The Future of Commercial Real Estate: Embracing Technology

Aviva (00:00)
This week's Listener of the Week is ABC The Closer. ABC The Closer thank you so much for leaving us a five star review and for those of you listening if you leave us a five star review below you might be next week's Listener of the Week. Week, Week. I am very excited for our guest this week Andrew Bermudez. Andrew is a former commercial real estate broker.

and now is the CEO and founder of DIGSY Now before I even thank him for being on the show or let him speak a little context, my husband and I, Josh, were in a long-distance relationship a decade ago and we, he, Josh lived four hours away in the mountains and I would be driving up and down from Denver to the mountains and I would go into YouTube and I would type in

commercial real estate content. And Andrew was the only person who came up literally a decade ago. So for context, this is really exciting because Andrew has become a friend ever since, but he's a really impressive player in the industry. Andrew, thank you for being on the show.

Andrew Bermudez (01:19)
Thanks for having me. Good to see you, Aviva. It's been a lot of fun vanter going back and forth over iMessage on our iPhones talking about whole fish and just sending each other memes. Ha ha.

Aviva (01:21)
It's great to see you.

and family and the crazy pursuit here in the world of commercial real estate. So will you tell the listeners a bit about DIGSY, who you are, what DIGSY is, and the market you serve.

Andrew Bermudez (01:46)
Well, thanks again for having me. My name is Andrew Bermudez. I am a former commercial real estate broker. I was a partner at Lee & Associates for 13 years, started in 99, left in 2012. After Lee & Associates, the only reason I left, I was top five of the top 10 and I had a great team. The only reason I left was because I was a self-taught programmer and that's what made me successful. So I would code stuff and I used to buy keywords in the early, when Google had just been up and coming for commercial real estate for like literally

pennies. Like now you try to buy the word office space like 22 bucks a click. So I did that. That made me successful. But because I started in the late nineties, the.com, a lot of my clients were, you know, software companies, technology companies. Some of them had sold their companies and become angel investors or venture capitalists. Long story short, what happened is

I loved being around these guys. So they became friends, they became mentors, and they would always sit down and say, dude, you're not a commercial REAL ESTATE guy. You're a tech guy that isn't commercial REAL ESTATE. You should start something. And I didn't want to. I was making a lot of money at Lee, and I WAS AT A good place at a great team. Long story short, what happened was, right around the time I turned 30, I realized, hey, I don't spend my money. All I've got is my house.

payment and I've got my car, which is almost paid off. If I'm gonna do anything, the time is now. Wasn't married, didn't have kids. Left, the two first projects that I started failed. And then eight years ago, we started DIGSY and that's gone through like so many pivots, but we're over a hundred people now. We're in the millions of dollars of revenue. It's fantastic. It's been a journey. I would not recommend people starting their own business unless the business already established. Like if you know the commercial real estate brokerage.

works then you can just build your own but don't go out and try to build something like that. NO entrepreneur wants to hear that but I'll tell you I've got a lot of scar tissue and blood sweat and tears that I've had to endure to get to the point where I am.

Aviva (03:43)
So explain to the listeners what DIGSY is as if they're a third grader.

Andrew Bermudez (03:49)
DIGSY is a website, right? It's a platform that makes it easy for commercial real estate professionals. So brokers, managing directors, lenders, property owners to get the software tools and also get services to help them run and grow their business. One thing that we offer is we have a free listing platform. You can list properties for sale or for lease, office, industrial, retail, healthcare, multifamily.

So that's a freebie product there. Some people can upgrade to embed their listings on their website or all the listings on their website. There's like lead generation tools. And then we also offer talent. So affordable talent, $15 an hour. So we call them virtual assistants because it's easy for people to understand. But basically what we do is we pair you up with one of our team members HERE AT Digsy depending on what you want. So a lot of people will use them for, you know, calling people who are clicking on your listings to see if they want to buy the building, if they want to lease the building.

or if they've got an asset they want to sell or lease. So basically lead generation, also emailing and sending messages on social networks when it makes sense, like messaging people on LinkedIn, or messaging retailers on Instagram, Facebook, which tend to be much more prone to respond versus emailing them or calling them. It's interesting in the retail world. The second part is marketing and graphics, and this is brokerages or the individual agent teams will sign up for it.

And those are creating brochures, offering memorandums, flyers using Adobe InDesign or other tools like BuildOut or a combination of that. Creating the images to market a property or a deal close in social media, animating the listing so it pops when people are viewing it, posting those into social media channels, updating the marketing campaigns, creating content, increasing the number of followers and connections that you have so you have more visibility.

Email marketing is easy, just make it look pretty and send it out. And then the third one, the third area is things that free up your time, help you get more things done that help you focus on higher revenue producing activities. So think email management, clearing out the junk, responding to listing inquiries, updating the prospect report for the seller or the, or the lessor.

Calendar management, so booking appointments, confirming appointments, saying, hey, Aviva, tomorrow, every appointment's confirmed, except you're 11 o'clock, the guy's not emailing me back or calling me back or texting me back. Also, updating the listings across the listing services, running searches on the listing services, calling the brokers to verify availability, operating expenses, touring instructions, and putting the tour packet together for you. Transaction management.

Aviva (06:26)
Hmm. Damn.

Andrew Bermudez (06:27)
Database management, so cleaning up the CRM, finding email addresses, updating what buildings have traded hands, finding who's behind the trust of the LLC, like, you know, doing all that detective work and finding the email address and the name and then calling to verify. It kind of runs a gamut on executive assistance. So like pretty much it can, it's anything from like, you know, drafting LOIs, leases, PSAs or even commission vouchers, but it's not limited to all those things because everybody operates differently.

Aviva (06:54)
That's it? That's all you guys do?

Andrew Bermudez (06:56)
Well, it's just two lines, right? It's like, hey, here are the marketing tools. There's a free version, there's a paid version, and here's what else we can help you out with. So it's pretty simple, but then those break down into those three pillars that I just shared.

Aviva (07:09)
No, it's unreal. I'm very passionate about commercial real estate technology and the future of commercial real estate. If you had a crystal ball, what would 5 or 10 years down the line look like for a commercial real estate broker from getting the lead, marketing the lead and closing the deal?

Andrew Bermudez (07:32)
Yeah, so I don't think that the broker's ever gonna go away, especially in commercial real estate. The reason why is how often, if you have 100 people, there might be one or two business owners in there, and those business owners can employ anywhere between five to hundreds of people, right? And there's one decision to be made. Each one of those 100 people can buy a house, but only one or two of those people own a business and are either gonna buy a building or lease a building or whatever. So the market tends to be a lot smaller. Also,

When they're leasing buildings or buying buildings, they're only doing this, you know, once every, you know, depending on the growth pattern, but let's just say one every five years or three years, et cetera. So it's not like you live in a house and you maybe buy one or you buy a couple of them, et cetera, you, you don't familiarize and the lease terms are confusing unless you're the PSA comments are confusing. There's just a lot that goes into, so it's a lot more like investment banking.

So you really do need somebody who understands this because it's not like, hey, here's the house, do your home inspection, et cetera. It's like, no, did you think about negotiating that you don't have to take care of the roof and the triple NET or did you think about the operating expense caps, things like that? So I don't think the broker is going to go away. The one thing that I think that I'm seeing is there's a lot of potential with AI and there's a lot of potential with systems talking to each other.

companies in commercial real estate are private, so they won't open up what's called an API, something like this data in this listing service or this property ownership database can talk to you, whatever, so that's what's missing. And I don't think that will ever go away. But there are ways where I believe can make a broker a lot more productive. For example, something that we've been toying around here, just discussing and just shrolling my head is,

Right now we have virtual assistants that manage a broker's email. That's the biggest complaint we get from brokers is how much email they get. And then things fall through the cracks and they don't even know how to delegate email. So we have a pretty good program that would be just showed the, hey, here's the best way to do it. And they're like, they just start nodding because they're like, well, that makes sense. When a listing inquiry comes through, somebody has to go in and respond, attach a brochure, put all the...

pricing, OPEX, whatever else that they're talking about, send it out and then update the prospect report for the owner, et cetera. That's pretty easy language for a large language model to grab that information, determine what it needs. If this, then that, then it can reply and then you can connect it to update the prospect reports, freeing up a lot of time. A lot of data entry goes into commercial real estate.

and moving data from one side or the other. If you do an export from this property database, but then you want to capture all those, you have this other property ownership database and you want to kind of blend them into two and kind of like see, okay, what's the truth, right? That's not really easy. That can be done in a combination, not only with a data warehouse, a type of technology similar to a data warehouse. So that basically you're merging all the data and normalizing it. So you have one view and go, oh, here are the properties from this database that aren't here or hey, this person.

Aviva (10:27)
Yeah.

Andrew Bermudez (10:44)
Same property, but different contexts, let's merge them together. And with a combination of a little bit of AI, not too much, you can also start cleaning up that data and giving you even more information, right? Like for example, uh, depending on the market, like calling on, you know, exporting all that data, merging it, and then the system just telling you, Hey, based on the low maturities, here are the people that I would focus on rather than the broker having to think about like having even that idea.

Like, right? Like if you're a broker, you want, the CNBS data is public, right? So you want to call on the people that are gonna have a reset, especially jumping from like three, four percent to eight or nine. So you kind of want to have those things. So there's a lot of advantages. The only problem though is in commercial real estate, with the exception of you and me and a few others that we know from TikTok or Twitter, where we spend a lot of time Aviva, is most brokers are

Aviva (11:15)
Yeah.

Andrew Bermudez (11:44)
They're not techie, right? And they can do email, they can do calendar, they can do Microsoft Word, but also their time doesn't allow them to think about this stuff or learn this stuff. So whatever solution comes through, it has to be semi-automated or it has to do the work for the broker to not have to think because, and it has to be really easy user interfaces. That's the reason why you don't see a lot of agents using chat GPT and the ones that say they do are very few, very, very few.

bottom of the barrel, you're scraping just a little bit of dust off the bottom of the cup. Because, I mean, you have this interface and it's just a box and you have to enter text. How does a broker know what to enter? We have a long way to go.

Aviva (12:29)
I am completely obsessed with that and I have built a business based on those types of brokers. Thank you guys. Because it is so overwhelming how opportunistic the internet is in regards to commercial real estate and then so underwhelming how brokers utilize it. And you know, I have found the ways that work for me and I've even like gotten a little comfortable and now I'm...

Andrew Bermudez (12:36)
Yeah

Aviva (12:59)
I've been thinking to myself recently like, okay, I need to keep pushing it. Like, you know, I pay for loop net ads. Like, those don't really work. How could I reallocate that budget into something where, yeah, I might have to test it for six months, but generally with commercial, you only need a lead or two to give yourself a use case and pay yourself back and learn and test and push further. So.

It's really opportunistic.

Andrew Bermudez (13:32)
It really is. And you gotta keep in mind though, like a lot of people who join commercial real estate tend to be former athletes. You know, they're not usually the people that are like played a lot of video games. They're not really the people that spend a ton of time on Facebook or a ton of time on Twitter, et cetera. And you need that type of person to go there. So it's very rare that you find somebody who's like competition and discipline driven that also does these things, which say the opposite. If you're playing video games, you're kind of

Some people may consider that you're not disciplined or you're wasting time or you're not learning, but it's really hard to find that combination of competitiveness, even though video games are competitive, but competitive and at the same time, like if you're more on the nerdy side to kind of merge those two things, which like people like you, it's very unique. And people like me, it's very unique, but it's very hard to meet people cut from the same thread.

Aviva (14:25)
Oh, hey, that's why I like the internet because I couldn't find any of those people in my local community, in my local brokerage community who spoke the same language as me, which is a good thing when it comes to competition. But when it came to community, I had to go online to find people like yourself who saw the opportunity and are willing to talk about it.

Andrew Bermudez (14:35)
Mm-hmm.

Aviva (14:51)
because, you know, obviously commercial real estate has been super gate kept and with, you know, we don't have to gate keep, obviously. You made a whole company revolving around deploying your strategies and it works. So it's impressive.

Andrew Bermudez (15:05)
Question for you, what do you think will be, what opportunities do you see technology wise in five years for the CRE community?

Aviva (15:15)
Sure. I mean, this goes into my next question for you. So I'm gonna answer your question with a question. You know, we all use CoStar. CoStar is the commercial MLS, if you will. CoStar LoopNet is what brokers use to find properties. I have found this year, 2024,

with the homes.com acquisition of CoStar, they've just taken their eye off the ball in commercial real estate. They are head down, ready to take over residential. And in my opinion, we're getting left out. To me, this creates an opportunity. You know, there's a lot of things that CoStar doesn't provide that makes me pull my hair out. Let me give you an example. If I wanna buy a house,

I call up my realtor and she programs in my criteria. And every morning at 4 a.m. I get an email with all the houses that just hit the market within my criteria. And then I go shopping, I tell her which one I like, and then we go preview. That does not exist in commercial real estate. CoStar is so gate-kept, and I've been telling my CoStar people this for years, oh, this would be so easy

Andrew Bermudez (16:33)
Yeah.

Aviva (16:42)
could just, and I have clients who ask me the same thing, can't you do something where you create a search and then it comes to my inbox? And the answer is no.

There is so much friction in commercial real estate when it comes to taking a property and putting it in front of a prospect. I think the next five years, I hope the next five years, figures, gives us some way to solve that issue because it's horrendous right now. And deals are missed because of all the friction. If...

if that makes sense.

Andrew Bermudez (17:24)
Yeah, makes a lot of sense. Yeah. Cause it's, it's like just getting a property listed online, everything from ordering the sign to writers, calling the photographer, doing the brochure, the floor plans, all that stuff, getting it on all the listing services, getting it into the email marketing service to send it out, uploading the prospects to send it to, and then even, you know, who has time to check every single alert every day of the new properties hitting the market and then forwarding it to, to a client, right?

Aviva (17:53)
And because commercial real estate buyers are so unique, and what I mean by that is, okay, you've got two types of buyers. You have your owner user and you have your investor. It's not like residential where it's like, I need a house or my lease is up or my house is sold. We got to figure this out. You know, your investor commercial real estate buyer.

is sitting with dry powder and they can sit and they can wait. Or your owner user, it's a little different, there's more of a need, but just the dynamic of buying is really different. You know, I have found that I really only work on the listing side and the tenant side. That's really where I like to hang out is tenant rep and then listing, be it for sale or for lease, just because.

I like a little more motivation on behalf of my clients because I've run around with buyers until I was blue in the face. And I love my buyers, but getting blue in the face does not put food on the table. So I'm interested to see. I think there's a huge market share and a huge opportunity for somebody to capture.

what CoStar is not providing us and it will happen. It's just a matter of who, what, where and when.