EXHIBIT 10.5

                                 LOAN AGREEMENT

       THIS AGREEMENT (the "Loan Agreement") is made and entered into as of July
23, 2001 between GRUBB & ELLIS COMPANY, a Delaware  corporation (the "Company"),
and MARK R. COSTELLO ("Executive").

       WHEREAS,  the Company  and  Executive  have  entered  into an  employment
agreement  effective as of July 1, 2001 (the  "Employment  Agreement"),  whereby
Executive will be Chief Operating Officer of the Company; and

       WHEREAS,  the Employment Agreement provides for a loan in an amount of up
to three hundred thousand dollars ($300,000) (the "Loan"),  to be evidenced by a
promissory note (the "Note").

       NOW,  THEREFORE,  in  consideration  of the  foregoing  and of the mutual
covenants and terms hereafter set forth, it is agreed as follows:

       1.     COMMITMENT  TO LEND.  The Company  offers to lend to Executive the
principal  sum  of up to  three  hundred  thousand  dollars  ($300,000)  on  the
following terms.

       2.     BORROWING.  Executive  may borrow up to  $300,000 on and after the
commencement date of his employment with the Company.  The Company's  commitment
to lend to  Executive  hereunder  shall  expire  on the  earliest  to  occur  of
termination  of  Executive's  employment  with the Company  for any  reason,  or
December 31, 2001.

       3.     PROMISSORY  NOTES.  Executive may request a Loan of up to $300,000
on or after July 23, 2001,  by executing a Note in the form  attached  hereto as
Exhibit A and incorporated herein by reference,  and by delivering the original,
executed Note to the Chief  Financial  Officer of the Company,  accompanied by a
request to borrow. The date of funding shall be the "Borrowing Date."

       4.     TERM OF LOAN.  The term of the Loan  hereunder  shall extend for a
period ending July 23, 2004 (the "Loan Due Date").

       5.     INTEREST  RATE.  The interest  rate per annum on the Loan shall be
the short-term  applicable  federal rate of interest under Internal Revenue Code
Section  1274(d) on the Borrowing Date for loans on which interest is compounded
annually.  Interest  shall  accrue  annually  from the  date of each  Borrowing.
Interest on the Loan shall compound annually.

       6.     REPAYMENT AND  AMORTIZATION OF THE LOAN. The principal on the Loan
shall be amortized annually over the period commencing on the Borrowing Date and
ending on each July 23 of 2002, 2003 and 2004.

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       7.     ACCELERATION OF THE LOAN DUE DATE.  Notwithstanding the provisions
of Paragraph 6, upon  termination of Executive's  employment with the Company by
Executive  without  "Good  Reason" or by the Company for "Cause," as those terms
are  defined  in  the  Employment  Agreement  and  are  incorporated  herein  by
reference,  before  the Loan Due  Date,  the  outstanding  balance  of the Loan,
including accrued interest, shall be immediately due and payable in cash.

       8.     USE OF  PROCEEDS.  Executive  represents  and  warrants  that  the
proceeds  from the Loan will not be used to finance  the  purchase  of shares of
capital stock of the Company.

       9.     TAXES.  Executive represents that he has reviewed with his own tax
advisor the federal,  state, local and foreign tax consequences,  if any, of the
Loan and the transactions contemplated by this Loan Agreement. Executive further
represents  that he has relied solely on such advisor and not on any  statements
or  representations  of the  Company  or any of its agents  with  respect to tax
matters in  connection  with this Loan  Agreement.  Executive  understands  that
Executive  (and  not the  Company)  shall be  responsible  for  Executive's  tax
liability  that  may  arise  as  a  result  of  the  Loan  or  the  transactions
contemplated by this Loan Agreement.

       10.    TRANSFER OF THE COMPANY'S  RIGHTS AND OBLIGATIONS  HEREUNDER.  The
Company is  entitled  to  transfer  its rights and  obligations  under this Loan
Agreement to one or more persons or entities,  and all covenants and  agreements
hereunder  shall inure to the benefit of, and be  enforceable  by the  Company's
successors and assigns.  If the Company undergoes a "Change of Control," as that
term  is  defined  in  the  Employment  Agreement  and  incorporated  herein  by
reference,  then the Company  shall use its best efforts to cause any  surviving
corporation or entity or acquiring  corporation or entity,  or affiliate of such
corporation  or entity,  to assume  the  Company's  obligations  under this Loan
Agreement.

       11.    RIGHTS TO CONTINUATION OF EMPLOYMENT.  Executive  acknowledges and
understands  that  the  benefits  conferred  upon  Executive  hereunder  do  not
constitute  an express  or implied  promise  of  continued  employment  with the
Company,  and that this Loan Agreement  shall not be construed as obligating the
Company to employ or retain Executive for any specific period of time.

       12.    DISPUTES.  Any  dispute  arising  in  connection  with  this  Loan
Agreement shall be finally  determined and settled by  arbitration.  Arbitration
shall be initiated by one party making  written  demand upon the other party and
simultaneously  filing the demand  together  with required fees in the office of
the American  Arbitration  Association in New York,  New York.  The  arbitration
proceeding  shall be conducted in New York,  New York by a single  arbitrator in
accordance with the Expedited  Procedures of the Employment  Dispute  Resolution
Rules of the American  Arbitration  Association,  except as  otherwise  provided
herein.  Except  as  required  by the  arbitrator,  the  parties  shall  have no
obligation to comply with discovery requests made in the arbitration proceeding.
The arbitration award shall be a final and binding  determination of the dispute
and shall be fully  enforceable  as an  arbitration  award in any  court  having
jurisdiction and venue over such parties.

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       13.    NO WAIVER;  SEVERABILITY.  Either  party's  failure to enforce any
provision  hereunder  shall not in any way be  construed as a waiver of any such
provision,  nor prevent  that party from  thereafter  enforcing  such  provision
and/or  any  other  provision  of this Loan  Agreement.  The  invalidity  of any
provision of this Loan Agreement  shall not in any manner affect the validity or
enforceability. of any other provisions hereof.

       14.    NOTICES.  Any  notice  to be given  under  the  terms of this Loan
Agreement to the Company  shall be addressed to the Company in care of the Chief
Legal  Officer,  2215 Sanders Road,  Suite 400,  Northbrook,  IL 60062;  and any
notice to be given to  Executive  shall be  addressed  to him at his  address of
record on file with the  Company.  By a notice given  pursuant to this  Section,
either party may hereafter designate a different address for notices to be given
to him.  Any notice  which is required to be given to the  Executive  shall,  if
Executive is then deceased,  be given to Executive's personal  representative if
such  representative  has  previously  informed  the  Company  of his status and
address by written  notice under this  Section.  Any notice to any party will be
effective  upon  receipt  (or refusal of  receipt),  and shall be in writing and
delivered  personally  or sent by  telecopy or  certified  or  registered  mail,
postage prepaid.

       15.    TITLES.  Titles are provided herein for  convenience  only and are
not to serve as a basis for interpretation or construction of this Agreement.

       16.    GOVERNING LAW; ENTIRE AGREEMENT;  AMENDMENTS.  This Loan Agreement
shall be  administered,  interpreted and enforced under the internal laws of the
State of New  York,  without  regard to  conflicts  of laws  thereof.  This Loan
Agreement  represents the entire  agreement  between the parties with respect to
the Loan as provided for in Executive's  employment  agreement with the Company,
and supersedes all prior  understandings of the parties with regard thereto.  In
the event of a conflict between the provisions of his employment  agreement with
the  Company  and this Loan  Agreement,  the terms of the Loan  Agreement  shall
prevail.  This Loan Agreement may not be modified  except in a writing signed by
both parties.

       This Loan Agreement may be signed in counterpart,  each of which shall be
deemed an original for all purposes and both of which together shall  constitute
one instrument.

       IN WITNESS WHEREOF,  this Loan Agreement has been executed by the parties
as indicated below.

EXECUTIVE                                  GRUBB & ELLIS COMPANY


/s/ MARK R. COSTELLO                       By: /s/ BARRY M. BAROVICK
-----------------------------------            ---------------------------------
Mark R. Costello                           Barry M. Barovick
                                           President and Chief Executive Officer

Date:  JULY 26, 2001                       Date:  JULY 26, 2001
       ----------------------------               ------------------------------

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EXHIBIT A TO LOAN AGREEMENT

                                                   PROMISSORY NOTE - PAGE 1 OF 2

[GRAPHIC OMITTED]



$------- 300,0000-------        NEW YORK,        NEW YORK        JULY 30, 2001
------------------------     ---------------  --------------  ------------------
                                 (City)           (State)           (Date)

On or, as indicated  below,  before JULY 23 , 2004 (the  "Maturity  Date"),  for
value received,  the undersigned Mark R. Costello  ("Maker")  promises to pay to
Grubb & Ellis Company,  a Delaware  corporation,  or its wholly owned subsidiary
named below  (hereinafter,  "Grubb & Ellis Company"),  or order, at 2215 Sanders
Road, Suite 400,  Northbrook,  Illinois 60062, or such other place as the holder
shall  designate,  the amount  financed as set forth above  ("principal"),  plus
interest  thereon  at the rate of 4.07 per cent per annum  ("interest"),  or the
highest rate permitted by law,  whichever is less.  Principal and interest shall
be payable  in lawful  money of the United  States  and  payments  made shall be
applied first to accrued interest and then to unpaid principal.

The  principal  shall be amortized  and paid in  installments  at the  following
dates:

                                  JULY 23, 2002
                                  JULY 23, 2003
                                  JULY 23, 2004

Interest shall accrue annually on the outstanding principal balance of this Note
on each July 23 of 2002, 2003 and 2004.

NOTWITHSTANDING THE FOREGOING REPAYMENT PROVISIONS,  UPON TERMINATION OF MAKER'S
EMPLOYMENT  WITH THE COMPANY BY MAKER WITHOUT GOOD REASON AS DEFINED IN THE LOAN
AGREEMENT OR BY THE COMPANY FOR CAUSE, AS DEFINED IN THE LOAN AGREEMENT,  BEFORE
THE  MATURITY  DATE,  THE  OUTSTANDING  BALANCE OF THE LOAN,  INCLUDING  ACCRUED
INTEREST, SHALL BE IMMEDIATELY DUE AND PAYABLE IN CASH.

The Maker  reserves the right to prepay all or any part of the unpaid  principal
and accrued interest at any time without any penalty or charge therefor.

Except to the extent  expressly  prohibited  by  applicable  law,  bonuses under
Maker's  Retention  Bonus  Program dated as of July 23, 2001 that are payable to
Maker by Grubb & Ellis  Company at any time  after  this Note is signed,  to the
extent that any balance of principal or interest remains unpaid under this Note,
shall be  applied  to the  outstanding  balance  of this Note  until it has been
repaid in full.  The Maker hereby  assigns all  foregoing  sums to Grubb & Ellis
Company;  provided,  however, that such repayment shall not relieve Maker of his
obligation to repay

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                                                   PROMISSORY NOTE - PAGE 2 OF 2


amounts  owing under this Note in the event that such bonuses to be received are
not sufficient or timely to meet Maker's obligations hereunder. The Maker agrees
to pay all  reasonable  attorneys'  fees and  costs  incurred  by the  holder to
collect  all sums due under this note  whether or not any  arbitration  or legal
action is commenced or concluded.

The Maker  warrants,  represents  and  agrees  that he has not  relied  upon any
statement by Grubb & Ellis  Company with respect to the matters  covered by this
Note  except for the matters  expressly  stated in this Note.  The Maker  hereby
waives  presentment  for  payment,  notice of  non-payment,  notice of dishonor,
demand for payment and any notices in connection with the delivery, presentment,
acceptance, performance, default or enforcement of this Note.

In the event a claim or  controversy  arises  concerning any failure by Maker to
pay holder all or any  portion of the  amounts  provided  herein,  such claim or
controversy shall be finally determined and settled by arbitration.  Arbitration
shall be initiated by one party making  written  demand upon the other party and
simultaneously  filing the demand  together  with required fees in the office of
the American  Arbitration  Association in New York,  New York.  The  arbitration
proceeding  shall be conducted in New York,  New York by a single  arbitrator in
accordance with the Expedited  Procedures of the Employment  Dispute  Resolution
Rules of the American  Arbitration  Association,  except as  otherwise  provided
herein.  Except  as  required  by the  arbitrator,  the  parties  shall  have no
obligation to comply with discovery requests made in the arbitration proceeding.
The arbitration award shall be a final and binding  determination of the dispute
and shall be fully  enforceable  as an  arbitration  award in any  court  having
jurisdiction  and  venue  over  such  parties.  In  the  event  any  arbitration
proceeding  or legal  action  to  enforce  an  arbitration  award  is  commenced
hereunder,  the  prevailing  party shall be entitled to recover its expenses and
reasonable attorneys' fees incurred therein from the unsuccessful party.

This Note shall be governed by and  construed  in  accordance  with the internal
laws of the state of New York, without regard to the conflict-of-law provisions.

                                              MAKER

                                              ----------------------------
                                              Mark R. Costello

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<PAGE>


                             RETENTION BONUS PROGRAM
                                  JULY 23, 2001
                                MARK R. COSTELLO

1.     ELIGIBILITY  FOR BONUSES.  You are eligible to receive a retention  bonus
       ("Bonus")  for  each  of  the  following   periods   commencing  on  your
       Commencement  Date and ending  three years from your  Commencement  Date,
       upon the continuation of your employment with the Company in the capacity
       of Chief Operating Officer,  and according to such other terms as are set
       forth below.

                                      YEAR

                             First (ending 7/23/02)

                           Second (7/23/02 - 7/23/03)

                            Third (7/23/03 - 7/23/04)

2.     CALCULATION OF THE BONUSES. Each bonus will be calculated as follows: you
       will be paid,  at the last day of each of the  above  periods,  an amount
       equal  to  the  accrued   interest  and  principal  due  under  the  Loan
       outstanding  under the Loan  Agreement  dated as of July 23, 2001 between
       you and the Company (the "Loan  Agreement"),  plus an amount necessary to
       pay applicable income and employment taxes on the bonus.

3.     ACCELERATION  OF BONUSES UPON CERTAIN  EVENTS.  Upon any of the following
       events,  you shall  receive a bonus equal to the  outstanding  and unpaid
       accrued interest and principal under the Loan outstanding  under the Loan
       Agreement,  plus  an  amount  necessary  to  pay  applicable  income  and
       employment taxes on the bonus:

       (i)    Following a "Change of  Control."  "Change of Control"  shall have
              the  meaning  set  forth  in your  employment  agreement  with the
              Company dated as of July 1, 2001, which is incorporated  herein by
              reference (the "Employment Agreement"),  and such definition shall
              be incorporated herein by reference:

       (ii)   if your  employment  with the Company is terminated by the Company
              other than for "Cause."  "Cause"  shall have the meaning set forth
              in  your  Employment  Agreement,  and  such  definition  shall  be
              incorporated herein by reference.

5.     APPLICATION OF BONUS PAYMENTS.  You agree that all bonuses paid hereunder
       will be applied to outstanding principal and accrued interest of the Loan
       issued to you under the Loan Agreement  between you and the Company dated
       as of July 23, 2001 (the "Loan Agreement") as evidenced by the promissory
       note that you have  executed  in favor of the Company as of July 30, 2001
       (the "Loan").

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6.     REPORTING OF INCOME.  You  acknowledge  and agree that each bonus payment
       hereunder,  whether or not  applied to  repayment  of the Loan,  shall be
       reported by the Company to the Internal  Revenue  Service as compensation
       income to you upon earning the bonus.


       This Retention Bonus Program may be signed in counterpart,  each of which
shall be deemed an original for all purposes  and both of which  together  shall
constitute one instrument.

       IN WITNESS WHEREOF, this Retention Bonus Program has been executed by the
parties as indicated below.

EXECUTIVE                                  GRUBB & ELLIS COMPANY


                                           By:
----------------------------------------   -------------------------------------
Mark R. Costello                           Barry M. Barovick
                                           President and Chief Executive Officer

Date:                                      Date:
     -----------------------------------        --------------------------------

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