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A
Welcome to Real Talk Real Estate discussions with Andrew Kirsch. In each episode, Andrew interviews industry leaders. We'll hear their real time opinions on.
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Today'S market, their background and unique career.
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A
Highlights and guidance for newcomers into the industry. You can find this show@skalkirsch.com and on YouTube, LinkedIn, Apple Podcasts, Spotify, Google podcasts and more. Now here's the host of Real Talk, Andrew Kirsch.
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B
Episode 87 of Real Talk. It's conference season. I was at the Real Estate Private Equity IMN conference in Laguna Beach a couple weeks ago and last week I was at NMHC in Las Vegas. And the sentiment really of both those conferences is optimism. Capital wants to deploy more equity this year and brokers are optimistic that we are going to have a strong transactional year in 2026. For Skar Kirsch, the second half of 2025 was quite active. So I can only imagine how active we will be in the coming year. On this week's show, I have my good friend Sean Folpon. Sean wears two hats. He's vice chairman of Colliers and he's also the founder of, of a new real estate prop tech company called Duxri. We have a wide ranging conversation about the office market and also how Duxri is disintermediating the real estate business with their new app platform. I hope you enjoy my conversation with Sean Folp. Welcome to another edition of Real Talk. I'm here with my good friend Sean Fulk, vice chairman and head of capital markets of Colliers and also the founder of Duxery. Sean, happy New Year, man.
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A
Yeah, thank you, thank you.
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B
We were talking before we taped. I got to spend New Year's Eve with your family, but not you. You were a little under the weather.
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A
This is, this is kind of funny being in this room with you because I think back like five, six years ago when we were really trying to figure out content with our business and how to, how to kind of bring it into commercial real estate and marketing. Coming into your office with some videographers and then doing, doing a podcast segment with you. I know, or I think at that time we were doing more like Instagram lives. So it's kind of funny how you know, being, trying to be like always forward thinking and seeing kind of what the industry needs and kind of seeing it come to fruition. It's, it's, it's really satisfying to, to be here right now and to kind of sit in this room with you because I think you've done a great Job. Like what you've taken your. Where you've taken your business and how you've implemented this into, you know, as a. As Like a. As an attorney. Right. Like, you think back, go back 20 years, what it was like for attorneys. And I mean, business development wasn't even something that they were supposed to be doing. Right. Yeah.
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B
There was a time where I don't even think lawyers could, like, solicit any type of business. It would be.
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A
We've moved way past that.
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B
Yeah. Thankfully, I wouldn't know what to do, but I vividly remember doing that Instagram live with you at my old house, the Palisades house, in the depths of COVID And thank God that was another time.
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A
Yeah.
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B
So a lot to talk about, but let's first talk about personal, because I think you're the only person I know from Alaska.
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A
Yeah.
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B
So. And I know. I'm sure it's a talking point. Wow. I always hear it when I'm with you, when people meet you, where are you from? You say Alaska, and then they do a double take. So we're gonna go there, huh?
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A
Okay, well, let's just start there.
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B
What is it? What. What was it like growing up in Alaska?
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A
Yeah. So that. Actually, I get that question a lot.
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B
Yeah.
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A
Alaska is one of those place that people find very. Just distant and interesting. And for me, it was being in Alaska. We grew up in a place in Alaska that was remote for most Alaskans. So I grew up on Kodiak island, was there for the first 20 years of my life. So I did actually my first year of college at East University of Alaska, Anchorage, but did that on the satellite campus in Kodiak. Very, very small satellite campus. But, yeah, a family with six kids and born and raised there. And I graduated high school in 1996. So it was pre Internet. So you really are remote and disconnected. And it was. It feels like a completely different lifetime because of the way we live today and the way I grew up. I would never trade it for anything. Right. I think that we all kind of revel in being able to disconnect and the potential of just, you know, venturing out and living a life like that. Right now. I think that we're. Especially with technology and how if it's kind of come into our lives and the distractions and noise, like, it's. It was very, very peaceful. When I look back and think about.
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B
How I grew up, is there a movie or television show that captures Alaska, which you say, okay, it's pretty accurate whether it's northern exposure or that Al Pacino movie, I think, where it was sunny like 24 hours a day.
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A
Or insomnia.
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B
Or insomnia. Yeah. And then there was a true detective that took place in Alaska. Do you watch any of them and.
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A
Say, I don't watch any of them. I actually almost every time somebody asked me about Alaska, they bring up a show that they're watching that's based in Alaska.
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B
Right.
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A
So it's like, you should watch this. I was like, why lived it. Yeah.
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B
You know, it's funny, I've got, you know, been to Hawaii dozens of times and have clients that are based in Hawaii. I feel like people are still more intrigued by you living in Alaska than someone living in Hawaii. I don't know if it's because of the cold or further away or people haven't traveled there as much.
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A
It's, it's, it is an impressive destination. I just think about in 2014, actually. I think back like over 10 years ago. I, I was like, okay, done. I'm done. I'm gonna, I'm gonna take people up there. I mean, I'm gonna take like 10 clients, 10, 15 clients up there. Gonna do Alaska trip and give them the full Alaskan experience. Well, we almost got killed by bears. We almost died on like a, like a remote, like four wheel trip that we went on. Like, I won't do it again because really surprised we like didn't get airlifted out of there. But it was an extreme trip and the people that were on that trip will probably know that they remember it vividly and would attest that that was an amazing trip.
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B
Yeah, I'm sure you guys talk.
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A
They got everything they wanted.
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B
I'm sure you guys talk about that today. I mean, look, you can go on a boring golf trip or ski trip or you could be almost killed by bears.
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A
Yeah, yeah. We weren't supposed to get that close to them, but we got kind of stuck and they just surrounded us and we were just like with our pilot who had a pistol, and we were like, well, if we're going to get mauled, at least it's going to be a story.
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B
Oh, my God. Well, I remember us meeting, I want to say, at the IMN conference in January of 2014. Our daughters were just born. Mercer born in September, I think, September 1st, if I correct. And then Clementine a couple months later. And then we said, we got to introduce our wives. And then we all had like this play date on Valentine's Day 2014. And my wife still calls it our anniversary. So it's been great just to see the growth of your family and, and professionally. So talk about before we get into, you know, where you see the market today, but let's give a little preview or summary of your background from growing up in Alaska to you being here today. So what were the steps?
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A
Yeah, so I transferred college in about midway through and went down to finished at Sac State. And that's where my brother was. He was working for Sacramento State University. He was in the athletic department. And literally two weeks before my junior year, I asked him if he'd walk my application over to admissions because I wanted to get out of Alaska. And so that's how I landed in Sacramento. And then, you know, I had to kind of just find my way and I kind of fell into commercial real estate because I was working at like a higher end racket club. And most of the people I looked at, lifestyles of everybody that were members there, I was like, you know, those commercial real estate guys and gals really have it made. Like they've got control of their schedule, they can make as much money as they want, they're challenged by all aspects of business. And so I kind of just you know, ingratiated myself with them and found my way to figuring out a way to get into brokerage and start a brokerage in Sacramento and started doing leasing and sales because you got to have to do a little bit of everything. It's a secondary market, so you got to be able to touch all product types. And that led me to kind of, you know, even doing some retail as well. But the depth of the last reception, the great financial crisis, I just knew that Sacramento was going to be the last to recover. It was one of the first to fall, it was going to be last to recover. And I was starting to get into sales and to be more on the capital market side, which is like investment sales and in the finance and raise side of commercial real estate. I knew I needed to be in a bigger market and so took the chance of moving to San Francisco and teaming up with a couple colleagues in San Francisco to rebuild the firm that I was at that time. Corn Sha' Carri Commercial rebuilt their capital markets team in San Francisco. And that was when I really started becoming a specialist and focusing on really office investment sales and selling office product in around the Bay Area. We didn't do too much in the city we are, but we did a lot in the surrounding markets. You know, the mid Peninsula, San Jose, Santa Clara. And what time period are we talking about? This is like two that we're coming out of the great financial crisis. So this is like 2010, 2009, 2010 and then kind of and all the way to 2014. And that's when I came down to LA to build my practice down here. And so I've, I've been in a few different markets, Sacramento, San Francisco and la. And I've sold product all over the western US and the thing that's really helped me kind of build my career was in the last financial crisis, CMBS was a big issue that defaults around cmbs. And for a younger guy in that time, I think I was in my early 30s, you had to kind of go figure out how I'm going to build my own book of business. And to do that you had to kind of go find fresh clients. Those fresh clients are the special servicers. These were the people that were going to control dispositions and they didn't really have any, any legacy relationships. So we traveled all over the country, developed relationships with all the major special servicers, figured out the conferences that we needed to, to attend under, tried to really understand commercial cmbs and, and, and how it, how it operated because it's really, it's bond investing versus real estate investing. And so I did that. And to this day a lot of those relationships that I developed 15 years ago, those people are still in their roles that they're in today. And trust me, when you are venturing into truly a different industry and you're, you're in those conference halls and you really don't know what you're talking about because it wasn't really had no bond experience. I was a local market expert, I knew my markets, but I didn't, but didn't really understand the bond industry. And you're basically, you're buying these conference passes and you're walking these halls and you're trying to introduce yourself and you have nothing to offer. They know you're a salesperson, right? They know you want the, want to, want to sell the product, but they're not ready to sell it. And so it's like you had to keep showing up and, you know, earn my stripes and, and today it's, it's paying off because, you know, office is the new retail. So retail was a big problem coming out of the last cycle. Now office, I kind of combine the core expertise of the product that I've, I've dealt the most with and then, you know, and then you kind of combine it with the downtown LA and some of the markets that are having the biggest issues and Then, you know, and then those past relationships I've had. So it's kind of like, it's all kind of coming together. Thank goodness. Right. Because a lot of time and effort and has been put into it. But that's. That's kind of been a little bit of my journey.
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B
Yeah, I definitely want to dive into where you're seeing the market now, but before we do that, just more on your background. So you were the Bay area at those years. 09 to 14 and then what prompted you to come down to LA?
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A
Well, it was Mercer. So Shadi was pregnant at that time with. With our first child. We've only have two, but with our first child and her family's from la, so wanting to be closer to her family was. Was a big part of it. But I had left Cornish Carry Commercial, which was in an arrangement with Newmark at that time. They had a licensing. Newmark had not acquired Cornish and Carry Commercial. And this was in like 20, around the 2014 mark. And I had left Quarter Carry Commercial and moved over to a company that was at the time called Rockwood Real Estate Advisors. And this is a boutique kind of inter. Intermediary out of New York that was affiliated with CW Financial and Fortress. And so what Fortress had tried to do is buy a brokerage firm and wanted to expand it across the country because they wanted to get into the operating side of the business and they needed a broker to kind of lead that effort. And so they reached out to me because of the relationship that I had with Fortress and asked me to kind of come on and lead that effort. And I was going to oversee the Western US build offices and develop kind of a investment sales capital markets brokerage company for them. And I did that for about a year or so. And they. Then they sold it, spun that off to 10x or auction.com and I say all that because there was a moment in time between when I was at Cornish Care Commercial and Newmark, and where I went off and was basically working on was really kind of the true tech side of the business at that point in time, which was auction.com one of the few platforms that are out there. And, and because I just felt like the business was like all Industries was set to kind of start to change and technology needed to be part of. Of. Of that effort. And so I was really interested in figuring out, you know, how to solve some of our pain points and using technology to do that. And so I did that for a bit, but then I that then that business plan and with the direction that 10X Auction.com were taking their business was away from deal making, away from brokerage. And so I then came back to Newmark. When I came back To Newmark in 2014, I had the choice to rebuild the team in San Francisco or take those efforts and move them to la. I knew it was going to be hard either way. And the competitive set of brokerage teams, investment sales, finance, brokerage teams in San Francisco is much deeper than it is in LA. And so. And also was looking at the next 10, 20, 30 years of my life and what market would be more interesting to be in. And while San Francisco is a high beta market, it's a, it's a fairly small market. Southern California is much more, it's much, you know, the volume of product, the type of product, the, the, the, the depth of private and institutional capital. So made the, made the leap because family a. But also just over. I just feel like over the next 20, 30 years, Southern California is a much more interesting place to be a broker.
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B
Yeah. And you, you still find that today?
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A
Yeah, yeah. I mean other than, you know, there's a lot of interesting things that are happening currently in San Francisco right now with artificial intelligence.
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B
Sure.
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A
And the Bay Area as a whole, but it is a much smaller market. Right. It's not, it's not. I mean the international capital, you know, they really truly like it flows through Southern California more so than, than really San Francisco. Bayer.
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B
But what are your thoughts in terms of the comeback of or, or the state of office today in Southern California versus Northern California? You know, two, two years ago, no one would have bought an office building, almost any type of product in San Francisco. And now fast forward, you have a new mayor, new school board, AI have has obviously driven the rebound and San Francisco has become a city or a market that institutional investors are interested in pursuing again. I don't know if we're there yet in Los Angeles.
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A
We're not there yet. But in San Francisco, I mean all west coast cities have policy issues. That's the number one thing that's holding all these cities back. And there's a lot of topics when you go into policy issues and that's happening all around the country. It's just not west coast. And that's going to limit institutional investment. When you can't rely on the government to kind of lay out certainty with regard to rules of the road, it's difficult to speculate and place bets. But as far as San Francisco, you have real demand drivers and the biggest demand driver and it's fast moving and they've seen the story before and so there's a lot of high quality assets up there as well. You know, there's newer construction. It just. We have a lot of functionally obsolete product in Southern California. It's also a horizontal market. It's not as vertical. The only real vertical markets are with, with major concentration is downtown la and downtown LA is, has got a host of issues and concerns and we can talk more about that. But as far as what we're seeing as far as office as a whole, it's coming. It's, it's started in New York. Miami never really was impacted that, that because just the migration of, of companies and population. But in San Francisco it's as far as the west coast. We knew it was going to lead coming out of the cycle and it's there we're seeing positive absorption and the tenant demand that they, they're seeing is, is greater than anything that they've seen since, since COVID So I think the, the numbers that the 10 to the market numbers are in line with 2019 numbers in San. So you're going to see a lot of institutional trades happen this year in San Francisco. And then as far as you know, how, how does that kind of roll down to Southern California? I think personally, I think that the, I think the Silicon beach which really kind of came about in, you know, the last 10 years is, is going to come back again. The same people that were being employed for different, by these large tech technology companies for whatever roles that they were they're being employed for at those times are repurposing themselves like they, these are all intelligent, educated people that, that live here, that want to, that want to be here and these and the companies want to have a presence here. And you've got great institutions like USC and UCLA that are going to keep pushing out new talent and new fresh talent and we're, we're going to, we're going to see those jobs get recreated in and really around artificial intelligence and everything that's happening with artificial intelligence. But it's going to happen here. I think it's going to happen back on the west side in markets like Playa Vista, Santa Monica. And so we, we'll get our shot. It's, it just takes a little bit of time and, and we've already seen the vacancy in a lot of the sub markets flatten out. We're bottomed. It's, it's, it's just a question of when do we start to come off that bottom. And I think a Lot of people that invested in 2020-1020-1112-2012, they'll tell you some of their best investments were in 2013, 2014, because it wasn't about what they were buying at and the price that they were buying at is when they were coming off that bottom. And so it's all about, you know, time is a big factor of returns. And so if you're having hold for a couple of years without getting a lift, that impacts your internal rate of return. So it's all, it's about when you acquire something and when you, when you, when you can really call bottom and when you're coming off that bottom.
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B
Mm. So when, you know, we're taping this, the, essentially the first business day of 2026, we are, you know, representing multiple types of clients. Those that are owning office currently who are telling me operationally, cash flow wise, they're actually in a good position. Their buildings are full, they're getting decent rents, but as their loans are maturing, they're still in a world of hurt. They can't refinance their debt because of the debt that they put on. You know, in the last cycle that cap rates have and their values have, you know, decreased to a point where operationally things are great, but from a cap stack perspective, things aren't.
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A
But that's, that's, that's not just office, that's industrial, that's multifamily, that's everyone. Right? We've, we. It happens every time with real estate, right? It's debt that gets us in trouble. Right. It was too much debt before and then it was too, too low of interest rates, which, which ended up, it's the same, ends up being the same formula, right? It's too much debt. And so, but yeah, that's, it's recapitalizing these assets is, is a big issue. And, and really it's just you're reinvesting in them. So you have to determine is this asset worth saving? Is this an asset? Is this an office building that I think should still be an office building that tenants will want to lease and want to occupy? And that is a question similar to retail. Retail went through this era with E Commerce and everything else where we had overbuilt retail and we needed to remove stock, we need to remove the stuff that shouldn't have been built. First of all, it was in the wrong location or just wrong quality. And so we went through this, we were shedding of this oversupply and we need debt with office as well. We have a Lot of, we have a lot of just office that nobody wants to be in. Right. It doesn't, it's not in the wrong location. It's just not, it's functionally obsolete. And so that product, I think we got like 7 billion square feet of office space around the country. Like, that's a lot of office space. But if we cut 2 billion square feet away off, off that like the market would, would right size pretty quickly. And that's, that's what's going to help is we're going to see the market, the balance of supply and demand happen. Not through absorption necessarily, but it's going to be the removal of these buildings that are 40, 50 years old that, you know, a lot of them. The problem too is this, like we got into this last 20 years, it's been private equity that's been investing in office because of the size of the, the equity checks that they can, they can get out in one office transaction. The office values are typically larger than any other product type. But they would come in and, and acquire these assets. And they say, we're going to, we're going to, we're going to take a private equity model and we're going to come in and we're going to buy it cheap and then we're going to fill out, figure out how to fill it up and then we're going to paint it and, and do some other modifications and we're going to sell it to the next person. But we're not going to replace a roof. We're not going to replace the chillers. We're not going to, you know, we're going to pass it along to the next guy and let, let him do the work. And no one ever did the work. It traded like three or four times and no one ever did the work. Right. So these buildings have, haven't had the capital invested in them that they should have had invested in them to really perform at the level they need to perform at today. And they're not designed in a new age way either.
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B
Yeah, I mean, the demands of tenants today are significant in terms of what they expect their office experience to be like. I mean, look, I'm in an office. We've got a podcast studio right above me. There's a golf simulator that the owner has in his suit. Do you hear it? What's that?
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A
Do you hear it?
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B
No, we don't hear it. Well, because he also never uses it, but we wouldn't hear it if he. The way that they built it. But beyond that, you go down just one block, is it the Lumen center on Olympic and pickleball courts and basketball and it looks like a country club. And you go to downtown LA and they can't offer those types of amenities.
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A
So how are you, can you talk about these a million square foot towers, they're being underwritten to, to like a stabilized occupancy rate of 75, maybe 80%. So you have 200,000 square feet that you're just saying we don't need. You could do a lot with 200,000 square feet. You build them all in one of those buildings if you wanted to with 200,000 square feet. Right.
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B
Is that happening?
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A
It should be happening. These buildings are self contained ecosystems like you. We just need the entrepreneurs, the innovators to come and say what can we create that's going to be an attraction for companies and tenants. And in San Francisco last cycle Google and Facebook or Meta were bringing buses up to San Francisco and then the high end chauffeur wi fi enabled buses and picking up their employees and bringing them down to Silicon Valley because they didn't have space in San Francisco, they didn't want to be in San Francisco, they wanted to bring the employees down to the Silicon Valley. And we, you know, the same thing could happen here. Like companies could go and occupy one of these buildings, control it self contained and then they can go to the west side and send buses to the west side and bring people down downtown and send them back like and we have this public transit system that really is pretty impressive. Like it's up to us to, to operate it correctly. But like the purple line which is coming into Century City is going to be open in, in months now and then, you know, what is that going to do once we've connected one of the best markets in the, with downtown and we all know, like, I think we would all rather get on, on that line no matter how, you know, whatever the condition it is. Right. Versus bear the LA traffic and sit in traffic for an hour and a half to try to get to a Lakers game. Right, right. So I do think that, that that connection is going to start to tie downtown LA and Century City. So it'd be very interesting to see, you know, the impacts of that as well.
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B
So what markets within Southern California are you seeing perform the best from a, we'll call it just a, a leasing perspective in terms of leasing velocity and, and rental amounts.
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A
They're all, you know, none of the markets have really started to kind of pick up the, the South Bay. And I look at kind of more la. The Orange county and San Diego are. Are sleepier. I mean San Diego, San Diego's got biotech but we know all know what's happening with biotech right now. And in, in la the South Bay has more of kind of advanced manufacturing and so you've got think of like SpaceX and everything that's kind of happening in Hawthorne and and El Segundo's got the Manhattan beach because in sort of lifestyle and everything else. So I think that there's a pretty strong belief that El Segado will be one of the markets that that kind of rises comes out of this stronger than it was in previous cycles. Culver City is going to continue to do well. Beverly Hills always does well. Burbank is struggling. Hollywood is really trying to figure out how to reinvent themselves with artificial intelligence. The production industry is really struggling because what can be done with AI right now so that we need Hollywood to survive this era.
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B
Yeah. And so the buyers of I mean let me ask it more open ended. How did 2025 conclude for you in terms of transactional volume and put your crystal ball or look at your crystal ball and see tell me where you think transactional volume will be in 2016. Six for office in Southern California.
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A
Yeah, our transaction volume went up and brokers are a good indicator of like what's happening. And you guys see it right? Just with what the. With the docs that you guys are processing the work that you're, you're. You're working on you're probably doing less workouts and more you know financings and acquisition assignments. But we our volume picked up and a lot of it is because we have a reliable capital stack now We've got. We have a healthy capital markets meaning more specifically finance side. Like we can go out we right now we're getting. We're getting quotes on and we have. We have plenty of bids on EY Plaza one of the towers that we've got out. So we think that that's going to be one. One of the first assets actually get third party financing not seller financing in downtown LA which will there that really hadn't happened since we we. We sourced the rescue financing for Union bank but that was all private rescue financing that was provided we have. We have non private financing sources for EY Plaza. So that having that is you know we're putting the capital stack together to be. To allow for more transactions and once you have the debt then it's. Then it's all about the equity and equity has been the Hardest part, I think 2026 is going to be the year for the private investors and family offices. If they don't make their purchases in 2026, they're going to miss out because we, we've heard it from institutional investors and more specifically the opportunity funds that they are going to be very selective but they're going to start making bets in 2026. So we, we expect that most of the opportunity funds will come into office, at least make one big office bet in 2026 and then obviously more follows that in 2027. So this will, this is, this is probably the prime time for the private investor to go out, be able to buy an asset at a significantly discounted value, capitalize it because they've got a debt market there for them and then they've got, probably a lot of them are syndicators, they can go out and be able to syndicate because now there's, there's not this aversion to specifically office. And I, I look at everything mostly through an office lens right too. So you know, I, I, so that's, that's, I mean we try to solve that problem day in and day out and so But I think 2026 will be the year of the private investor and, and these will be the buys.
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B
Of a lifetime from a, from a purchase price standpoint, buys of a lifetime. But you were, you know, we were just talking a few minutes ago about the repurposing of, I don't know, 20% of an office building putting in the amenities that attend requires. So the capital outlay that is required above and beyond the acquisition purchase price are. How are, how are your buyers able to make money in order for them to attract the type of tenants that they want?
- [31:43]
A
Well, they're buying a lot of these with a lot of cash flow. These are like 10 cap deals. So there's a ton of cash flow that are coming off these assets because the buyer pool is just so thin so they're able to buy them at that price. But yeah, everyone thinks that you're going to have to create some new solution to attract tenants but it's, it never really happens that way. It, it always just happens because the demand's there and there's more demand than there is supply. So think of like in, go back downtown la, the county Bach Gas company Tower, million and a half square feet that's been pulled off the market. LadWPS in the market to buy a building. They'll probably buy a million square foot building that'll get be another million square Feet that's taken off the market, we will probably see one or two more user acquisitions in downtown LA. And in total, I would not be surprised if 3 or 4 million square feet in downtown LA gets pulled the market. And that's, that's, that's, you know, the higher quality stuff that's like 10, 20% of the market. Right. So, and all those tents, those buildings now have to go and find other space, you know, or, or you'll see one building get converted to residential or whatever it may be. But the, the, the market's going to rebalance pretty quickly and all sudden 1010's going to say, yeah, I wanted that golf simulator, but we just need space because I need my employees to start working again.
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B
And have you seen a return to office trend for tenants? I mean it went from, you know, you can work remotely to now maybe a hybrid.
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A
Oh, for sure.
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B
Where are you seeing it in terms of tenants requirements for, in office for their employees?
- [33:22]
A
Yeah, I mean that was something that we were talking more about like a year ago. Right. It's like, okay, so what's, what's the, how many days a week like? I think about like the deals we were touring a year ago and it was like, okay, we gotta do our tours on Tuesday. Yeah, right, Tuesday at 11 o', clock, right before the lunch is provided to them, you know, and then, and then still you'd be like, why is it only half full? Oh, because we got these rotating shifts. Like half the office comes in on Wednesdays, other half comes on Tuesdays. It's like all these little experiments that we've tried have failed. And so now it's, it's, I think we're going back to what was kind of what, what we all were living pre Covid. And I tell you what, in San Francisco is six days a week. So when there's opportunity, people show up. When there's, when you're, when you're going through the motions, it's of course it's like, yeah, I'd like, I'd like to kind of, you know, be at more my kids functions. I want to, you know, I have, I've got to wash the dishes. I got to, you know, do whom to take, take care of my dry cleaning. Like people can fill their time if you allow them to be away from the office. And so I, and you know, listen, I, I run a, a company, a technology company and everyone's remote and there's a lot of problems with a lot of, with remote. And we, we do the best we can with all the different messaging applications and everything, everything else. But I would love to have those people in the office.
- [34:42]
B
Perfect segue. Let's talk about it. So you know your vice chairman of Colliers and also the founder of a, of a technology company, Duxray, talk about, I guess really the inspiration, the inspiration of this company and, and what does it do?
- [35:02]
A
Yeah, so it started through pain points, right? So I'm not a tech guy. I'm a cre. Deal maker. And, and I would just, I hit a ceiling with it, with the technology that was available. I was frustrated. I wanted to, we wanted my team to be able to do more volume. I wanted more intelligence. There was things that we, we, we were. The friction that we were seeing with the web applications that were available to us and was like, if we could just build this, if we could just build that. It was just. Everything was just too fragmented, too disconnected. And it still exists. That's still the way it is today. But it really, it wasn't so much about building a better tool. Is, is. I just felt like the, the, the industry's upside down in that the, the deal maker, and I don't think that I'm any different than, than most other broker brokers, which are truly dealmakers, is like you want to control your brand, you want to control your relationships, your, your listings, your product. And that's. Think about other industries as well. Like the content creators are the same way. They want direct access to their audience. You know, that's, that's why that all the, all the industries are kind of turning over right now. And agents are no different. Right. They want their own storefront. And so that's what I wanted is I wanted to have control over my digital brand. I wanted to have control over my funnel and control over my data. And that's, that's the platform that we built. It was like, I was like, I need one place that I can drive all this traffic can kind of come to. They will see my name, you know, my branding, my voice, and they'll engage with, with us on this site. And then from there I needed it connected to kind of a better operating system, one that wasn't just, you know, that was fully integrated, not a bunch of different disparate tools. One of the things that were, and this was never really the true intention of the company was to, to build an operating system, but we're all going to hear it more and more because we're all facing this. It's like tech overload. It's like application overload. If you go, most people go to their, their browsers, they sit down in their, at their work desk and they look at their computer screen. They've got 10, 15 browsers open. And it's. And if you think about like how many web applications or software applications that you're using to do to run your workflows, you'd be pretty surprised. It's probably 15 or 20 different web applications that you're using, using. And that's, that's, that's what we face every day. There's no way you can. And that has grown, right? It's been oh, add this, add a note taker. Now add, you know, whatever it may be. And it's just like it's one more application and people are like done with it. They, they, they're like, I need, I want a purpose built operating system that's like I want to go to one place and it. And I don't need, I don't need Salesforce and army of consultants to, to design it for me because I need three things that, right and then, and I don't need that whole CRM, you know, solution. I need three things from IT and I need two things from this and one thing from that. And so that's, that's what we've done. Like I'm here today because you know, Duxree is a little freed me up to, to just be more to, to be out in front of clients and, and do the things that I want to be doing versus versus working for the my technology.
- [38:19]
B
Basic question, what does Duxree mean? Where did that name come from?
- [38:23]
A
So it was kind of funny, it's a longer story. But we scrambled and we ran into a wall because we couldn't use the name that we wanted to use, which is pretty typical of every kind of startup. But so Shadi went to her Latin dictionary. She's got, you know, she, you know, Latin educated person and she, for a whole day she was going through stuff and ducks is to lead. It means to lead. The UX is in software is user experience. The X stands for universally is an exchange. So you see the red X because it's truly an exchange. Re for real estate and then the deal for dealmaker. So there's a lot to it, there's a lot that goes behind it and it's hard to find a five letter word that you can get the URL too.
- [39:18]
B
And so how would you compare these? And maybe you have. But you know, as a real estate attorney, you know, we hear of these different applications but we really don't use them, but the Loopnets, the Crexis mls, you name it. So those that are skeptical and say, you know, we have what Sean is producing. Why is Duxree different? How is this either disintermediating what currently exists or what's the difference?
- [39:48]
A
So the marketplaces that are out there, whether it's LoopNet or Crexi, they're websites. They're websites with thousands of listings. And you as a broker, you put your product in those websites basically to generate leads. And you're renting out your brand, you're renting out your data, and you're not getting much back. And so you're actually having, once you do go to those sites, you're having to pay to elevate your exposure on those sites. And still the lead quality is fairly poor because also the experience for the investor and the tenant isn't great as well. So it's not a modern marketplace. The marketplace that we developed is truly to put the control back in the hands of the intermediary, the deal maker. And we're starting with brokers because that's where the product is going to come from. Right? They're staffed with those listings to bring those listings to market. And so we're giving them their own storefront. It's a shopify of real estate. It's. It's YouTube for creators. And so once they have their, they don't have to lend their brand, lend their data to anyone else. They control everything. And so they become the destination.
- [40:53]
B
If I work at, I don't call your, your brokerage company a CBRE or jll.
- [40:59]
A
Yeah.
- [41:00]
B
Can I, Andrew Kirsch, become a subscriber or customer or does the parent company need to be.
- [41:08]
A
It can be both. Customer. You can be the customer and you have a lot of different options. You don't have to have your own custom site and that's hardwired into the operating system, the Dux RE operating system. You can choose to kind of go about business in a more traditional fashion where you publish to the Dux Re marketplace as well. I would think that our operating system, again, it's. I looked at like the what, what existed out there and the problems with what existed out there and been very thoughtful about what an operating system should be, what tools should be encompassed in that operating system. And so I think when the brokers come to use the Dux Reeves product, they'll see, oh, this was more intentionally designed. This, this is, this, this is comfortable. I don't just make sense for me, but I think that we're in, we are starting with brokers, but we're not stopping with brokers.
- [41:55]
B
Who else you envision can use this?
- [41:58]
A
We're investors, occupiers, you create the whole ecosystem. And so you're, you're developing tools basically for all the different participants of cre. You first, you create a great tool for brokers because the deal makers, that's, that's what I understand best. I'm, every day I'm using the product and I, and I seen where the friction is and I'm trying to remove the, the friction from the product. Right. It's happening every day. But we will, we will. Once we, once a marketplace is stood up, we already have investors and occupiers creating accounts because they're going after those listings, right. So once it's stood up, we'll start building the tools for all of those. Once you have an operating system though, that's that where, and brokers are having to not use as much other applications. You all have your data in one place. And why that's so important is because there's no way you can harness the power and leverage the power of artificial intelligence if you don't have your data in one place. So if you're, if you continue to use a 15, you know, 15 software application stack, you're never going to be able to use artificial intelligence correctly.
- [43:05]
B
So give me an example. So right now the pain point is you have data that's spread throughout so many different websites that you, you, you aren't able to use an AI software to help your day to day job.
- [43:21]
A
You can use them within those applications. There's, they're trying to figure out how to connect that, connect applications. And yes, they, they, they, they'll, they'll do it, they'll, they'll be able to patch them together to a certain extent. But what's really happening is, is, and I think everybody that kind of listens to this, especially the senior brokers, they don't use software anymore. What do they use? They hire someone to run their software. So they pay someone 70, $80,000 a year. That basically acts as human middleware. And this person is there to run their software for them because it's fragmented, it's spread across 15, 20 applications. And that's the hidden cost of software today is that you have to hire someone to run your software and to manually move data out of the software and into a centralized worksheet or whatever it may be. It's, it's a mess right now and it's become a bigger mess because of how we've layered on more and more applications. And so what we're doing is we're collapsing that stack.
- [44:19]
B
And what type of feedback have you been getting from, you know, your initial customers?
- [44:25]
A
The well, you got to remember like the, we don't really need to do a focus group because we are the focus group. Right. But it's, it's, it's, it's positive. Like everybody that has used it previously and uses it, the correct, the correct way is it's intuitive. We have other things that we need to build. Right? We, we know that, you know, we're like we're developing an email engine right now because we know people want to broadcast out from the system. And so we will get everything put together and put together the right way. And so when we build an email engine, we're looking at all the different solutions that are out there. Constant contact, mailchimp. But then we'd say what is it? What does a CRE professional really need from those? And then so we go through, we design it the right way, we create the workshop drawings and then we, that we go through the build of it. The biggest thing on that we're doing that's, that's really most cutting edge is once you have that operating system. And yes, we have the modern marketplace which is a big differentiator as well, but we have the operating system and we're developing an ingenic agent that sits on top of the operating system. It's integrated operating system Operating system has access to your proprietary data, has knows the rules and permissions it has. So it's not accessing some someone else's data and it can truly be a assistant for you. Right? So that's now that it has, has your data as can go to the web and combine it with what it can find from the web. It can start retrieving information and do a really good job of that, parsing all those OM documents and pulling information out of it, whatever it may be. But then it gets to the point where it's also ends up being a thought partner for you. Because the future of software with AI is it understands you, Andrew Kershus it understands what creates value for you and then it understands the same. You know, what my value pillars are as well. So that's expectation that we're going to start to see from, from software and Dash, we call this Agenic Agent Dash. It sits right on top of, of the software. So you what we're going to pull those senior brokers back into software again. We're going to pull them back into the application because all they have to do is do what they already do with their team. They either text them, they email them, or they talk to them. And that's all you have to do. Dash. The interface, interface of today is what we all see now with Chat, GPT and Gemini. It's a chat bot interface, but it needs to be an intelligent agent that. That's a system that understands and reasons and can use your data, along with other data to come up and bring back the solution that you're looking for.
- [46:53]
B
Did you ever think, I don't know, let's say three, four years ago, that you would be this versed in technology, software engineering, back end? I don't know computer programming.
- [47:10]
A
No, no. And I've gotten. I've just gotten myself in too big of a hole.
- [47:15]
B
Would you rather communicate now with engineers or with real estate investors?
- [47:20]
A
I love it. Both. Like, I can't stop doing both. And that's maybe that's the special sauce of it all.
- [47:25]
B
Well, I was gonna ask you. Yeah. What's your time allocation between brokerage versus Duxri?
- [47:32]
A
So most of the team is literally on. They come on at like 8 or 9 o' clock at night, which rolls throughout the country because we've got people in London, we got people in Serbia, we got Bali, we got India, we got Ukraine. So they're all, literally all over the world.
- [47:45]
B
I could have seen your colleague in India when I was there.
- [47:47]
A
Yeah, yeah, that's true. So the slowest part of the day is like 9 to 5 for me, which is when I go to work. Right.
- [47:58]
B
That's your day brokerage jump.
- [48:00]
A
Yeah. But it's a super, super adjacent, super complimentary. And what we're building is allowing, you know, giving me time back. Right. So I have. I am working harder than I've ever worked, literally weekends and evenings. And I've got a super supportive family. But I'll tell you, starting a company and especially a technology company now I. Now I understand why founders, most of them are in their 20s, because it's a physically and mentally intensive, you know, effort to go after.
- [48:30]
B
How has it impacted your golf game?
- [48:32]
A
I don't golf.
- [48:34]
B
I know. I haven't seen you out there.
- [48:35]
A
Yeah.
- [48:37]
B
It's just even hearing you, I feel exhausted. How. I know you said, like, you're in this rabbit hole and you keep finding, like another hole and another problem to tackle. What will bring you, I guess, the satisfaction of like, where you could take a deep breath and Say, okay, it was all worth it.
- [49:05]
A
You know, I started this. I signed the contract development contract in, like, January of 2020, the first time I wanted to try to build a tool. And when Covid hit, I made a conscious decision that I was going to be all in because I knew I was at home, I knew I had capacity because I didn't have to be in the office. And I could do this at night and weekends.
- [49:28]
B
Fewer deals.
- [49:29]
A
I had a little bit of capital of my own capital. So I kind of jumpstart this thing. And I knew I was the right age and I had the right amount of experience to really maybe impact the industry. And I'm passionate about it. Like, I see the issues and, and I. And I. I want to be part of the solution. And I think that's a competitive, even a competitive advantage, because I just want the industry to be able to have, have. Have its time back. I think that we are all weighed down with, again, the. The 15, 20 applications that we're using. And it's like, I want to build technology to allow people not to have to use technology. I want to build the invisible operating system, right? And I think that everyone would appreciate that. And I think that is where we're going with artificial intelligence, is it's going to create more work, but it's. And it's going to create more opportunities. It's not going to. It's going to eliminate jobs, but it's going to. Those people are going to be able to do funner and more interesting things, but it's going to give people their time back. Like, because I think we find ourselves in working, working in these applications that are just going to be collapsed into something that's more, you know, efficient and intuitive for them.
- [50:36]
B
I'm not going to compare to Steve Jobs, but I guess this is sort of the comparison I'm going to make.
- [50:41]
A
Yeah.
- [50:41]
B
In 2000, when did the iPhone come out? Maybe 2007, 8, 9. In that time period, if you would have asked someone, you know, do you need the iPhone? It can do all these things for you, from, you know, these applications to a phenomenal camera, to emailing, you know, web browsing, make reservations, whatever. Everyone would say, I don't really need it. I'm good with the way the status quo is. And then a couple years later, you couldn't live your life without it. Now, I'm not going to say, hey, this is the next iPhone, but is it similar? I guess my question is it's almost the challenge of getting people past the status quo. Of how they conduct themselves from a day to day level of, gosh, Sean, do I really need this? And then a year or two later they'll look back and they'll say, I can't even imagine my life without this tool. I can't run my business without this tool.
- [51:48]
A
Yeah. I tell the team right now is one of the things too, is like, we want to be a great, we want to have great services as well. Like I want within the company. I always feel like you need to be a great service company as well. You need to understand the user's pain points and be there to help them as well. And so that's, and that's part of me just wanting to service my colleagues and help them with their business is always to bring on people on that can actually have that human touch and human element and helping them with their business. But I say right now is people are going to come for our service and stay for the software. They don't know. It's not fair to ask somebody to really understand everything that we're building and all that it does. So we'll find one or two things that people can make sense of and see the value in like a website everyone understands. Like, oh, we'll build a website for you for $10,000 and that'll be your annual subscription. And people are like, yeah, if I went out and build a website, it'd be 15,000. It's hardwired in our operating system and that website's intelligent and it's gonna give you so much more behavioral data than any other website that you could develop. And we're gonna be really good at building, designing these websites. So they come for the website, save for the software, right? So we'll come for the email engine, stay for the software, right? And then all of a sudden they'll realize, oh, wow. Like, wow. They, my, my, my, my photos, like, I, I don't even have to create photos. I just put in my address of the property, have this data in here and, and they put this all in there for me and they just created these AI images for me. It's like, oh, wow. And pretty soon they're like, I don't, I don't even need to go into software. I'm just going to talk with Dash and Dash is going to do everything for me. But if you want to drive the car, you can get in there and tinker around with it as well. But people are gonna be like, I just want to talk to Dash. And Dash is kind of funny. So we'll give it a personality. We'll figure it out.
- [53:31]
B
No, it's incredible. I guess my last question here, because I want to be, you know, respectful of your time is, you know, for many years you were. Are still are a broker and being part of organizations that have been around for decades and now you're starting one. And so talk about just a few things that yes, you had this idea, you identified pain points, but you didn't realize in starting a company that certain aspects of being a founder would be as eye opening, as challenging, as satisfying. What are some either pleasant surprises or really hard challenges that you've had to deal with?
- [54:23]
A
You know, the people side of the business. The people side of the business is very challenging, but super rewarding too. I mean, and you know that, right? Running, running this law firm, being able to provide purpose for people like that just to, to see what they've gone through. Like, I've been. I have engineers in India that have been coating from their hospital bed with ventilators on during COVID I've had engineers who are coding in the hallways to avoid shrapnel. I have a designer in Ukraine right now who designs from bunkers and operates on battery packs and takes vacation, asks for vacation when her husband comes home from work. So she comes, could spend some time with them. You know, so when you go, when you, when you. We are very fortunate to live the lives that we're living here in this country. And when you are brought more like I have, I have one of the, I have one of the key executives for company who's in Nicole and has doctor appointment today for. To see if his cancers come back. You know, so it's like you go through this stuff with people and, and it really, it really help. It really ends up being the journey that you're on. And that's, that's the thing that's is. I mean, I have that with, with the team that we have here at Colliers. I have a wonderful team. And I think that's the thing I'm most blessed with, is people around me. And that's what keeps me so energized. That's what keeps me working around the clock. And that also helps me try to be a better person and improve constantly. But that's, that's probably been the thing that has been most eye opening and different is just, just the people side of it. Yeah.
- [56:08]
B
Well, it's like you said, most founders are in their 20s and not in their 40s, mid-40s with a family and an established career with demanding clients like being a broker in the office industry. And look I just want to a thank you for coming in and really gosh we're on what are we 10 now 12 years of our relationship, our, our family's relationship from school to holidays to to work and professional. I can't wait to see the success of Duxtri. I already know how successful you are as a broker and one of our leading, you know, thought thought leaders of our community and so thank you for coming on and really all the success for for you and Duxry and Colliers.
- [57:03]
A
Thank you Andrew. I appreciate being here.
- [57:04]
B
Absolutely. And that's another edition of Real Talk.
- [57:08]
A
You've been listening to Real Talk real estate discussions with Andrew Kirsch. You can catch prior episodes@scalarkirsch.com and on YouTube, LinkedIn, Apple Podcasts, Spotify, Google Podcasts and more. Thank you for your positive reviews, comments and for sharing this show with others.