Leveraging real estate to reduce healthcare expenses
Best Way to Contact Colin:
Why Maximizing Your Real Estate Strategy in Healthcare Matters with Colin Carr, Founder and CEO at Carr was automatically transcribed by Sonix with the latest audio-to-text algorithms. This transcript may contain errors. Sonix is the best audio automated transcription service in 2020. Our automated transcription algorithms works with many of the popular audio file formats.
Welcome to the Outcomes Rocket podcast, where we inspire collaborative thinking, improved outcomes and business success with today’s most successful and inspiring health care leaders and influencers. And now your host, Saul Marquez.
Saul Marquez:
Welcome back to the podcast. Today I have the privilege of hosting Colin Carr. He’s the founder and CEO of Carr, one of the nation’s leading providers of commercial real estate services with expertise in health care, of course, among other things, commercial investment, housing, senior housing realty. But today we’re going to be talking about health care, real estate. Carr’s mission is to help companies practices and investors maximize their profitability through real estate. There’s a lot of ways that we could do it. Colin’s going to be covering a lot of interesting angles that you could be thinking about your business as a provider, but also as an employer, what you could be doing to make profitability through real estate. Colin invest this time and expertise into the professional lives of his staff and agents, systems and processes and ultimately the thousands of clients that Carr is privileged to represent on an annual basis. He’s been involved in the commercial real estate area since 2000 and has personally complete over 1000 transactions. He lectures and trains thousands of health care professionals, administrators, business owners, students and more on an annual basis through the country at national meetings, conventions, study clubs, associations, universities and more. He also founded and currently leads several other thriving companies. But today, as I mentioned at the beginning, we’re focused on health care, real estate and how to maximize your profitability. So, Colin, such a pleasure to have you here with us today. Thanks for joining.
Colin Carr:
Sincerely appreciate the opportunity.
Saul Marquez:
So, Colin, you work in a lot of areas in real estate. As you know, we calibrated here before our chat and our listener base is highly sophisticated. Health care leaders in the provider space, but also employers in the space providing solutions into health care systems. What is it that motivated you to have a focus area of your company in real estate, within health care?
Colin Carr:
Yeah, absolutely. So I got involved in commercial real estate when I was 19 years old. I started managing apartment complexes, did that for a couple of years. I got into brokerage in my early 20s, started doing a lot of retail. I did stuff with large national retailers, moved into some office work, really just trying to figure out what was my lane. And after a handful years, it started just tripping over some deals that were in the health care space. I started working for some health care providers, DNS veterinarians, physicians, etcetera. And I realized very quickly that no one was focusing on representing the health care provider. There were a number of lamore agents, a number of listing agents, all our agents that wanted to work for the hospital system or want to work for the investor that owned the medical buildings. But nobody was focusing exclusively on the healthcare tenant buyer side. So I just kept exploring that space further. And the more clients that I had the privilege to work for, the stronger the response and the more referrals I started get. And it became evident to me that there was an area that was very untapped. And so I started a company in 2009 called Carr Health Care Realty, and we had a double niche of only health care and only representing tenants and buyers. And that’s what we’ve done now for over the last eleven years. We’ve expanded to some other areas because we had traditional commercial companies and other groups that have asked us to take our say activities that we utilize in the healthcare space and bring it into the commercial space or senior housing space. But health care is what is and was the primary focus from the beginning. And you know, we represent a couple of thousand healthcare providers each year now and we went from operating out of just Colorado to now we’re at about thirty five plus states and we touch deals and in all 50 states plus D.C. and that’s really our passion.
Saul Marquez:
Love it. Yeah. No, it’s you caught on to an opportunity in the markets and you seized it and have been working pretty voraciously to try to make things happen for for the leaders in health care. And so how are you and your business adding value to the ecosystem through real estate?
Colin Carr:
So a lot of people recognize real estate as being just kind of a component that you have to deal with. And everyone’s looking for chances to lower their bottom, you know, lower their overhead, you know, trying to find ways to cut expenses. Some people are more proactive with trying to find ways to grow, etc. But real estate really effects, affects both sides, affects the overhead, but also can dramatically affect the profitability as well. I mean, most health care providers know that real estate are expensive, but they don’t realize that is usually the second or third highest expense that way. Payrolls, number one. Real estate usually number two. There’s times you could have capital equipment or other operating costs that take the number two slot. But if you look at health care providers practice over 20, 30 year period, real estate typically occupies the second position. And so you start looking at that. You negotiate a good deal or bad deal. It can it can have a swing or it can affect your economics by tens or hundreds of. Thousands of dollars as an example, if you’re in a smaller space. It could be tens of thousands of dollars over a 10 year period if you’re in a medium or large. Basically hundreds of thousands or literally millions of dollars in savings or an additional overhead that you have to pay if you don’t capture the right terms and then you get into other concepts like what if it’s not the right location and that means lower revenue? Or what if it’s. What if it is a better location and that means higher staff retention and less less turnover? There’s just there’s so many areas that real estate, a fact that affects obviously the care that’s provided. It affects the staff experience, which then turns to affect how they interact with patients. That affects the patient as well. So real estate, as far as the clinical experience, the actual health care, the care provided, you can’t escape the real estate factor. And then on the economic side, it’s a big decision. And realistically, payroll is not very negotiable. I mean, you can try to cut pay if you want to, but you’re going to lose staff and it’ll cost you two or three times more than if you would’ve just paid them what’s fair and equitable and retain them. So if you’re looking at overhead costs, payrolls, minimally negotiable, real estate is 100 percent negotiable and you have the ability to choose where you occupy, where you locate, whether you would have a property or and whether you leased or own. There’s just so many variables. It provides the health care provider a chance to make a lot of decisions, and that can have a tremendous upside or downside for them.
Saul Marquez:
There’s some some great thoughts there, Colin. And so as you as you think about the 11 plus years you’ve been doing this in healthcare, what would you say makes you different or better than other practices in real estate that can help customers like the ones listening?
Colin Carr:
There’s a handful of things that give us a huge competitive advantage and are differentiators. First and foremost is our commitment to the health care space. Most real estate brokers are generalists and they will chase anything that moves. Whether it’s an automotive deal, whether it’s a landlord listing, a tenant deal, health care restaurant as a matter what it is, if it’s a deal, they chase it. And that’s great because you can provide some level of support, but you can’t become you can’t become the specialist if the equivalent of in health care, you know, you have an orthopedic surgeon that all he does is replace knees. All right. Are you having dental? You have endodontist. All they do is root canals every single day. And so you could have someone who does a root canal once a year, once every two or three years, you could have an endodontist that has a root canal three or four times per day and has done thousands and thousands in their career. So that’s the differentiator for us, is that we have a commitment to the health care space. We love it. We breathe it, and that’s our focus. And with that, we understand the technology. We understand the ergonomics of how the spaces layout the architecture. We understand the construction costs. We understand how the technology integrates. We have a team of professionals with attorneys, CPA, is everyone involved that is committed to the health care space and committed to those industries. And so we just bring a a more unified, stronger focus to every transaction. And we understand what actually makes a difference or move the needle for the healthcare provider.
Saul Marquez:
Yeah, that that specialty makes a makes a big difference. And maybe you can share a story. Colin, we love stories. What’s an example of how your company has been able to get some wins for your customers?
Colin Carr:
Actually, you I’ll share a scenario that is very common in health care. But I think it’s one that’s it’s one of our more fun wins, if you will. We had a deal that we are working for a dentist and he was a dental dentist. He was in a multitenant building with seven or eight other tenants. And the other people that own the building where dental specialists. So three or four other people that own the building, this dentist referred a lot of business to them when his lease came up for renewal. They came to and said, hey, listen, you know, you’ve been a good tenant. You’re a referral source for us. You’re our friend. And he was paying about twenty nine dollars a square foot. And they said, you know, normally it cost them to raise the lease rates. And so because you had a great time and we like you, we’re gonna go and just keep your lease rate at the same number, keep it at twenty nine dollars a square foot. And we even give you a little bit of money for carpet in pain and we’ll give you a month of free rent. So on the surface, that sounds that sounds equitable. These guys are taking care of me. These guys are my friends. Right., the doctor, he’d heard me speak and he was, you know, I’m missing this call. I’m going to call Colin and just have him double check the numbers just to make sure that I’m or I’m supposed to be. So he called me. We met with him, went to the lease, and I said, you know, everything, they said you sounded good. And that’s the traditional landlord posture of, hey, I’m going to take care of you. But I said, you realize the landlord, even if it’s an acquaintance or even a friend, they still have their interests first. All right. And it to that point. They had a vacant space in the first floor that they were marketing at $19 a square foot.
Saul Marquez:
So that’s a big difference.
Colin Carr:
So you look at it. Most people sign a lease as part of the market. The lease escalates every year 2, 3, 4 percent. Those increases typically outpace inflation or the current market. So most scenarios end up with the lease. That’s dramatically higher than where the market’s at. And so in this scenario, the friend discount or the referral source discount was a $10 per square foot premium. And so we obviously, you know, called the bluff, went to the market, found other options, put together our posher, which is either give us, you know, give us a market deal, give us the same or a better deal that you’d give a total stranger. But we’re not going to pay that premium. And so we were able to drop the red dramatically, get them much higher tenant premium allowance to renovate, get a more free rents and it saved him several hundred thousand dollars. And then he took that money and reinvested in upgrading a space, upgrading technology. And then just put the remaining portion of savings in his pocket. But I mean, that’s an example of just the old idea that landlords, good, bad or indifferent, are in business to make money. And they’re not going to voluntarily cut their cash flow income by tens or hundreds of thousands of dollars over a deal any more than a health care provider would would voluntarily reduce their reimbursement rates from an insurance company. It’s not going to happen. So it’s important to go into a transaction knowing that if you make a small mistake, it will cost you tens, $1000 is not an exaggeration. That’s the real numbers. They take a couple of dollars per square foot times, a couple of thousand square feet times five or 10 years. It’s a lot of money, but you go in the transaction and realize that every party is out for their benefit. And it doesn’t matter whether they’re a good person or a great person or whether they give you a Christmas gift or they take you golfing or whether they’re a patient. If they can push the deal higher or give you lower concessions, they’re gonna do what’s best for them. And it’s no different than you in your practice. You’re not gonna lower your fees if you don’t have to. If you could bump your fees, you would if you could find a way to capture more money, you do it. And it’s not really a it’s not about being good or bad or moral or moral. It’s about each person in the real estate transactions going to try to get the best deal for themselves. And if you’re going up against sophisticated landlords that negotiate professionally for a living, they have an upper hand. You’ve got to find a way to level the playing field so that you can capture the best care for your practice.
Saul Marquez:
Yeah. Now it’s a great story. Colin and wow. I mean, that’s an eye opener right there. I mean. Same building, different unit, 10 bucks cheaper per square foot, hundreds of thousands of dollars. You got a pressure test up, folks, and this is a great reminder of that. And beyond that, Right. understanding what other opportunities exist within you are a real estate per portfolio to optimize terms, to optimize benefits to you and your business, because ultimately without margin, there is no mission. And so we’ve got to make sure we got great business models to take care of patients and deliver on the promises we’re we’re giving to our customers and healthcare, our customers being patients as well. Great story. Colin, I’m glad you took us to that moment. And man. I’m sure that guy is happy.
Colin Carr:
He was very happy. This practice was the fact he was able to save a ton of money. He was able to put a ton of money as pocket. He is still able to renovate a space and then also invest in new technology, which then, you know, increases production, increases profitability. So that was a great scenario.
Saul Marquez:
That’s awesome. So what would you say is one of the biggest setbacks you’ve had? And what was a key learning from that?
Colin Carr:
Early on, I realized and this ended up being a huge benefit to me, but early on I realized that you can’t just tell people in real estate what you want to do. And I know that might seem foreign to people, but when it comes to commercial real estate, it be great to tell people like, hey, I want to stay in the property. I want to relocate my practice. If you tell them that they’re going to dramatically increase your lease rate. So in the beginning, I went into real estate with the idea of, hey, listen, I’m to tell you what, we’re gonna tell people what they want to do. They’re treated fairly. And I realized quickly that that’s just not how commercial real estate works. You if you tell someone I don’t want to move or I’d rather stay. They’re gonna take that as you can’t move or you’re not want to move and they’re gonna push you or push the deal as high as they possibly can. So, you know, one of the things I learned early on, it was a quick lesson, but it was a good one is if you’re dealing with a lease renewal as an example and you go to the landlord and tell them, hey, the client wants to stay, they’re going to take that as a weakness. They’re gonna take that as you can’t move, you’re not willing to move and they’re gonna punish you for that. And so I realized quickly, you can’t even begin negotiate with a landlord until you’ve gone to the market and you’ve seen what your other options are. So you have a benchmark to compare it to. And then when you do talk the landlord, our lease renewal, you’ve got to realize that you’ve got to have other options that are viable and you’ve got to be willing to exercise those options. And if you do that, then you flip the table on the landlord to where they have the loss factor or the risk factor of losing you. And then they end up competing for your business. So one of the things that I learned early on the hard way was just go into a landlord and say, hey, the client wants they do this or they really want to be here. This is the property they want to choose. And in turn, the landlords took that and price gouged and gave terms that were not fair and not equitable and put the client a huge disadvantage. I realized very quickly, you’ve got to have a better strategy. You’ve got to go into the transaction with market knowledge, with other viable options and the ability to execute on those options. And if you do that, you are then in a position of strength and control. And that’s the lesson I learned early on that has helped us help our clients capture the best terms on the vast majority of transactions we’re involved with.
Saul Marquez:
Yeah, that’s a big lesson, Colin. And folks, don’t show your cards in here. You use that leverage in that negotiation. We’re talking about real estate negotiations here. You don’t want to show your cards because the minute you do, that’s when they’ll take advantage. And Colin said it’s not that they’re good or are great people or or, you know, bad, that they’re just in business and they’re looking to get a good deal. So don’t help them get a good deal at your own expense. So lots to talk about here in this topic. But, you know, time’s short. We limit these episodes to 20, 25 minutes. You’ve shared some great pearls. Colin, what would you say you’re most excited about today?
Colin Carr:
I’m the most excited about having the ability to possibly impact people’s lives that help people. And, you know, in the midst of what’s happening right now with with the Corona virus, with the economy, people are panicking. People are concerned about what’s going on with the election, people concerned about what’s going on with with health. And the reality is, is that health care providers are on the frontlines of society across the board. They’re affecting what’s happening right now with people’s lives, with their health. And then you can see how that then turns and dominoes into the economy at dominoes into other areas. And so I’m excited to have the ability to make a positive impact in a difference in a health care providers life or companies that support health care providers. And when we do our job and take care people, that that means more cash flow, higher profitability, them to be able to save more, then to reinvest more, to hire better staff, to hire more staff. And so I look at our world, I look at real estate as a chance to possibly impact and influence the health care industry. And I am keenly aware that the health care industry moved the needle for the entire economy and hopefully the entire world. So it’s for us, it’s a privilege to be involved in those deals and for others to be involved in our lives.
Saul Marquez:
Now, it’s a great, great message, Colin. And folks, if you want to learn more about Colin and Carr real estate, go to carr.us That’s carr.us to figure out maybe an opportunity for you to to find a way to optimize your real estate position so that you can maximize profits, but also patient care. Colin, leave us with a closing thought and best place where the listeners could get in touch with you if they wanna learn more.
Colin Carr:
Absolutely, closing thought would be go into every real estate transaction with a strategy. Hire a professional who exclusively represents your interests, not the landlords, not the sellers, but just your interests and get educated on the market before you actually start asking for proposals or negotiating. Know what’s out there and then know all your available options. Know what’s available for lease. Know what’s available for purchase. Have a real strategy and then go into the negotiation with a specific posture and a plan to actually execute and win. And if you do that, you’re going to end up with a dramatically better scenario. For any any health care provider or or anyone to be in touch with us carr.us is a great place to do it. And in the upper right hand corner, you can click, find an agent and you can find someone who serves health care providers in your area. You can also click an upper right – free lease or purchase evaluation and we’ll take your current terms, your current scenario compared to the market. We can tell you in a very short time, if you want to purchase what your options would be if you want to compare your current terms to the market. Are you above market? Below market? What’s the opportunity? And we can tell you that the perfect time to start your next transaction, that you are fully prepared and can capitalize.
Saul Marquez:
Great opportunity, folks, to check that out and figure it out. I mean, does not hurt to pressure test. And don’t be that dentist that doesn’t find out, be the dentist that did find out in this story and and there might be an opportunity for you to improve what you’ve got going on. So, Colin, just want to say thank you. And I really appreciate you sharing your wisdom.
Colin Carr:
Appreciate the chance to be here. Thank you.
Thanks for listening to the Outcomes Rocket podcast. Be sure to visit us on the web at www.outcomesrocket.health for the show notes, resourses, inspiration and so much more.
Sonix uses cutting-edge artificial intelligence to convert your mp3 files to text.
Thousands of researchers and podcasters use Sonix to automatically transcribe their audio files (*.mp3). Easily convert your mp3 file to text or docx to make your media content more accessible to listeners.
If you are looking for a great way to convert your mp3 to text, try Sonix today.
