<PAGE>

                                                                   EXHIBIT 10.16

                                Grubb & Ellis Company
                                One Montgomery Street
                                   Telesis Tower
                                San Francisco, CA 94104



                                  November 15, 1995





Mr. Allan D. Schuster
3937 Merriweather Woods
Alpharetta, Georgia 30202

         Re:  LETTER AGREEMENT OF EMPLOYMENT
              ------------------------------

Dear Allan:

         This letter confirms the terms of your employment with Grubb & Ellis
Company (the "Company").

         POSITION.  You will be Chief Executive Officer and President of the
    Company.  You will be elected to serve on the Board of Directors of the
    Company, and during the Period of Contract Employment (as defined below)
    you will be nominated to serve as a director upon expiration of your term
    as a director and will serve as a director at the pleasure of the Company's
    stockholders.  You will also serve as Chief Executive Officer, and be a
    member of the Board of Directors, of such subsidiaries of the Company as
    the Board of Directors of the Company determines (the "Designated
    Subsidiaries").  You will serve at the pleasure of the Board of Directors
    of the Company and will report directly to the Chairman and Board of
    Directors of the Company.  In such capacities, you will work closely with
    other members of the management team to accomplish the goals of the Company
    and the Designated Subsidiaries.

         DUTIES AND RESPONSIBILITIES.  Subject to control of the Board of
    Directors of the Company and the Designated Subsidiaries, you will direct
    the day-to-day operations of the Company and the Designated Subsidiaries
    and you will formulate plans and policies to achieve overall corporate
    objectives and targeted profitability, including: (i) creating, approving
    and implementing broad corporate policies, procedures and organizational
    structure; (ii)

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<PAGE>

    establishing and monitoring short-term and long-term plans consistent with
    overall profit and growth objectives; (iii) providing advice, guidance and
    direction to carry out major plans and procedures consistent with policies
    established by Board

    of Directors of the Company or a Designated Subsidiary; (iv) monitoring and
    analyzing operating results to ensure that corporate performance is
    satisfactorily maintained; and (v) performing additional assignments as
    directed by the Chairman of the Company or the Board of Directors of the
    Company or the Designated Subsidiaries.

         PERIOD OF CONTRACT EMPLOYMENT.  As used herein, the term "Period of
    Contract Employment" means the period beginning on the date hereof and
    ending on the earlier of December 31, 2000 or at the time of the
    Termination of Contract Employment (as defined below under the caption
    "Termination").  The Period of Contract Employment may be extended by a
    written agreement signed by you and the Company; PROVIDED, that if the
    Company offers to extend your employment beyond December 31, 2000, such
    offer must include a compensation arrangement that includes an amount of
                Base Salary (as defined below under the caption "Annual Base
    Salary") equal to or greater than the amount of Base Salary paid or payable
    during calendar year 2000 and, with respect to Target Bonus (as defined
    below under the caption "Bonus Compensation"), includes an amount equal to
    or greater than the Target Bonus applicable in calendar year 2000.
    Notwithstanding the foregoing, neither you nor the Company will have any
    obligation to extend the Period of Contract Employment.  If you remain in
    the employ of the Company following the Period of Contract Employment and
    any extension thereof in accordance with this paragraph, such employment
    will be at will unless different terms of employment are established in
    writing.

         ANNUAL BASE SALARY.  During the Period of Contract Employment the
    Company agrees to pay you a base salary (the "Base Salary") in the annual
    amount set forth below:

<TABLE>
<CAPTION>
     Calendar             Base Salary
     --------             -----------
       Year
       ----
     <S>                  <C>
       1995               $350,000     (prorated for portion of year employed
                                        by the Company)
       1996               $350,000
       1997               $350,000
       1998               $380,000
       1999               $400,000

                                                                              57

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       2000               $415,000
</TABLE>

         The Base Salary will be payable as current salary, in installments
    (not less frequent than monthly) subject to all applicable withholding and
    deductions, in accordance with the Company's customary payroll practices.

         BONUS COMPENSATION.  During the Period of Contract Employment, you
    will be entitled to receive annual bonus compensation ("Bonus
    Compensation") comprised of a target bonus (the "Target Bonus") and a
    special bonus (the "Special Bonus").  Bonus Compensation, if earned, will
    be payable after December 31 of the calendar year in which the Bonus
    Compensation was earned in one lump sum in accordance with the Company's
    customary payroll practices, but in no event later than 90 days after the
    end of such calendar year.

         During the Period of Contract Employment and upon the completion of
    each of the calendar years 1996 and 1997, the Company agrees to pay you a
    minimum Target Bonus equal to $175,000 with a maximum bonus amount to be
    established in the sole discretion of the Compensation Committee of the
    Company's Board of Directors (the "Compensation Committee") based on the
    achievement of performance factors to be established by the Compensation
    Committee after consultation with you.  During the Period of Contract
    Employment and with respect to calendar year 1998 and calendar years
    thereafter, you will be eligible to receive a Target Bonus based upon
    achievement of performance factors to be established by the Compensation
    Committee after consultation with you.  For each performance factor, after
    consultation with you the Compensation Committee will establish
    quantitative performance standards and an accompanying Target Bonus equal
    to fifty percent (50%) of your Base Salary for the applicable year, subject
    to increase or decrease in the event such quantitative performance
    standards are exceeded or not met, as the case may be.

         During the Contract Period of Employment, you will be eligible to
    receive a Special Bonus with respect to calendar years 1998, 1999 and 2000.
    The Special Bonus will be payable in the event the Company's Net Income for
    the twelve months ending December 31 of a given year equals or exceeds a
    level as set forth below (the "Earnings Level").  For purposes of
    determining whether the Earnings Level is achieved for a given calendar
    year, Net Income means after-tax, net income as reported in the Company's
    Consolidated Statement of Operations in a manner consistent with the
    Company's accounting practices used as of the date hereof but excluding
    extraordinary items of income and expense.
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    For purposes of this letter agreement, any annual amount of depreciation
    and amortization expense in excess of $2,000,000 will be deemed an
    extraordinary expense and will not be included in determining Net Income.
    You will have the right to request the Company's principal accounting
    officer to provide a presentation of the Company's Net Income for a given
    calendar year calculated in a manner consistent with the accounting
    practices used as of the date hereof.
<TABLE>
<CAPTION>

                    Calendar Year          Earnings Level
                    -------------          --------------
                    <S>                    <C>
                      1998                  $14,500,000
                      1999                  $17,000,000
                      2000                  $20,000,000

</TABLE>

         In the event the Company achieves the Earnings Level during a given
    calendar year, the Company agrees to pay you a Special Bonus equal to
    $333,000 (the "Special Bonus Amount").  In the event the Company achieves
    at least eighty-five percent (85%) but less than one hundred percent (100%)
    of the Earnings Level in a given calendar year, the Company agrees to pay
    you a pro-rata share of the Special Bonus Amount in an amount equal to the
    percentage of the Earnings Level achieved by the Company that year.  To the
    extent that the Company's Net Income for a given calendar year exceeds the
    Earnings Level, you will have the right to deduct the aggregate amount of
    such excess in such portions as you direct (PROVIDED that the aggregate
    amount of such portions does not exceed the aggregate amount of such
    excess) from the specified Earnings Level of any preceding and/or any
    succeeding calendar year for which you were eligible to earn a Special
    Bonus but for which the full Special Bonus Amount was not earned, and the
    Company agrees to pay you the Special Bonus for such prior and/or
    succeeding calendar year in accordance with the Earnings Level, as
    adjusted.

         EQUITY INCENTIVE.  Concurrent with the execution of this letter
agreement and pursuant to the Company's 1990 Amended and Restated Stock Option
Plan (the "Plan"), the Company has granted you a non-qualified stock option (the
"Option") to purchase 500,000 shares of the Company's common stock, $.01 par
value per share (the "Common Stock"), at an exercise price equal to the closing
price of the Common Stock on The New York Stock Exchange on the date of such
grant.  The Option vests in five equal, annual installments commencing on
December 31, 1996, provided you are still employed by the Company on each such
installment date.  Notwithstanding the foregoing, the option agreement with
respect to the Option (the "Stock Option Agreement") provides that the Option
becomes fully vested in the

                                                                              59

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event the Company achieves the Earnings Level in calendar year 1998 or 1999 or
in the event of a Change of Control Termination (as defined below under the
caption "Change of Control Termination").  Except as otherwise provided herein
or in the Stock Option Agreement and subject to the following paragraph, the
Option may be exercised at any time in accordance with the provisions of the
Plan, if and to the extent vested, until the tenth anniversary of the date of
grant.

         The Company will amend the Plan to permit you to exercise the Option
    as contemplated by this letter agreement and the grant of the Option is
    subject to such amendment.  The failure of the Company to amend the Plan
    during calendar year 1996 shall entitle you to terminate your employment as
    if a Change of Control Termination had occurred.

         BENEFITS.  During the Period of Contract Employment, you will be
    entitled to participate in or receive benefits under any employee benefit
    plan or other arrangement including, but not limited to, any medical,
    dental, retirement, disability, life insurance, sick leave and vacation
    plans or arrangements generally made available by the Company to its
    executive officers, subject to and on a basis consistent with the terms,
    conditions and overall administration of such plans or arrangements;
    PROVIDED, that such plans and arrangements are made available at the
    discretion of the Company and nothing in this letter agreement establishes
    any right on your part to the availability or continuance of any such plan
    or arrangement.

         EXPENSES AND OFFICE SPACE.  The Company agrees that during the Period
    of Contract Employment, you will be reimbursed for reasonable documented
    traveling and entertainment expenses directly related to the business of
    the Company or any Designated Subsidiary and you will be furnished office
    space, assistance and accommodations within the Company's place of business
    suitable to the character of your position with the Company and adequate
    for the performance of your duties hereunder.  The Company also will
    reimburse you for membership fees to organizations and societies related to
    the Company's business.  During the Period of Contract Employment, you
    agree that you will maintain and use your private airplane as may be
    necessary or required to perform and fulfill your duties and
    responsibilities with the Company.  To the extent that you pilot yourself
    for business air travel, the Company will reimburse you at the standard
    coach fare for such air travel.

         RELOCATION AND REIMBURSEMENT.  You will be resident in

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<PAGE>

    the Company's offices located in Rosemont, Illinois and you agree to 
    relocate to the Chicago area within such time period as is      
    appropriate to effect your orderly transition to your position with the 
    Company or following the reasonable request of the Board of 
    Directors of the Company on or after July 1, 1996.  You will be entitled 
    to reimbursement for the reasonable expenses for moving household 
    goods incurred by you in connection with your relocation from Atlanta, 
    Georgia to the Chicago area, for the customary commission paid by 
    you in connection with the sale of your current, primary residence in 
    Atlanta, and for the customary closing costs paid by you in 
    connection with the purchase of a residence in the Chicago area.  The    
    Company is not obligated to purchase your Atlanta residence.  The 
    Company will reimburse you for the cost of coach-class plane fare 
    for a reasonable number of round-trips for you and/or your wife from 
    Atlanta in connection with searching for a residence in the Chicago 
    area. During the first 90 days of your temporary residence in the 
    Chicago area, the Company will reimburse you for reasonable and 
    customary expenses incurred by you in connection with commuting to or 
    from the Company's Rosemont offices (including accommodation, meals 
    and transportation).  The Company will not reimburse you for any tax
    liability associated with your movement of household goods, the 
    commission paid by you in connection with the sale of your 
    residence or the closing costs associated with the purchase of a 
    residence in the Chicago area.  Except as set forth above, you will 
    bear all expenses, costs and capital losses associated with your 
    relocation.

         TERMINATION.  Your employment hereunder will terminate upon the first
    to occur of the following circumstances (any such termination and any
    termination pursuant to this section is referred to herein as a
    "Termination of Contract Employment").

              EXPIRATION.  Your employment hereunder will terminate on December
         31, 2000 unless you and the Company agree to extend the Period of
         Contract Employment pursuant to the paragraph above captioned "Period
         of Contract Employment."  In the event of such termination, you will
         be paid:

              (i) all earned but unpaid Base Salary (including any of such
              amount deferred, which amount of deferred Base Salary will be
              paid within five business days after the date of termination
              notwithstanding anything herein to the contrary) to and including
              the date of termination, payable

                                                                              61

<PAGE>

              in a lump sum within five business days after the date of
              termination;

              (ii) all earned but unpaid Bonus Compensation (including any of
              such amount deferred, which amount of deferred Bonus Compensation
              will be paid within five business days after the date of
              termination notwithstanding anything herein to the contrary) to
              and including the date of termination, payable when such amount
              would have been otherwise payable in accordance with the
              Company's customary payroll practices but in no event later than
              April 1, 2001; and

              (iii) six months' Base Salary (based on the Base Salary paid
              during the first six months of the calendar year 2000), payable
              over the first six months of 2001 when such amounts would have
              been otherwise payable in accordance with the Company's customary
              payroll practices,  PROVIDED that the Company will not be
              obligated to make any payment to you pursuant to this clause
              (iii) if, on or prior to June 30, 2000, the Company offers to
              extend your employment for at least one year and such offer
              includes a compensation arrangement that includes an amount of
              Base Salary equal to or greater than the amount of Base Salary
              paid or payable during calendar year 2000 and with respect to
              Target Bonus, includes an amount equal to or greater than the
              Target Bonus applicable in calendar year 2000, and you decline
              such offer.

              After expiration of your initial term of employment with the
         Company pursuant to this subsection, the Option may be exercised in
         accordance with the Plan through the term of the Option and thereafter
         any unexercised portion of the Option will be forfeited.

              DEATH OR DISABILITY.  Your employment hereunder will terminate
         upon your death or disability.  In the event of such termination, you
         or your estate will be paid:

              (i) all earned but unpaid Base Salary (including any of such
              amount deferred) to and including the date of termination,
              payable in a lump sum within five business days after the date of
              termination;

              (ii) all Bonus Compensation earned with respect to

                                                                              62


<PAGE>

              calendar years ended prior to the date of termination
              (including any of such amount deferred, which amount of deferred
              Bonus Compensation will be paid within five business days after
              the date of termination notwithstanding anything herein to the
              contrary) but which is unpaid as of the date of termination,
              payable in a lump sum within five business days after the
              effective date of the termination, PROVIDED that in the event the
              Company has not determined as of the date of termination the
              amount of Bonus Compensation payable pursuant to this clause
              (ii), the amount paid pursuant to this clause (ii) will be
              calculated based upon 80% of Company projections for the calendar
              year immediately preceding the effective date of termination, and
              PROVIDED FURTHER that in the event the amount of any projected
              Bonus Compensation paid pursuant to this clause (ii) is greater
              or less than the actual amount of Bonus Compensation as
              calculated in accordance with the Company's customary payroll
              practices (which calculation will be completed not later than 90
              days after the end of the calendar year immediately preceding the
              termination) then the Company will give you notice of such
              difference within five business days after making such
              determination and you or the Company, as the case may be, agree
              to pay the other party the amount of such difference within 10
              business days after such notice is delivered to you;

              (iii) a pro-rata share of the Target Bonus calculated as follows:

                   (A) if the termination occurs on or before June 30 of a
                   given year, you will receive the established Target Bonus
                   for that year pro-rated for the percentage of the year you
                   were employed by the Company, payable in a lump sum within
                   five business days after the effective date of termination;
                   or

                   (B) if the termination occurs on or after July 1 of a given
                   year, you will receive:

                        (I) the established Target Bonus for that year pro-
                        rated up to June 30 of that year, payable in a lump sum
                        within five business days after the effective date of
                        termination; and

                                                                              63

<PAGE>

                        (II) the pro-rata share of the Target Bonus for the
                        calendar year in which the termination occurred based
                        on the percentage of the year you were employed by the
                        Company less the amount in clause (I) above, payable in
                        a lump sum when such amount would have been otherwise
                        payable in accordance with the Company's customary
                        payroll practices; and

              (iv) if the termination occurs on or after January 1, 1998 and
              after comparing the Company's financial performance through the
              end of the month nearest to the date of termination against the
              approved Company financial plan for the same period, the Company
              has achieved a level of Net Income such that on a pro forma basis
              taking into consideration the actual financial performance to the
              date of termination the Company would have achieved the specified
              Earnings Level for the calendar year in which the termination
              occurred, you will receive a pro-rata share of the Special Bonus
              for the calendar year in which the termination occurred based on
              the percentage of the calendar year you were employed by the
              Company, payable in a lump sum by the later to occur of five
              business days after the date of termination or two business days
              after the Company prepares final financial reports for the end of
              the month nearest to the date of termination, which reports will
              be prepared no later than 12 business days after the end of such
              month; and

              (v) any amounts payable to you by reason of the Company's
              disability or other benefit plans in effect and applicable to you
              at the time of such termination, payable when such amounts would
              be otherwise payable in accordance with the terms and provisions
              of such plans.

              The Option, to the extent vested at the date of termination, may
         be exercised in accordance with the Plan within twelve months after
         termination of your employment with the Company pursuant to this
         subsection and any unexercised portion of the Option will be
         forfeited.

              For purposes of this subsection, "disability" means your failure,
         during the Period of Contract

                                                                            64
<PAGE>


         Employment, to render services to the Company for a continuous period
         of 120 days because of your physical or mental disability during said
         period.  If there should be any dispute between the Company and you as
         to your physical or mental disability at any time, such question will
         be settled by the opinion of an impartial reputable physician agreed
         upon for the purpose by the Company and you or our respective
         representatives, or failing such agreement within ten days of a
         written request therefor by either of us to the other, then one
         designated by the then president of the Chicago Medical Society.  The
         certificate of such physician as to the matter in dispute will be
         final and binding on you and the Company.

              Nothing in this subsection will be construed to waive your
         rights, if any, under existing law including the Family and Medical
         Leave Act and the Americans with Disabilities Act and the provisions
         of this subsection will be construed so as to assure compliance with
         such laws.

              COMPANY CONVENIENCE.  The Company may terminate your employment
         hereunder without cause at any time by giving written notice
         ("Termination Notice") to you.  Such termination will become effective
         upon the date specified in the Termination Notice, which date will be
         on or after the date such Termination Notice is delivered to you.  In
         the event of such termination, you will be paid:

              (i) all earned but unpaid Base Salary (including any of such
              amount deferred) to and including the date of termination,
              payable in a lump sum within five business days after the date of
              termination;

              (ii) the amount of Base Salary you would have otherwise earned
              during the twelve months following the termination, payable over
              a twelve month period when such amounts would have been otherwise
              payable in accordance with the Company's customary payroll
              practices;

              (iii) all Bonus Compensation earned with respect to calendar
              years ended prior to the date of termination (including any of
              such amount deferred, which amount of deferred Bonus Compensation
              will be paid within five business days after the date of
              termination notwithstanding anything herein to the contrary) but
              which is

                                                                              65

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              unpaid as of the date of termination, payable in a lump sum
              within five business days after the effective date of the
              termination, PROVIDED that in the event the Company has not
              determined as of the date of termination the amount of Bonus
              Compensation payable pursuant to this clause (iii), the amount
              paid pursuant to this clause (iii) will be calculated based upon
              80% of Company projections for the calendar year immediately
              preceding the effective date of termination, and PROVIDED FURTHER
              that in the event the amount of any projected Bonus Compensation
              paid pursuant to this clause (iii) is greater or less than the
              actual amount of Bonus Compensation as calculated in accordance
              with the Company's customary payroll practices (which calculation
              will be completed not later than 90 days after the end of the
              calendar year immediately preceding the termination) then the
              Company will give you notice of such difference within five
              business days after making such determination and you or the
              Company, as the case may be, agree to pay the other party the
              amount of such difference within 10 business days after such
              notice is delivered to you;

              (iv)

                   (A) if the effective date of the termination is prior to
                   January 1, 1998:

                        (I) the pro-rata share of the Target Bonus for the
                        calendar year in which the termination occurred based
                        on the percentage of the calendar year you were
                        employed by the Company, payable in a lump sum within
                        five business days after the date of termination; and

                        (II) an amount equal to fifty percent (50%) of the Base
                        Salary that you would have otherwise earned during the
                        calendar year following the year in which the
                        termination occurred, payable in equal installments
                        over the twelve months following the effective date of
                        the termination in accordance with the Company's
                        customary payroll practices; or

                   (B) if the effective date of the termination

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                   is on or after January 1, 1998:

                        (I) an amount based on Target Bonus calculated as
                        follows:

                             (a) if the termination occurs on or before June 30
                             of a given year, you will receive the established
                             Target Bonus for that calendar year pro-rated for
                             the percentage of the calendar year you were
                             employed by the Company, payable in a lump sum
                             within five business days after the effective date
                             of termination; or

                             (b) if the termination occurs on or after July 1
                             of a given year, you will receive:

                                  (1) the established Target Bonus for that
                                  year pro-rated up to June 30 of that year,
                                  payable in a lump sum within five business
                                  days after the effective date of termination;
                                  and

                                  (2) the pro-rata share of the Target Bonus
                                  for the calendar year in which the
                                  termination occurred based on the percentage
                                  of the year you were employed by the Company
                                  less the amount in clause (1) above, payable
                                  in a lump sum when such amount would have
                                  been otherwise payable in accordance with the
                                  Company's customary payroll practices; and

                        (II) if the termination occurs on or after January 1,
                        1998 and after comparing the Company's financial
                        performance through the end of the month nearest to the
                        date of termination against the approved Company
                        financial plan for the same period, the Company has
                        achieved a level of Net Income such that on a pro forma
                        basis taking into

                                                                              67

<PAGE>

                        consideration the actual financial performance to the
                        date of termination the Company would have achieved the
                        specified Earnings Level for the calendar year in which
                        the termination occurred, you will receive a pro-rata
                        share of the Special Bonus for the calendar year in
                        which the termination occurred based on the percentage
                        of the calendar year you were employed by the Company,
                        payable in a lump sum by the later to occur of five
                        business days after the date of termination or two
                        business days after the Company prepares final
                        financial reports for the end of the month nearest to
                        the date of termination, which reports will be prepared
                        no later than 12 business days after the end of such
                        month; and

                        (III) an amount equal to fifty percent (50%) of the
                        Base Salary that you would have otherwise earned during
                        the calendar year following the year in which the
                        termination occurred, payable in equal installments
                        over the twelve months following the effective date of
                        the termination in accordance with the Company's
                        customary payroll practices.

              The Option, to the extent vested at the date of termination, may
         be exercised in accordance with the Plan within 24 months after the
         effective date of termination of your employment with the Company
         pursuant to this subsection and any unexercised portion of the Option
         will be forfeited.

              EXECUTIVE CONVENIENCE.  You may terminate your employment
         hereunder without cause at any time by giving a Termination Notice to
         the Company.  Such termination will become effective upon the date
         specified in the Termination Notice, provided that such date is at
         least sixty days after the date of the Termination Notice.  In the
         event of such termination, you will be paid:

              (i) all earned but unpaid Base Salary (including any of such
              amount deferred) to date of termination, payable in a lump sum
              within five business days after the effective date of the

                                                                              68

<PAGE>
              termination; and

              (ii) all Bonus Compensation earned with respect to calendar years
              ended prior to the date of termination (including any of such
              amount deferred, which amount of deferred Bonus Compensation will
              be paid within five business days after the date of termination
              notwithstanding anything herein to the contrary) but which is
              unpaid as of the date of termination, payable in a lump sum
              within five business days after the effective date of the
              termination, PROVIDED that in the event the Company has not
              determined as of the date of termination the amount of Bonus
              Compensation payable pursuant to this clause (ii), the amount
              paid pursuant to this clause (ii) will be calculated based upon
              80% of Company projections for the calendar year immediately
              preceding the effective date of termination, and PROVIDED FURTHER
              that in the event the amount of any projected Bonus Compensation
              paid pursuant to this clause (ii) is greater or less than the
              actual amount of Bonus Compensation as calculated in accordance
              with the Company's customary payroll practices (which calculation
              will be completed not later than 90 days after the end of the
              calendar year immediately preceding the termination) then the
              Company will give you notice of such difference within five
              business days after making such determination and you or the
              Company, as the case may be, agree to pay the other party the
              amount of such difference within 10 business days after such
              notice is delivered to you.

              The Option, to the extent vested at the date of termination, may
         be exercised in accordance with the Plan within three months after the
         effective date of termination of your employment with the Company
         pursuant to this subsection and any unexercised portion of the Option
         will be forfeited.

              FOR CAUSE BY COMPANY.  The Company may terminate your employment
         at any time for cause by giving a Termination Notice to you.  Unless
         otherwise specified in the Termination Notice, such termination will
         become effective immediately upon giving of such Termination Notice.
         In the event of such termination, the terms with respect to Base
         Salary, Bonus Compensation and the Option will be the same as those
         set forth in the paragraph captioned "--Executive Convenience."  For

                                                                              69


<PAGE>

         purposes of this subsection, "cause" means: (i) your failure to remedy
         any breach of this letter agreement or serious breach of Company
         policy, or any gross negligence on your part, which failure or gross
         negligence shall continue for 30 days after receipt of written notice
         from the Company's Board of Directors regarding such breach or gross
         negligence; or (ii) serious, willful misconduct by you, including,
         self-dealing, disloyalty, the commission of any felony, or any act of
         dishonesty, fraud or other crime against the Company or a Designated
         Subsidiary.

              CHANGE OF CONTROL.  You or the Company may terminate your
         employment hereunder (a "Change of Control Termination") after the
         occurrence of a Trigger Event or of both (a) a Change of Control and
         (b) any Termination Event by giving a Termination Notice to the other
         party.  Such termination will become effective upon the date specified
         in the Termination Notice, which date shall be on or after the date
         such Termination Notice is delivered to the other party.  In the event
         of a Change of Control Termination, the terms with respect to Base
         Salary, Bonus Compensation and severance will be the same as those set
         forth in the paragraph captioned "--Company Convenience"; PROVIDED
         that the amounts required to be paid pursuant to clauses (ii) and
         (iv)(B)(III) therein will be payable within five business days after
         the date of termination.  The Option will become fully vested in the
         event of a Change of Control Termination and may be exercised in
         accordance with the Plan within 24 months after the effective date of
         termination of your employment with the Company pursuant to this
         subsection and any unexercised portion of the Option will be
         forfeited.

              For purposes of this subsection, Trigger Event means (i) the
         Company is liquidated or the Company sells or disposes of all or
         substantial assets of the Company such that your ability to earn the
         Target Bonus and/or the Special Bonus will be materially jeopardized
         solely as a result of such sale, disposition or liquidation and/or
         (ii) the securities of Company cease for more than 60 consecutive days
         to be listed or quoted on any national securities exchange or market,
         PROVIDED that this clause (ii) will not be deemed a Trigger Event if
         the Company uses its best efforts to have the securities of the
         Company listed or quoted on any national securities exchange or
         market.  Notwithstanding anything herein to the contrary, no

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         Trigger Event will be deemed to have occurred for purposes of this
         letter agreement if in connection with or by virtue of such Trigger
         Event, you receive an amount equal to the established Target Bonus for
         the calendar year in which such Trigger Event occurred, an amount
         equal to the Special Bonus Amount, if any, payable in such year, and
         an amount equal to or greater than $10.00 for each share of Common
         Stock vested pursuant to the Option.

              For purposes of this subsection, Change of Control means the
         occurrence of one or more of the following events:

              (1)  any "person" (as such term is used in Sections 13(d) and
         14(d)(2) of the Securities Exchange Act of 1934, as amended (together
         with any comparable provisions of any successor statute, the "Exchange
         Act")) becomes a "beneficial owner" (as such term is defined in Rule
         13d-3 promulgated under the Exchange Act) (other than the Company, any
         trustee or other fiduciary holding securities under an employee
         benefit plan of the Company, any employee benefit plan of the Company
         or its affiliates, or any corporation owned, directly or indirectly,
         by the stockholders of the Company, in substantially the same
         proportions as their ownership of stock of the Company), directly or
         indirectly, of securities of the Company, representing thirty percent
         (30%) or more of the combined voting power of the Company's then
         outstanding securities; or

              (2)  persons who, as of the date of this letter agreement,
         constituted the Company's Board of Directors (the "Incumbent Board")
         cease for any reason including, without limitation, as a result of a
         tender offer, proxy contest, merger or similar transaction or event,
         to constitute at least one-third (1/3) of the Board of Directors,
         provided that any person becoming a director of the Company subsequent
         to the date of this letter agreement whose election was approved by at
         least a majority of the directors then comprising the Incumbent Board
         will, for purposes of this clause (2), be considered a member of the
         Incumbent Board; or

              (3)  the stockholders of the Company approve a merger or
         consolidation of the Company with any other corporation or other
         entity, other than (a) a merger or consolidation which would result in
         the voting securities of the Company outstanding immediately prior
         thereto continuing to represent (either by remaining

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<PAGE>

         outstanding or by being converted into voting securities of the
         surviving entity) more than fifty percent (50%) of the combined voting
         power of the voting securities of the Company or such surviving entity
         outstanding immediately after such merger or consolidation or (b) a
         merger or consolidation effected to implement a recapitalization of
         the Company (or similar transaction) in which no "person" (as
         hereinabove defined) acquires more than fifty percent (50%) of the
         combined voting power of the Company's then outstanding securities.

              Notwithstanding anything in the foregoing to the contrary, no
         Change of Control will be deemed to have occurred for purposes of this
         letter agreement by virtue of or in connection with (i) any
         transaction which results in you, or any "person" (as such term is
         used in Sections 13(d) or 14(d)(2) of the Exchange Act) which includes
         you, acquiring, directly or indirectly, 30% or more of the combined
         voting power of the Company's then outstanding securities, or (ii) any
         distribution by Warburg, Pincus Investors, L.P. or its affiliates
         (collectively, "Warburg") of the Company's securities to investors of
         Warburg.

              For purposes of this subsection, Termination Event means the
         occurrence of one or more of the following events:

              (1)  a material adverse change of your title or position or a
         material adverse change in the responsibilities and/or duties
         exercised by you before the Change of Control; or

              (2)  as a result of a Change of Control, you are unable to
         exercise substantially the responsibilities, authorities, powers,
         functions or duties exercised by you before the Change of Control; or

              (3)  the relocation beyond the Chicago metropolitan area (MSA) or
         beyond 25 miles of your residence or the offices at which you are
         principally employed as of the Change of Control; or

              (4)  a reduction of your Base Salary or a material reduction in
         your ability to earn a Target Bonus and/or Special Bonus solely by
         reason of (a) the Company's entering one or more new core businesses
         and/or (b) the Company's accelerating expenditures in a manner
         materially different than that before the Change of

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         Control with the express purpose of decreasing the amount of Net
         Income during the remaining Period of Contract Employment and
         increasing Net Income thereafter, PROVIDED that this clause (4) will
         be deemed a Termination Event only after an event described in clauses
         (1), (2) and (3) under Change of Control above.

         For purposes of this letter agreement, Bonus Compensation will be
    earned only upon completion of the entire calendar or fiscal year with
    respect to which such Bonus Compensation is calculated; PROVIDED that a
    pro-rata share of Bonus Compensation may be earned in accordance with the
    provisions of this letter agreement under the captions "Termination--Death
    or Disability,"  "--Company Convenience" and "--Change of Control."  The
    Company reserves the right to change its fiscal year and the Company and
    you agree to use reasonable good faith efforts to adjust the terms and
    provisions of this letter agreement so that the parties are in
    substantially the same economic position after such change in the fiscal
    year.

         FULL-TIME EXECUTIVE.  You hereby covenant and agree that during the
    Period of Contract Employment you will faithfully and in conformity with
    the directions of the Company's Board of Directors perform the duties of
    your employment hereunder, and that you will be a full-time employee of the
    Company and that you will devote to the performance of said duties all such
    time and attention as said duties reasonably require, taking, however, from
    time to time (as the Company agrees that you may) reasonable vacations.

         NO DETRACTION FROM PERFORMANCE.  You hereby consent and agree that
    during the Period of Contract Employment you will not, without the express
    consent of the Company's Board of Directors or a committee thereof to which
    such authority is delegated by the Company's Board of Directors, become
    actively associated with or engaged in any business other than that of the
    Company, or a division, or subsidiary of the Company that would detract
    from the performance of your duties to the Company or any Designated
    Subsidiary, and you will do nothing inconsistent with such duties.
    Notwithstanding anything herein to the contrary, you may serve on any Board
    of Directors or similar governing body of an organization that is not a
    Competing Business, and you may continue to serve on any Board of Directors
    or similar governing body on which you currently serve, including the Board
    of Directors of Avalon.
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<PAGE>

         CONFIDENTIAL INFORMATION.  It is recognized by you and the Company
    that your duties during the Period of Contract Employment will entail the
    receipt of confidential information concerning not only the Company's and
    the Designated Subsidiaries' current operations and procedures but also
    their respective short-term and long-term plans.  You hereby covenant and
    agree that during the Period of Contract Employment and at any time
    thereafter, you will not disclose to anyone outside of the Company or any
    Designated Subsidiary, except as appropriate in the course of performing
    your duties hereunder, or use in any activity or business (other than the
    business of the Company or a Designated Subsidiary), Confidential
    Information (as defined below) relating to the business of the Company or a
    Designated Subsidiary, in any way obtained by you while employed by the
    Company, unless authorized in writing by the Company or a Designated
    Subsidiary, as the case may be.  For purposes of this letter agreement, the
    term "Confidential Information" includes all information of any nature and
    in any form which is owned by the Company or a Designated Subsidiary and
    which is not publicly available or generally known to persons engaged in
    businesses similar to that of the Company or a Designated Subsidiary,
    including, but not limited to, research techniques; patents and patent
    applications; inventions and improvements, whether patentable or not;
    development projects; computer software and related documentation and
    materials; designs, practices, processes, methods, know-how and other facts
    relating to the business of the Company or a Designated Subsidiary;
    practices, processes, methods, know-how and other facts related to sales,
    advertising, promotions, financial matters, customers, customer lists or
    customers' purchases of goods or services from the Company or a Designated
    Subsidiary; industry contracts; and all other secrets and information of a
    confidential and proprietary nature.  In the event that you are requested
    or required in connection with a legal proceeding or civil investigative
    demand to disclose any Confidential Information, you will provide the
    Company with prompt written notice of any such request or requirement so
    that the Company may seek a protective order or other appropriate remedy
    and/or waive compliance with the provisions of this letter agreement.  If,
    in the absence of a protective order or other remedy or the receipt of a
    waiver by the Company, you are nonetheless legally compelled to disclose
    Confidential Information in connection with such proceedings, then
    notwithstanding anything in this paragraph to the contrary, you may,
    without liability hereunder, disclose in any such proceedings only that
    portion of Confidential Information that  you are legally required to
    disclose; PROVIDED, that you exercise your best efforts to

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<PAGE>

    preserve the confidentiality of the Confidential Information, including,
    without limitation, by cooperating with the Company to obtain an
    appropriate protective order or other reliable assurance that confidential
    treatment will be accorded the Confidential Information.  The agreements
    set forth in this paragraph will not terminate upon the Termination of
    Contract Employment.

         CONFLICT OF INTEREST AND BUSINESS ETHICS STATEMENT.  You hereby
    covenant and agree that you will comply with and, if requested, execute
    such statements relating to conflicts of interest or business ethics in
    forms satisfactory to the Company's Board of Directors and that during the
    Period of Contract Employment you will not knowingly engage in any activity
    which would violate any such statement unless it is otherwise authorized by
    this letter agreement.

         COMPETING BUSINESS.  You hereby covenant and agree that, during the
    Period of Contract Employment and for one year following the Termination of
    Contract Employment, you will not have any investment in a Competing
    Business (as defined below) other than an equity interest of less than five
    percent (5%) of any company whose securities are listed on The New York
    Stock Exchange, The American Stock Exchange or quoted on NASDAQ and will
    not render personal services to any Competing Business in any manner,
    including, without limitation, as owner, partner, director, trustee,
    officer, employee, consultant or advisor thereof.  For purposes of this
    letter agreement, "Competing Business" means any business which derives a
    substantial portion of its revenue from business similar or competitive to
    that now, or at any time during the Period of Contract Employment,
    conducted by the Company or any Designated Subsidiary, in any metropolitan
    area, city, county or other political subdivision, where the Company or any
    Designated Subsidiary presently does business or, at any time during the
    Period of Contract Employment, will do business.  If you breach the
    agreement contained in this paragraph, such breach may render you liable to
    the Company for damages therefor and entitle the Company to enjoin you from
    making such investment or from rendering such personal services.  In
    addition, the Company will have the right in such event to enjoin you from
    disclosing any Confidential Information concerning the Company or any
    Designated Subsidiary to any Competing Business, to enjoin any Competing
    Business from receiving you or using any such Confidential Information
    and/or to enjoin any Competing Business from retaining or seeking to retain
    any other employees of the Company or a Designated Subsidiary.
    Notwithstanding anything herein to the contrary, you may serve on any Board
    of Directors or

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<PAGE>

    similar governing body of an organization that is not a Competing Business, 
    and you may continue to serve on any Board of Directors similar governing 
    body on which you currently serve, including the Board of Directors of 
    Avalon.

         NO SOLICITATION.  You hereby covenant and agree that during the Period
    of Contract Employment and for two years following the Termination of
    Contract Employment, you will not, for yourself or any third party,
    directly or indirectly, (i) divert or attempt to divert from the Company or
    a Designated Subsidiary any business of any kind in which the Company or a
    Designated Subsidiary is engaged, including, without limitation, the
    solicitation of its customers or interference with any of its suppliers or
    customers; or (ii) solicit for employment any person employed by the
    Company or a Designated Subsidiary during the period of such person's
    employment.

         REMEDIES.  You and the Company agree that the Company will be
    irreparably harmed by any violation or threatened violation of any of the
    foregoing provisions of the paragraphs captioned "Full-Time Executive," "No
    Detraction from Performance," "Confidential Information," "Conflict of
    Interest and Business Ethic Statement," "Competing Business" and "No
    Solicitation" if such provisions are not specifically enforced and
    therefore that the Company will be entitled to an injunction restraining
    any violation of such provisions by you, or any other appropriate decree of
    specific performance.  Such remedies will not be exclusive and will be in
    addition to any other remedy to which the Company may be entitled under
    this letter agreement or at law.

         GOVERNING LAW.  This letter agreement is being made and executed in
    and is intended to be performed in the State of Illinois and will be
    governed, construed, interpreted and enforced in accordance with the
    substantive laws of the State of Illinois, without regard to the conflict
    of laws principles thereof.

         ENTIRE AGREEMENT.  This letter agreement and the Stock Option
    Agreement comprise the entire agreement between you and the Company
    relating to the subject matter hereof and as of the date hereof, supersede,
    cancel and annul all previous employment agreements between the Company
    (and/or its predecessors) and you, as the same may have been amended or
    modified, and any of your rights thereunder other than for compensation
    accrued thereunder as of the date hereof, and supersede, cancel and annul
    all other prior written and oral agreements between you and the Company or
    any predecessor to

                                                                              76

<PAGE>

    the Company.  The terms of this letter agreement are intended by you and
    the Company to be the final expression of our agreement with respect to
    your employment by the Company and may not be contradicted by evidence of
    any prior or contemporaneous agreement.  In the event of any conflict
    between this letter agreement and the Stock Option Agreement, the Stock
    Option Agreement will control.

         DISPUTES.  Any dispute or controversy arising under, out of, in
    connection with or in relation to this letter agreement will be finally
    determined and settled by arbitration.  Arbitration will 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 (the "AAA") in Chicago, Illinois.  The arbitration
    proceeding will be conducted in Chicago, Illinois by a single arbitrator in
    accordance with the Expedited Procedures of the Employment Dispute
    Resolutions Rules of the American Arbitration Association (the "EDR
    Rules"), except as otherwise provided herein.  The arbitrator will be
    appointed expeditiously in accordance with the EDR Rules and the arbitrator
    will be mindful of the mutual desire of the parties to conduct the
    arbitration in an expeditious and efficient manner and the arbitrator is
    hereby authorized to manage the proceedings in order to accomplish such
    desire.  Except as required by the arbitrator, the parties will have no
    obligation to comply with discovery requests made in the arbitration
    proceeding.  The arbitration award will be a final and binding
    determination of the dispute and will be fully enforceable as an
    arbitration award in any court having jurisdiction and venue over such
    parties.  The prevailing party (as determined by the arbitrator) will be
    awarded by the arbitrator such party's attorneys' fees and expenses in
    connection with such proceeding, in addition to any other relief that may
    be granted.  The non-prevailing party (as determined by the arbitrator)
    will pay the arbitrator's fees and expenses.

         SEVERABILITY; ENFORCEABILITY.  In the event that the provisions of the
    paragraphs captioned "Competing Business" and "No Solicitation", or any
    portion thereof, should ever be adjudicated by a court of competent
    jurisdiction in proceedings to which the Company is a proper party to
    exceed the time or geographic or other limitations permitted by applicable
    law, then such provisions will be deemed reformed to the maximum time or
    geographic or other limitations permitted by applicable law, as determined
    by such court in such action, the parties hereby acknowledging their desire
    that in such event such action to be taken.  Without

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<PAGE>

    limiting the foregoing, the covenants contained herein will be construed as
    separate covenants covering their respective subject matters, including,
    without limitation, with respect to (a) each of the separate cities,
    counties, metropolitan areas, and each other political subdivision of the
    United States in which any of the Company or the Designated Subsidiaries or
    their respective successors now transact any business or propose to
    transact business, (b) each business now conducted by the Company or any
    Designated Subsidiary or their successors, and (c) the Company and the
    Designated Subsidiaries and their successors separately.  In addition to
    the above, all provisions of this letter agreement are severable, and the
    invalidity or unenforceability of any provision or provisions of this
    letter agreement or portions or aspects thereof will not affect the
    validity or enforceability of any other provision, or portion of this
    letter agreement, which will remain in full force and effect as if executed
    with the unenforceable or invalid provision or portion or aspect thereof
    modified, as set forth above.

         NOTICES.  Any notice, request, claim, demand, document and other
    communication hereunder to any party will be effective upon receipt (or
    refusal of receipt) and will be in writing and delivered personally or sent
    by telecopy or certified or registered mail, postage prepaid, as follows:
    if to the Company, addressed to the attention of its General Counsel at the
    address above with a copy to Grubb & Ellis Company, 10275 W. Higgins Road,
    Suite 300, Rosemont, IL 60018, attention:  General Counsel; and if to you,
    at the address set forth below under your signature; or at any other
    address as any party has specified by notice in writing to the other party.

         COUNTERPARTS.  This letter agreement may be executed in several
    counterparts, each of which will be deemed to be an original, but all of
    which together will constitute one and the same agreement.

         AMENDMENTS; WAIVERS.  This letter agreement may not be modified,
    amended, or terminated except by an instrument in writing, approved by the
    Company's Board of Directors and signed by you and the Company.  By an
    instrument in writing similarly executed, you or the Company may waive
    compliance by the other party with any provision of this letter agreement
    that such other party was or is obligated to comply with or perform;
    PROVIDED, that such waiver will not operate as a waiver of, or estoppel
    with respect to, any other or subsequent failure.  No failure to exercise
    and no delay in exercising any right, remedy or power hereunder will
    preclude any other or further exercise of any other

                                                                              78

<PAGE>

    right, remedy or power provided herein or by law or in equity.

         NO INCONSISTENT ACTIONS.  You and the Company will not voluntarily
    undertake or fail to undertake any action or course of action inconsistent
    with, or to avoid or evade, the provisions or essential intent of this
    letter agreement.  Furthermore, it is the intent of the Company and you
    hereto to act in a fair and reasonable manner with respect to the
    interpretation and application of the provisions of this letter agreement.

         ATTORNEYS' FEES.  The Company agrees to reimburse you for reasonable
    attorneys' fees incurred by you in connection with negotiating and
    executing this letter agreement up to a maximum amount of $10,000.

         We look forward to working with you.

         If this letter accurately reflects our agreement, please sign and
return to the Company the enclosed duplicates of this letter whereupon this
letter will become a binding agreement between the Company and you in accordance
with its terms.

                                  Very truly yours,

                                  GRUBB & ELLIS COMPANY

                                  /s/ Joe F. Hanauer

                                  Joe F. Hanauer
                                  Chairman





CONFIRMED AND ACCEPTED as of the
date first above written.


/S/ ALLAN D. SCHUSTER
---------------------
Allan D. Schuster
Address: 3937 MERRIWEATHER WOODS
          -----------------------
         ALPHARETTA, GEORGIA
          -------------------
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