As commercial real estate builds momentum, the industry is reportedly attracting increasing numbers of practitioners, raising anew the importance of professional standards and business ethics in an industry that just three decades ago was described by some as the "Wild West."

The nation's largest brokers' association of its kind, the Los Angeles-based American Industrial Real Estate Association (AIR), is credited by many as having brought order out of this earlier chaos.

AIR, according to some veteran local members of the trade group, achieved this by specific far-reaching initiatives _ establishing Rules of Professional Conduct for commercial brokers, Standard Sale and Lease Contracts, and particularly vital to brokers, the Standard Owner/Agency Agreement. These same brokers emphasize that these initiatives are especially critical in today's heated real estate environment.
"As the volume of transactions accelerates, as the size of transactions increase, and as new people enter the industry, AIR Standard Sale and Lease Forms, and the Standard Owner/Agency Agreement provide a structure for these brokers to work within. These documents not only protect the broker, but their clients, "says Jim McDonald, principal of Calabasas-based Group 100/Jim McDonald and a 35-year AIR member. McDonald served as AIR's president in 1971 and 1972.

McDonald added that without these tools, new people in the brokerage field could be subject to substantial exposure and expense.

"The AIR standard contracts are a powerful tool that level the playing field for negotiating, while protecting the broker, owner and the user who have the greatest risk to their assets," McDonald said. "They also protect tenants by delineating responsibilities and outlining disclosures."

Meanwhile, he continues, "AIR's Rules of Professional Conduct set standards of behavior between brokers, and between brokers and principals, creating an orderly marketplace for over 1000 AIR members in Southern California."

"Before AIR established these standards in the early Sixties, the market was chaotic. It was not uncommon to see numerous broker signs on properties and brokers contacting owners who were already under contract with another broker. This led to confusion, and often a distortion of the actual demand for the product. AIR's Rules of Professional Conduct are designed to prevent this," said McDonald.

He explained that under AIR's rules, a broker cannot take an offer from a user on a property that they have already negotiated on through another broker without the first broker's consent. "I cannot muscle my way into that user's confidence with promises of a better deal under AIR rules," said McDonald.

Significantly, lawsuits among brokers and tenants are frequently avoided because of these rules. "If a dispute is unavoidable, AIR's Arbitration/Mediation program provides a quick, equitable means of settling," said McDonald.

Moreover, he continues, Air's MULTIPLE data base, provided by and for brokers, increases the likelihood that a commission will be paid a broker.

"The MULTIPLE is no mere data base of properties. It not only contains an Owner/Agency Commission Agreement, but assures deliverability of properties offered at a specific price. Reliability of property data is also high because AIR's data is gathered by brokers who know the property intimately and how to evaluate it, not by inexperienced and unlicensed information gatherers," said McDonald.

He explained that property on a commercial data base may have a quoted price, but no contract with a broker. So, the price may, in fact, be a trial balloon.

"When the owner has a contract with a broker, there is a greater likelihood of deliverability. That affects everyone, the owner, broker and user; the owner benefits from the diligent marketing efforts of the broker, the user has fewer surprises, and the broker is incentified, McDonald concluded.

Affiliate Profile
North American Title Eyes New Vistas Following Acquisition by Lenna

North American Asset Development Corporation (North American Title) and its affiliate companies, Colorado Asset Development Corporation and Phoenix Asset Development Company, LLC, were purchased early this year by Lennar Title Services, Inc., a subsidiary of Lennar Corporation.

"Our new affiliation with Lennar will provide many exciting opportunities for North American in the years ahead. We are excited about our new affiliation and look forward to a very successful relationship with Lennar, but we remain committed to being the local, hands-on service oriented company," a North American Title spokesman said. North American Title's AIR affiliate is based in Glendale.

Lennar Corporation is a publicly held company listed on the New York Stock Exchange. It is the fifth largest home building company in the country based on unit sale and the number one home building company when measured by profitability.

Say you are a business owner seeking an industrial facility between 20,000 and 30,000 sq. ft. in the City of Santa Fe Springs. Where do you begin?

The American Industrial Real Estate Association announces that this information is now just a mouse click away on AIR's new Web Site (http://www.airea.com).

Recently unveiled, AIR's Web Site contains basic information of interest to the commercial real estate community. Perhaps the most useful is data on all properties in virtually every size range listed by over 1000 AIR broker members in the eight-county Los Angeles Basin.

Once on-line at AIR's home page, all the user need do is click the "search" icon. Instantly options appear for the specific property sought. These options include for sale or lease, property type (industrial, office), city, and building size range, from 1000 to 100,000 sq. ft.

Once you make your selections, click "search" and the names and phone numbers of all AIR brokers who have listings in that market and size range appear.

Other features of the AIR home page include a list of all AIR members, news from AIR, a calendar of events, and a "tool box" of links to other commercial real estate outlets, including Inman News Service and its commercial real estate section.

The AIR Financial Statements for 1997 will be available at the end of the month. If you are an active member and wish to receive a copy, please send a written request and a self-addressed stamped envelope to the AIR office.