. Dedicate: To appropriate private property to public ownership for a public use. Deed: A legal instrument transferring title to real property from the seller to the buyer upon the sale of such property. Design/Build: A system in which a single entity is responsible for both the design and construction. in favor of the lender (beneficiary).” . Deficiency Judgment: Imposition of personal liability on a borrower for the unpaid balance of mortgage debt after a foreclosure has failed to yield the full amount of the debt. Deed in Lieu of Foreclosure: A deed given by an owner/borrower to a lender to satisfy a mortgage debt and avoid foreclosure.Million Dollar Broker 167 Cumulative Discount Rate: The interest rate used in finding present values that when applied to the rental rate takes into account all landlord lease concessions and then expressed as a percentage of base rent. to secure repayment of a debt. also referred to as “design/construct.

Easement: A right of use over the property of another created by grant. Otherwise known as an “Expense Stop. such as a public utility easement. usually expressed as an average rate over the term of the lease.g. It’s either for the benefit of adjoining land (“appurtenant”). May be applied to specific expenses (e. with excess revenue establishing the degree of viability.. or for the benefit of a specific individual (“in gross”). agreement. Economic Feasibility: A building or project’s feasibility in terms of costs and revenue. . even though the actual rent may be different. Economic Rent: The market rental value of a property at a given point in time. property taxes or insurance).” Earnest Money: The monetary advance by a buyer of part of the purchase price to indicate the intention and ability of the buyer to carry out the contract. reservation. and therefore value.168 Scott W Johnstone Depreciation: Spreading out the cost of a capital asset over its estimated useful life or a decrease in the usefulness. Effective Rent: The actual rental rate to be achieved by the landlord after deducting the value of concessions from the base rental rate paid by a tenant. such as the right to cross A to get to B. of real property improvements or other assets caused by deterioration or obsolescence. Dollar Stop: An agreed dollar amount of taxes and operating expense (expressed for the building as a whole or on a square foot basis) over which the tenant will pay its prorated share of increases. Distraint: The act of seizing (legally or illegally) personal property based on the right and interest that a landlord has in the property of a tenant in default.. prescription or necessary implication.

This may be accomplished by several means such as fixed periodic increases. without permission. etc. lien. Encumbrance: Any right to. etc. Also known as a Core Factor or Rentable/Usable (R/U) Factor. real property held by someone other than the owner. This factor can be computed for an entire building or a single floor of a building. a claim.Million Dollar Broker 169 Efficiency Factor: Represents the percentage of Net Rentable Square Feet devoted to the building’s common areas (lobbies. or interest in. increases tied to the Consumer Price Index or adjustments based on changes in expenses paid by the landlord in relation to a dollar stop or base year reference. Eminent Domain: A power of the state. See also “Condemnation.). municipalities. Environmental Impact Statement: Documents that are required by federal and state laws to accompany proposals for major projects and programs that will likely have an impact on the surrounding environment. but which will not prevent the transfer of fee title (i. rest rooms.e. Escalation Clause: A clause in a lease which provides for the rent to be increased to reflect changes in expenses paid by the landlord such as real estate taxes. corridors. in return for just compensation. Estoppel Certificate: A signed statement certifying that certain statements of fact are correct as of the date of the statement and . operating costs. and private persons or corporations authorized to exercise functions of public character to acquire private property for public use by condemnation. over a property line. Equity: The fair market value of an asset less any outstanding indebtedness or other encumbrances. it’s calculated by dividing the rentable square footage by the usable square footage. charge or liability attached to and binding real property). easement boundary or building setback line.” Encroachment: The intrusion of a structure that extends.

Exclusive Agency Listing: A written agreement between a real estate broker and a property owner in which the owner promises to pay a fee or commission to the broker if specified real property is leased during the listing period. Escrow Agreement: A written agreement made between the parties to a contract and an escrow agent. . Finance Charge: The amount paid for the privilege deferring payment of goods or services purchased. including any charges payable by the purchaser as a condition of the loan. The escrow agreement sets forth the basic obligations of the parties. May be applied to specific expenses (e. Also known as FMV. neither being under any compulsion to buy or sell and both having reasonable knowledge of the relevant facts. Fair Market Value: The sale price at which a property would change hands between a willing buyer and willing seller. describes the monies (or other things of value) to be deposited in escrow. Expense Stop: An agreed dollar amount of taxes and operating expense (expressed for the building as a whole or on a square foot basis) over which the tenant will pay its prorated share of increases. The broker need not be the procuring cause of the lease. Face Rental Rate: The “asking” rental rate published by the landlord. property taxes or insurance).170 Scott W Johnstone can be relied upon by a third party.. and instructs the escrow agent concerning the disposition of the monies deposited.g. a statement by a tenant identifying that the lease is in effect and certifying that no rent has been prepaid and that there are no known outstanding defaults by the landlord (except those specified). In the context of a lease. including a prospective lender or purchaser.

Floor Area Ratio (FAR): The ratio of the gross square footage of a building to the land on which it’s situated. because of its position. This right is often restricted to specific areas of the building such as adjacent suites or other suites on the same floor. Usually provides a configuration allowing a flexible amount of office or showroom space in combination with manufacturing. The holder of the first or senior mortgage has a priority right to payment in the event of default. First Mortgage: The senior mortgage. loading dock facilities and high ceilings. Generally constructed with little or no common areas. which. First Refusal Right or Right of First Refusal (Purchase): A lease clause giving a tenant the first opportunity to buy a property at the same price and on the same terms and conditions as those contained in a third party offer that the owner has expressed a willingness to accept. warehouse distribution. First Refusal Right or Right of First Refusal (Adjacent Space): A lease clause giving a tenant the first opportunity to lease additional space that might become available in a property at the same price and on the same terms and conditions as those contained in a third party offer that the owner has expressed a willingness to accept. Typically also provides the flexibility to relocate overhead doors. Flex Space: A building providing its occupants the flexibility of utilizing the space. such as rent.Million Dollar Broker 171 First Generation Space: Generally refers to new space that is currently available for lease and has never before been occupied by a tenant. . laboratory. which do not fluctuate in proportion to the level of sales or production. load-bearing floors. See also “Second Generation Space. has priority over all junior encumbrances. etc. Calculated by dividing the total square footage in the building by the square footage of land area. Fixed Costs: Costs.

and is responsible for payment to subcontractors. or war. The tenant is generally still responsible for any increase in operating expenses over the base year amount.g. General Partner: A member of a partnership who has authority to bind the partnership. rather than just a portion of the work. zoning. Future Proposed projects include all those projects waiting for a lead tenant. A general partner also shares in the profits and losses of the partnership. Full Service Gross Rent: An all-inclusive rental rate that includes operating expenses and real estate taxes for the first year. plumbing. fire. etc. or any other event necessary to begin construction. (e. electrical.172 Scott W Johnstone Force Majeure: A force that cannot be controlled by the parties to a contract and prevents said parties from complying with the provisions of the contract. This includes acts of God such as a flood or a hurricane or..). Also may refer to the future phases of a multi-phase project not yet built.” Future Proposed Space: Space in a proposed commercial development that is not yet under construction or where no construction start date has been set. See also “Deed In Lieu Of Foreclosure. The general contractor hires subcontractors. financing. coordinates all work. See also “Pass Throughs.” . Foreclosure: A procedure by which the mortgagee (“lender”) either takes title to or forces the sale of the mortgagor’s (“borrower”) property in satisfaction of a debt. See also “Limited Partnership. General Contractor: The prime contractor who contracts for the construction of an entire building or project. acts of man such as a strike.” Full Recourse: A loan on which an endorser or guarantor is liable in the event of default by the borrower. approvals.

Ground Rent: Rent paid to the owner for use of land. maintenance. or simply the passage of time. insurance. which provides that the rent will vary depending upon future contingencies. such as an easement. such as a periodic appraisal. etc. See also “Guaranty. either the fee or a lesser interest. generally long term in nature. the tenant’s gross income.” Guaranty: Agreement whereby the guarantor undertakes collaterally to assure satisfaction of the debt of another or perform the obligation of another if and when the debtor fails to do so.g. utilities. etc. See also “Net Absorption. Generally. elevator shafts. Grantee: One to whom a grant is made. Grantor: The person making the grant. Grant: To bestow or transfer an interest in real property by deed or other instrument. Guarantor: One who makes a guaranty. Gross Lease: A lease in which the tenant pays a flat sum for rent out of which the landlord must pay all expenses such as taxes.Million Dollar Broker 173 Graduated Lease: A lease. 99 years) with the lessor retaining title to the land.g. Gross Absorption: A measure of the total square feet leased over a specified period with no consideration given to space vacated in the same geographic area during the same time period.) and basement space. normally on which to build a building.term lease (e. the arrangement is that of a long.” Gross Building Area: The total floor area of the building measuring from the outer surface of exterior walls and windows and including all vertical penetrations (e. Differs from a surety .

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agreement in that there is a separate and distinct contract rather than a joint undertaking with the principal. See also “Guarantor.”

Hard Cost: The cost of actually constructing the improvements (i.e. construction costs). See also “Soft Cost.” Highest and Best Use: The use of land or buildings, which will bring the greatest economic return over a given time, which is physically possible, appropriately supported, financially feasible. High Rise: In the Central Business District, this could mean a building higher than 25 stories above ground level but in suburban sub-markets, it generally refers to buildings higher than seven or eight stories. Hold Over Tenant: A tenant retaining possession of the leased premises after the expiration of a lease. HVAC: The acronym for “Heating, Ventilating, and AirConditioning.”

Improvements: In the context of leasing, the term typically refers to the improvements made to or inside a building but may include any permanent structure or other development, such as a street, sidewalk, utilities, etc. See also “Leasehold Improvements.” See also “Leasehold Improvements” and “Tenant Improvements.” Indirect Costs: Development costs, other than material and labor costs, which are directly related to the construction of improvements, including administrative and office expenses, commissions, architectural, engineering, and financing costs. Inventory: The total amount of rentable square feet of existing and any forthcoming space (whether it be a tenant vacating space or new

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buildings coming on the market), in a given category, for example, all warehouse space in a specified submarket. Inventory refers to all space within a certain proscribed market without regard to its availability or condition, and categories can include all types of leased space such as office, flex, retail and warehouse space.

Judgment: This is the final decision of a court resolving a dispute and determining the rights and obligations of the parties. Money judgments, when recorded, become a lien on real property of the defendant. Judgment Lien: An encumbrance that arises by law when a judgment for the recovery of money attaches to the debtor’s real estate. See also “Lien.” Just Compensation: Compensation, which is fair to both the owner and the public when property is taken for public use through condemnation (eminent domain). The theory is that in order to be “just,” the property owner should be no richer or poorer than before the taking.

Landlord’s Lien: A type of lien that can be created by contract or by operation of law. Some examples are: (1) a contractual landlord’s lien as might be found in a lease agreement; (2) a statutory landlord’s lien; and (3) landlord’s remedy of distress (or right of Distraint), which in not truly a lien but has a similar effect. See also “Lien.” Landlord’s Lien or Warrant: A warrant from a landlord to levy upon a tenant’s personal property (e.g., furniture, etc.) and to sell this property at a public sale to compel payment of the rent or the observance of some other stipulation in the lease. Lease: An agreement whereby the owner of real property (i.e., landlord/lessor) gives the right of possession to another (i.e.,

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tenant/lessee) for a specified period (i.e., term) and for a specified consideration (i.e., rent). Lease Agreement: The formal legal document entered into between a landlord and a Tenant to reflect the terms of the negotiations between them; that is, the lease terms have been negotiated and agreed upon, and the agreement has been reduced to writing. It constitutes the entire agreement between the parties and sets forth their basic legal rights. Lease Commencement Date: The date usually constitutes the commencement of the term of the Lease for all purposes, whether or not the tenant has actually taken possession so long as beneficial occupancy is possible. In reality, there could be other agreements, such as an Early Occupancy Agreement, which have an impact on this strict definition. Leasehold Improvements: Improvements made to the leased premises by or for a tenant. Generally, especially in new space, part of the negotiations will include in some detail the improvements to be made in the leased premises by landlord. See also “Tenant Improvements.” Legal Description: A geographical description identifying a parcel of land by government survey, metes and bounds, or lot numbers of a recorded plat including a description of any portion thereof that is subject to an easement or reservation. Legal Owner: The term is in technical contrast to equitable owner. The legal owner has title to the property, although the title may actually carry no rights to the property other than as a lien. See also “Lien.” Letter of Attornment: A letter from the grantor to a tenant, stating that a property has been sold, and directing rent to be paid to the grantee (buyer). See also “Attorn.”

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Letter of Credit: A commitment by a bank or other person, made at the request of a customer, that the issuer will honor drafts or other demands for payment upon full compliance with the conditions specified in the letter of credit. Letters of credit are often used in place of cash deposited with the landlord in satisfying the security deposit provisions of a lease. Letter of Intent: A preliminary agreement stating the proposed terms for a final contract. They can be “binding” or “non-binding.” This is the threshold issue in most litigation concerning letters of intent. The parties should always consult their respective legal counsel before signing any Letter of Intent. Lien: A claim or encumbrance against property used to secure a debt, charge or the performance of some act. Includes liens acquired by contract or by operation of law. Note that all liens are encumbrances but all encumbrances are not liens. Lien Waiver (Waiver of Liens): A waiver of mechanic’s lien rights signed by a general contractor and his subcontractors that is often required before the general contractor can receive a draw under the payment provisions of a construction contract. May also be required before the owner can receive a draw on a construction loan. Like-Kind Property: A term used in an exchange of property held for productive use in a trade or business or for investment. Unless cash is received, the tax consequences of the exchange are postponed pursuant to Section 1031 of the Internal Revenue Code. Limited Partnership: A type of partnership, created under state law, comprised of one or more general partners who manage the business and who are personally liable for partnership debts, and one or more special or limited partners who contribute capital and share in profits. However, one or more of the partners take no part in running the business and incur no liability over and above the amount contributed. See also “General Partner.”

the boundaries of which are shown on recorded maps and “plats.” .” Low Rise: A building with fewer than four stories above ground level. Maker: One who creates or executes a promissory note and promises to pay the note when it becomes due. Market Rent: The rental income that a property would command on the open market with a landlord and a tenant ready and willing to consummate a lease in the ordinary course of business. indicated by the rents that landlords were willing to accept and tenants were willing to pay in recent lease transactions for comparable space. this refers to a lease whose term is at least three years from initial signing until the date of expiration or renewal option. Market Study: A forecast of future demand for a certain type of real estate project that includes an estimate of the square footage that can be absorbed and the rents that can be charged.” Long Term Lease: In most markets. one of several contiguous parcels of land making up a fractional part or subdivision of a block. The contractor absorbs any loss or retains any profit. Lot: Generally. Also called “Marketability Study. See also “Exclusive Listing Agreement. set fee or other form of compensation. Lump-Sum Contract: A type of construction contract requiring the general contractor to complete a building or project for a fixed cost normally established by competitive bidding.178 Scott W Johnstone Listing Agreement: An agreement between the owner of a property and a real estate broker giving the broker the authorization to attempt to sell or lease the property at a certain price and terms in return for a commission.

metes referred to distance and bounds referred to direction.” Market Value: The highest price a property would command in a competitive and open market under all conditions requisite to a fair sale with the buyer and seller each acting prudently and knowledgeably in the ordinary course of trade. An Executive Suite operation is a good example in that a primary lease is signed with the landlord and then individual offices within the leased premises are leased to other individuals or companies. described by listing the compass directions and distances of the boundaries. Mid-Rise: A building with between four and eight stories above ground level although in a Central Business District. See also “Encumbrance. Mixed-Use: Space within a building or project providing for more than one use (i. Mechanic’s Lien: A claim created by state statutes for the purpose of securing priority of payment of the price and value of work performed and materials furnished in constructing. Metes and Bounds: The boundary lines of land. a loft or apartment project with retail..e. Master Lease: A primary lease that controls subsequent leases and which may cover more property than subsequent leases. an office building with retail space). with their terminal points and angles. Mortgage: A written instrument creating an interest in real estate and that provides security for the performance of a duty or the . an apartment building with office space. Originally. and which attaches to the land as well as to the buildings and improvements thereon. sold) to a reasonably intelligent purchaser who is well informed of the facts and willing to accept such title while exercising ordinary business prudence. this might extend to buildings up to twenty-five stories..e. repairing. or improving a building or other structure.Million Dollar Broker 179 Marketable Title: A title which is free from encumbrances and could be readily marketed (i.

Net Square Footage (S. There are also “NN” (double net) and “NNN” (triple net) leases.” Non-Compete Clause: A clause that can be inserted into a lease specifying that the business of the tenant is exclusive in the property and that no other tenant operating the same or similar type of business can occupy space in the building.” Net Lease: A lease in which there is a provision for the tenant to pay.). Net Absorption: The square feet leased in a specific geographic area over a fixed period-of-time after deducting space vacated in the same area during the same period.): The space required for a function or staff position. .” Net Rentable Area: The floor area of a building that remains after the square footage represented by vertical penetrations. Also.BOMA. travel agent.e. (This is by the Building Owner and Manager Association . see “Circulation Factor and “Usable Square Footage.F. has been deducted. repairs. The borrower is not personally liable if the value of the collateral for the loan falls below the amount required to repay the loan. The borrower (i. etc. See also “Gross Lease. such as elevator shafts. These costs may include property taxes.. deli.180 Scott W Johnstone payment of a debt. This clause benefits serviceoriented businesses desiring exclusive access to the building’s population (i. See also “Gross Absorption. Standard). certain costs associated with the operation of the property. The difference between the three is the degree to which the tenant is responsible for operating costs. which bars a lender from seeking a deficiency judgment against a borrower in the event of default. insurance.. utilities.e. in addition to rent. and maintenance. etc. Common areas and mechanical rooms are included and there are no deductions made for necessary columns and projections of the building. mortgagor) retains possession and use of the property. Non-Recourse Loan: A loan.

Operating Cost Escalation: Although there are many variations of escalation clauses. or containing only such improvements as are appropriate to the use and enjoyment of the open area.Million Dollar Broker 181 Normal Wear and Tear: The deterioration or loss in value caused by the tenant’s normal and reasonable use. and dedicated for public or private use or enjoyment or for the use and enjoyment of owners and occupants of land adjoining or neighboring such open spaces. covering most costs of operation of the building. In many leases. The landlord’s definition of Operating Expenses is likely to be broad. all are intended to adjust rents by reference to external standards such as published indexes. Operating Expenses: The actual costs associated with operating a property including maintenance. Operating Expense Escalation: Although there are many variations of operating expense escalation clauses. utilities. During the past thirty years. and insurance.” Open Space: An unimproved area of land or water. management. landlords have developed the custom of separating the base rent for the occupancy of the leased premises from escalation rent. negotiated wage levels. taxes. . repairs. which the tenant would not willingly or knowingly accept. or expenses related to the ownership and operation of buildings. Most landlords pass through proper and customary charges. all are intended to adjust rents by reference to external standards such as published indexes. This technique enables the landlord to better ensure that the “net” rent to be received under the lease will not be reduced by the normal costs of operating and maintaining the property. the tenant is not responsible for “normal wear and tear. but in the hands of an overly aggressive landlord. covering most aspects of operating the building. these clauses can operate to impose obligations. A landlord’s definition of operating expenses is likely to be quite broad.

e. or expenses related to the ownership and operation of buildings. Power of Sale: Clause inserted in a mortgage or deed of trust giving the mortgagee (or trustee) the right and power. taxes.g. Plat (Plat Map): Map of a specific area. Dividing the total rentable square footage of a building by the building’s total number of parking spaces provides the amount of rentable square feet per each individual parking space (expressed as 1/xxx or 1 per xxx). utilities. Pass Throughs: Refers to the tenant’s pro rata share of operating expenses (i. which shows the boundaries of individual parcels of land (e.182 Scott W Johnstone negotiated wage levels. such as a subdivision. Performance Bond: A surety bond posted by a contractor guaranteeing full performance of a contract with the proceeds to be used to complete the contract or compensate for the owner’s loss in the event of nonperformance. Parking Ratio or Index: The intent of this ratio is to provide a uniform method of expressing the amount of parking that is available at a given building. lots) together with streets and easements. Partial Taking: The taking of part (a portion) of an owner’s property under the laws of eminent domain. Percentage Lease: Refers to a provision of the lease calling for the landlord to be paid a percentage of the tenant’s gross sales as a component of rent. This type of clause is most often found in retail leases. Dividing 1000 by the previous result provides the ratio of parking spaces available per each 1000 rentable square feet (expressed as x per 1000). repairs) paid in addition to the base rent. There is usually a base rent amount to which “percentage” rent is then added. on default in the .

interest. or liability. or claim that the grantor may have in the property. Prime Tenant: The major tenant in a building or. according to measure. See also “Common Area” and “Operating Expenses.” Punch List: An itemized list. to advertise and sell the property at public auction. In the case of a tenant. but not containing any warranty or professing that such title is valid. smaller tenants into adjacent space because of the customer traffic generated.Million Dollar Broker 183 payment of the debt secured. Precast Concrete: Concrete components (i. Pro Rata: Proportionately. interest. Preleased: Refers to space in a proposed building that has been leased before the start of construction or in advance of the issuance of a.e. walls) of a building. documenting incomplete or unsatisfactory items after the contractor has notified the owner that the tenant space is substantially complete. Raw Land: Unimproved land that remains in its natural state. Quitclaim Deed: A deed operating as a release that is intended to pass any title. the major or anchor tenant in a shopping center serving to attract other. Certificate of Occupancy. which are fabricated at a plant site and then shipped to the site of construction. the proportionate share of expenses for the maintenance and operation of the property. Prime Shell Space: This typically refers to first generation (new) space that is currently available for a tenant that has never before occupied. typically prepared by the architect or construction manager. .

e. in a weak market. Recourse: The right of a lender. a clause giving the lessor a percentage of profits above a fixed amount of rent. plumbing and heating fixtures. Rent Commencement Date: The date on which a tenant begins paying rent. and including light fixtures. in settlement of some other obligation. Rent: Compensation or fee paid. which is often a factor in foreclosure since there is a forgiveness of debt. endorser or guarantor).e. The dynamics of a marketplace will dictate whether this date coincides with the lease commencement date or if it commences months later (i. or other items which would be personal property if not attached. a clause granting the landlord a right to terminate the lease if the tenant fails to realize minimum sales. and generally whatever is erected or affixed to the land. usually periodically (i. Renewal Option: A clause giving a tenant the right to extend the term of a lease. the tenant may .. buildings. equipment. land.g. to recover against the personal assets of a party who is secondarily liable for the debt (e. such as buildings. usually for a stated period of time and at a rent amount as provided for in the option language. fences. etc. which is intended to cure obsolescence of such building or project. Rehab: An extensive renovation of a building or project. for the occupancy and use of any rental property. in the event of a default by the borrower. monthly rent payments. including real estate taken to satisfy a debt. Real Property: Land. REO (Real Estate Owned): Real estate that has come to be owned by a lender.184 Scott W Johnstone Raw Space: Unimproved “shell space” in a building. or in a percentage lease. Includes real estate acquired by lenders through foreclosure or. (2) As used in leases. Recapture: (1) When the IRS recovers the tax benefit of a deduction or a credit previously taken by a taxpayer.

when tenants are actively being sought and the project is approaching its stabilized occupancy. set fee or other form of compensation. full floor occupancy will have an R/U Factor of 1. It will never begin before the lease commencement date. often referred to as the Rentable/Usable (R/U) Factor.” Rent-Up Period: The period of time.10 to 1. and lower than market rental rates and moving allowances are only a few of the many. there are many others such as: increased tenant improvement allowance.” Request for Proposal (“RFP”): The formalized Request for Proposal represents a compilation of the many considerations that a tenant might have and should be customized to reflect their .10 while partial floor occupancy will have an R/U Factor of 1. The pro-rata share. Rentable Square Footage: Rentable Square Footage equals the Usable Square Footage and the tenant’s pro rata share of the Building Common Areas. will typically fall in a range of 1. Rental Concession: Concessions a landlord may offer a tenant in order to secure their tenancy.16 times the Usable Area. The inverse of this ratio describes the proportion of space that an occupant can expect to actually utilize/physically occupy. signage.16. See also “Abatement. such as lobbies.12 to 1. Typically. Rentable/Usable Ratio: That number obtained when the Total Rentable Area in a building is divided by the Usable Area in the building.Million Dollar Broker 185 be granted several months free rent). following construction of a new building. See also “Exclusive Listing Agreement. While rental abatement is one form of a concession. Representation Agreement: An agreement between the owner of a property and a real estate broker giving the broker the authorization to attempt to sell or lease the property at a certain price and terms in return for a commission. depending on the particular building. public corridors and restrooms.

both will have been agreed to as part of the same transaction. Seisen (Seizen): Possession of real property under claim of freehold estate. indicated by the date of recording. three. See also “First Generation Space.” Sale-Leaseback: An arrangement by which the owner occupant of a property agrees to sell all or part of the property to an investor and then lease it back and continue to occupy space as a tenant. determines the designation first. As the old doctrine of corporeal investiture is no longer in force. etc. or land contracts as liens at the same time. This deposit can also take the form of a Letter of Credit or other financial instrument. Second Mortgage: A mortgage on property that ranks below a first mortgage in priority. property line or other reference point. Security Deposit: A deposit of money by a tenant to a landlord to secure performance of a lease. Second Generation or Secondary Space: Refers to previously occupied space that becomes available for lease. the delivery of a deed gives seisin in law.186 Scott W Johnstone specific needs. either directly from the landlord or as sublease space.” the RFP serves in that same capacity for the tenant. within which building is prohibited. deeds of trust. Setback: The distance from a curb. second. Right of First Refusal: See “First Refusal Right. Properties may have two. Although the lease technically follows the sale. This term originally referred to the completion of feudal investiture by which a tenant was admitted into the feud and performed the rights of homage and fealty. Legal sequence priority. Presently it has come to mean possession under a legal right (usually a fee interest). . third. or more mortgages. Just as the building’s standard form lease document represents the landlord’s “wish list.

and roof of enclosed premises and may include some HVAC. In a new multi-tenant building. etc. restrooms. such as lobbies. Site Development: The process of installation of all necessary improvements. the common area improvements.Million Dollar Broker 187 Setback Ordinance: Setback requirements are normally provided for by ordinances or building codes. there will often be a distinction between improvements above and below the ceiling grid. windows. made to a site before a building or project can be constructed upon such site. (i. Slab: The exposed wearing surface laid over the structural support beams of a building to form the floor(s) of the building .). Site Analysis: The study of a specific parcel of land. With a newly constructed office building. Site Plan: A detailed plan. Shell Space: The interior condition of the tenant’s usable square footage when it’s without improvements or finishes. installment of utilities. While existing improvements and finishes can be removed.e. and exit corridors may also be included in the shell construction. which also contains all the information required by the zoning ordinance. the term most commonly refers to the condition of the usable square footage after completion of the building’s “shell” construction but prior to the build out of the tenant’s space. In a retail project. thus returning space in an older building to its “shell” condition. all or a portion of the floor slab is often installed along with the tenant improvements to better accommodate tenant specific under-floor plumbing requirements. electrical or plumbing improvements but not demising walls or interior space partitioning. Provisions of a zoning ordinance regulate the distance from the lot line to the point where improvements may be constructed. Shell construction typically denotes the floor. grading. which depicts the location of improvements on a parcel of land. which takes into account the surrounding area and is meant to determine its suitability for a specific use or purpose. walls.

water and sewer. showing wall and door locations.. room sizes.g. See also “Hard Cost. It must be sufficiently detailed to allow an accurate estimate of the construction costs. Soft Cost: That portion of an equity investment other than the actual cost of the improvements themselves (i. Special Assessment: Any special charge levied against real property for public improvements (e. Specific Performance: A requirement compelling one of the parties to perform or carry out the provisions of a contract into which he has entered. architectural and engineering fees. When the tenant has selected a building of choice. . Speculative Space: Any tenant space that has not been leased before the start of construction on a new building. This is typically paid out in monthly installments. etc. of rent that is to be paid periodically during the entire term of the lease. etc.188 Scott W Johnstone or laid slab.on-grade in the case of a non-structural. A preliminary space plan will be prepared for a prospective tenant at any number of different properties and this serves as a “test-fit” to help the tenant determine which property will best meet its requirements. ground level concrete slab.” Step-Up Lease (Graded Lease): A lease specifying set increases in rent at set intervals during the term of the lease.” Space Plan: A graphic representation of a tenant’s space requirements. See also “First Generation Space. commissions.) that benefit the assessed property. a final space plan is prepared which speaks to all of the landlord and tenant objectives and then approved by both parties.e. sidewalks. and sometimes includes furniture layouts. a fixed amount.) and which may be taxdeductible in the first year. This final space plan will often become an exhibit to any lease negotiated between the parties. streets. Straight Lease (Flat Lease): A lease specifying the same.

and the landlord is often given the power to subordinate the tenant’s interest to any first mortgage or deed of trust lien subsequently placed upon the leased premises. comprised of a row of stores but smaller than the neighborhood center anchored by a grocery store. generally with common parking. the tenant generally accepts the leased premises subject to any recorded mortgage or deed of trust lien and all existing recorded restrictions. Surface Rights: A right or easement granted with mineral rights. Survey: The process by which a parcel of land is measured and its boundaries and contents ascertained. voluntarily binds himself to be obligated for the debt or obligation of another. . This is a worker. Subcontractor: A contractor working under and being paid by the general contractor. often a construction specialist. though mistakenly. such as an electrical contractor. enabling the possessor of the mineral rights to drill or mine through the surface.Million Dollar Broker 189 Strip Center: Any shopping area. Although the term includes guarantor and the terms are commonly. It contains engineering considerations and other information required by the local authority. used interchangeably. and for the purpose of securing to him a benefit. Surety: One who at the request of another. which depicts the manner in which a parcel of land has been divided into two or more lots. Taking: A common synonym for condemnation or any actual or material interference with private property rights but it’s not essential that there be physical seizure or appropriation. etc. Subordination Agreement: As used in a lease. cement contractor. surety differs from guarantor in a variety of respects. Subdivision Plat: A detailed drawing.

Tax Lien: A statutory lien. The tenant pays any of the costs that exceed this amount. without a fixed term) and the right of either party to terminate on proper notice. which attaches only to the property upon which the taxes are unpaid. “Time is of the Essence”: Means that performance by one party within the period specified in the contract is essential to require performance by the other party. Tenant (Lessee): One who rents real estate from another and holds an estate by virtue of a lease. the characteristics of which are an uncertain duration (i. for nonpayment of property taxes. Generally.e. and tax amounts. which is then multiplied by the tax rate or mill levy to determine the amount of tax due.” “Work letter. especially in new space. Tenant at Will: One who holds possession of premises by permission of the owner or landlord. See also “Leasehold Improvements. Tax Roll: A list or record containing the descriptions of all land parcels located within the county. part of the negotiations will include in some detail the improvements to be made in the leased premises by the landlord.190 Scott W Johnstone Tax Base: The assessed valuation of all the real property that lies within the jurisdiction of a taxing authority. the names of the owners or those receiving the tax bill. existing in favor of the state or municipality. Tenant Improvements: Improvements made to the leased premises by or for a tenant. Title: The means whereby the owner of lands has the just and full possession of real property.” Tenant Improvement (“TI”) Allowance or Work Letter: Defines the fixed amount of money contributed by the landlord toward tenant improvements. . Also commonly referred to as “Tenant Finish Allowance. assessed values.

certain costs associated with a leased property. This normally includes owneroccupied space. Under Contract: A property for which the seller has accepted the buyer’s offer to purchase is referred to as being “under contract. usually a developer or general contractor. insurance premiums. etc. is responsible for the total completion of a building (including construction and interior design) or. Total Inventory: This is the total amount of square footage of a type of property (i. See also “Gross Lease. which may include property taxes. industrial. in addition to rent. or from the enforcement of liens existing against it at the time the title policy is issued. it’s typically removable upon lease termination. depending upon the degree to which the tenant is responsible for operating costs.e.Million Dollar Broker 191 Title Insurance: A policy issued by a title company after searching the title and which insures against loss resulting from defects of title to a specifically described parcel of real property. Since this property is part of the business and not deemed to be part of the real estate.” . retail. the construction of tenant improvements to the customized requirements and specifications of a future owner or tenant.) within a geographical area. There are also “Net Leases” and “NN” (double net) leases. the walls of the leased premises) that is used in the business. repairs. Under Construction: When construction has started but the Certificate of Occupancy has not yet been issued. Title Search: A review of all recorded documents affecting a specific piece of property to determine the present condition of title. whether vacant or occupied. office.” Turn Key Project: The construction of a project in which a third party.e. and maintenances. Trade Fixtures: Personal property that is attached to a structure (i. Triple Net (NNN) Rent: A lease in which the tenant pays. utilities.

Vacancy Rate: The total amount of available space compared to the total inventory of space and expressed as a percentage. Multiplying the vacant space times 100 and then dividing it by the total inventory calculate this. the prospective buyer is given a certain period of time in which to perform its due diligence and finalize financing arrangements. Unimproved Land: Most commonly refers to land without improvements or buildings but can also mean land in its natural state. During the period of time the property is under contract. Unencumbered: Describes title to property that is free of liens and any other encumbrances. Vacant Space: Refers to existing tenant space currently being marketed for lease. Total Usable Square Footage equals the Net Square Footage x the Circulation Factor. often expressed as a percentage of the total rentable square footage available in a building or project. the seller is precluded from entertaining offers from other buyers. This excludes space available for sublease. See also “Encumbrances.192 Scott W Johnstone Generally.” Use: The specific purpose for which a parcel of land or a building is intended to be used or for which it has been designed or arranged. See also. “Raw Land. . Usable Square Footage: Usable Square Footage is the area contained within the demising walls of the tenant space. Free and clear. Vacancy Factor: The amount of gross revenue that pro forma income statements anticipate will be lost because of vacancies. see: Circulation Factor and Net Square Footage. Also.

etc. because of special circumstances. Included would be such things as the particular physical surroundings. Workletter: A list of the building standard items that the landlord will contribute as part of the tenant improvements.Million Dollar Broker 193 Variance: Refers to permission that allows a property owner to depart from the literal requirements of a zoning ordinance that. the landlord does not warrant that he owns the land. It provides a warranty by landlord that it has the legal ability to convey the possession of the premises to Tenant. See also Leasehold Improvements and “Tenant Improvements. number of telephone and electrical outlets. This is the essence of the landlord’s agreement and the tenant’s obligation to pay rent. cause a unique hardship. type and quantity of lights. which of course had nothing to do with noise in and around the leased premises. Working Drawings: The set of plans for a building or project that comprise the contract documents that indicate the precise manner . it constitutes an actual or constructive eviction. and when compliance would result in a practical difficulty and would deprive the owner of the reasonable use of the property. Examples of the building standard items typically identified include: style and type of doors. Warranty of Possession: This is the old “quiet enjoyment” paragraph. lineal feet of partitions. quality of floor coverings. This means that if the landlord breaches this warranty. The Workletter often carries a dollar value but is contrasted with a fixed dollar tenant improvement allowance that can be used at the tenant’s discretion. shape or topographical condition of the property. Weighted Average Rental Rates: The mean proportion or medial sum made out of the unequal rental rates in two or more buildings within a market area.

at the city or county level. This set of plans includes a set of specifications for the building or project. Glossary of Terms borrowed from several locations too many to name: Thank you to all contributors. generally. . Note that these are generally accepted terminology for our industry but that this should not be construed as legal terminology and that we are not providing legal advice.e. Please always consult an attorney when considering legal advice. architectural design and intended use of buildings within such designated zone (i. Zoning: The division of a city or town into zones and the application of regulations having to do with the structural. a tenant needing manufacturing space would look for a building located within an area zoned for manufacturing). controlling the use of land and construction of improvements in a given area or zone.194 Scott W Johnstone in which a project is to be built. Zoning Ordinance: Refers to the set of laws and regulations.