You're not going to believe this one! Frankly, I wasn't sure I believed it myself, at first. We recently experienced surprisingly greedy and stupid actions taken by a commercial real estate broker and his associate, both of whom were working on the same team that represented competing properties. What these two did could land them in serious trouble. The two brokers work for a well-known commercial real estate brokerage company, you know, one of those "alphabet companies" where, when people talk about it, they use the company's initials instead of its full company name.

Our client, let's call them the Laboratory Company, is a rock solid company that has experienced steady growth, has maintained a quality reputation, and can demonstrate considerable financial credibility. When we recently attempted to visit a particular suburban office building with our client, the broker representing that property stone-walled us, saying they were not interested in pursuing a transaction with our client. You should know that the property, a multi - building complex with significant vacancies, had more than a few blocks of available space that could accommodate our client's needs, and was situated in a geographic area where approximately 6 million square feet of office space sat empty and begging for tenants that rarely showed up.

So, when even before we provided the property broker with any details about our client's requirements, he said they weren't interested in, what was, a very desirable tenant, my antenna went up...way up! When I asked the property broker to explain his very peculiar response, he gave me some back-handed nonsense that caused me to keep digging. Then, I hit pay dirt!

What I learned greatly disappointed me. Up to that point, I had held this particular broker in high regard...up until that point! What I found out was that the property broker and his associate had just been engaged to represent a competing office campus nearby. The owner of that campus is active in the regional market with a substantial and growing portfolio, and is a player whose properties are sought after by many local real estate brokers. I'm sure the property broker was counting on growing the number of properties he represents, including those of the competing owner.

Guess what? Our client was one of the major tenants in the competing owner's office campus. That's the facility our client contemplated vacating in order to move to the suburban office building. So, what I realized was that the property broker was in a real pickle. The worst thing that could happen to the property broker would be for its first transaction at the office campus to be the loss of a major tenant. The only thing worse than that would be for the loss to occur because the tenant moved to another building represented by the very same property broker! In such an instance, the owner of the office campus would likely assume that the property broker pilfered its tenant, and the owner might even fire the property broker. For the property broker, his dreams of future revenue opportunities and an expanded relationship with the owner of the office campus could quickly become dust in the wind!

Instead of demonstrating integrity and doing the right thing by disclosing his predicament to both property owners and recusing himself from representation of one or both properties, the property broker did something that really surprised me. Because he thought he and his associate had so much control over the local market, these two attempted to manipulate the properties, both owners, my client, and me, to protect their own position above the interests of everyone else.

Here's where it got silly: The property broker attempted to block our client from visiting the suburban office building. Then, his associate suggested that our client was expected to remain in the competing owner's campus. Were they kidding? Not only did their actions constitute blatant conflicts-of-interest, but the property brokers surely breached ethics and their fiduciary responsibility to the blocked building owner, devalued the reputation of their company, made the competing office campus owner look bad, and most likely violated State license law. Moreover, as brokers who I had previously admired for their achievements and approach to business, the property brokers lost my respect!

Can you imagine how upset our client was? The CEO was an accomplished and easy-going, but no-nonsense executive, who did not enjoy feeling like anyone's pawn. Understandably, his first inclination was to tell the property brokers and both owners that he wouldn't do business with any of them. He also wondered if perhaps the competing owner was in on the whole thing. Can you blame him?

Our client WILL have the opportunity to do business with whomever it chooses, irrespective of any actions taken by these greedy property brokers. This story is still playing out. I'll keep you apprised. The actions of these particular property brokers are the kind of pedestrian garbage that perpetuates the negative stereotypes of commercial real estate professionals...the kind of stuff the rest of us fight against!

Have you experienced anything like this before? Send me your stories.

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When Commercial Real Estate Brokers Get Greedy...and Stupid!

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