Andrew Riepe on Importance of Tenant Representation in Dental Healthcare Transactions

SUMMARY

In this episode of the Dental Flow podcast, Benjamin Suggs interviews Andrew Riepe from Crown Tenant Advisors, a leading dental broker specializing in tenant representation in healthcare real estate. Andrew shares his journey from a minor league baseball player to a successful broker, emphasizing the importance of aligning real estate decisions with the goals of dental practices. The conversation covers various topics including the unique role of tenant representation, navigating lease agreements, choosing the right location for dental practices, understanding tenant improvement allowances, and the value of dental practices to landlords. Andrew also discusses the importance of renegotiating leases and planning for the future, providing valuable insights for dental startups and established practices alike.

Takeaways

• Crown Tenant Advisors focuses exclusively on healthcare clients.
• Tenant representation ensures conflict-free negotiations for clients.
• Understanding lease clauses can prevent potential issues for practices.
• Location choice impacts the success of dental practices significantly.
• Rural markets may offer less competition for new practices.
• Tenant improvement allowances are crucial for startup budgets.
• Dental practices are considered high-value tenants by landlords.
• Renegotiating leases should start 1.5 to 2 years before expiration.
• Planning ahead is essential for successful practice management.

Chapters

00:00 Introduction to Dental Real Estate Expertise

03:09 The Unique Role of Tenant Representation

06:07 Navigating Lease Agreements and Clauses

08:58 Choosing the Right Location for Dental Practices

11:52 Understanding Tenant Improvement Allowances

14:55 The Value of Dental Practices to Landlords

18:00 Renegotiating Leases and Future Planning

21:03 Conclusion and Contact Information

ARE YOU LOOKING TO OPEN A DENTAL PRACTICE OR RENEGOTIATE YOUR LEASE? CONNECT WITH ANDREW REIPE AND CROWN TENANT ADVISORS FOR YOUR REAL ESTATE NEEDS.

https://crowntenantadvisors.com

404.216.4017
ariepe@crowntenantadvisors.com

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Transcript

Benjamin Suggs (00:02.358)
Hello everybody. Welcome back to the Dental Flow podcast. Today we're excited to have a special guest. We are talking to Andrew Reapy from Crown Tenant Advisors. Andrew is one of the most well known dental brokers in the Southeast and even beyond now I think Andrew maybe. But we're really excited to have you today. Thank you for coming.

Andrew Riepe (00:23.81)
Yeah, thanks for having me. Excited to be here to chat with you.

Benjamin Suggs (00:26.72)
Yeah, absolutely. So if you wouldn't mind just give us a little bit about your background and how you ended up in working in

Andrew Riepe (00:38.062)
So I come from a commercial real estate background, obviously. I've been in this field since 2004. I started my career after a minor league baseball playing career that lasted three years. Thought I wanted to be a college baseball coach. Coached at the Division I level for two years and realized maybe that wasn't the path for me long term. Got into commercial real estate working for a national tenant rep firm.

focusing on mostly office tenants and transactions and sort of by happenstance started working with a few dentists, other healthcare folks and realized there wasn't anybody in that space in the early 2000s just focused on helping them either find space, negotiate leases or purchases and truly represent their interests through the process. So 2009, fast forward, I started Crown Tenant Advisors.

We're a boutique healthcare commercial real estate focused only on helping healthcare clients on the tenant and buyer side of a transaction. So what that means is we completely align with our clients' goals and objectives and make sure that their real estate does as well. And it's a hundred percent conflict-free every step of the way. Our job is to get them the best real estate deal that we can at the right location for their practice and always be on their side of the table throughout the process.

Benjamin Suggs (01:54.794)
Gotcha. And where did you where were you when you were playing minor league baseball in a small town or large town?

Andrew Riepe (02:00.558)
Yeah, so I spent a summer in Lowell, Massachusetts, about an hour north of Boston. was with the Boston Red Sox organization and then spent parts of two seasons with Augusta Greenjackets here in Georgia and also in Sarasota, Florida in the Florida State League.

Benjamin Suggs (02:12.918)
Wow.

Benjamin Suggs (02:16.864)
Nice, that's pretty sweet place to play baseball in Sarasota. Awesome, Well, so let's jump into it. So you mentioned in your intro there.

Andrew Riepe (02:21.46)
a little warm in the sun.

Benjamin Suggs (02:28.852)
more focused on tenant representation in these medical, dental, real estate transactions. Can you just talk a little bit about what that means and how does that make you different from other brokers out there?

Andrew Riepe (02:42.99)
Exactly. Most commercial real estate firms have generalists who will typically either be a landlord rep or a tenant rep or sometimes work both sides of the transaction by being just solely focused on the tenant and buyer and in the healthcare space makes us unique. There's not many folks like us. And it also makes sure that we get the best outcomes for our clients. It's more consultative. We're not selling anybody on a space because we're getting compensated if they lease this space or that space.

We take a broader approach. want our clients to feel like they're making the right decision every time they make that real estate decision. And by being on their side, showing them everything, walking them through that process, we end up with better results for our clients though.

Benjamin Suggs (03:23.432)
Absolutely. It's kind of like, always makes me think of why if you purchase a house, you hire your own real estate broker. You don't necessarily it happened sometimes, but you're not necessarily going to use the seller's broker. It's odd to me, dentists are out there purchasing practices using the representation with the land, the same representation as their landlord.

Andrew Riepe (03:35.714)
Right.

Andrew Riepe (03:43.744)
Yeah, you're exactly right, right? They're looking at it from, if they're representing the landlord, they've got a fiduciary responsibility to that landlord to get them the highest return on their space or their sale. Likewise, we're making sure that we're leveling that playing field and we've got all the information our clients are leveraging the real estate market with us involved to get the best outcome versus just going in one direction where that person has an inherent interest to that landlord.

Benjamin Suggs (04:12.246)
Gotcha. And I remember, so you and I are both based out of Atlanta. So we've crossed paths quite a bit. and we shared quite a few clients for sure. so I remember I won't name her cause I didn't, I didn't ask for permission to say her name here, but, one of our clients, she started in Georgia and I remember there being an issue with her landlord about a year or so in, can you, I think, you know, I'm talking about with the, something to do with Kroger or something like that.

Andrew Riepe (04:17.623)
yeah.

Andrew Riepe (04:41.198)
Yep, it was a Kroger Anchor shopping center. We had a client that we had helped her through the process of finding the location, negotiating the lease. And as we kind of go through that with legal counsel, there's certain clauses that we want to make sure that we address in that lease. And one of them was the relocation clause, right? So a lot of times landlord will ask for the ability to relocate a tenant if they need the space or they've got a bigger tenant. In retail settings, that's typically

we're going to get that removed the vast majority of time, unless there's a special circumstance. that's what we did. We negotiated basically relocation clause out of her lease. And the landlord came to her about a year and a half in and said, Hey, we want to put a fuel center where your section of the shopping center is. And she called me in a panic and said, what do I do? They want to move me. They want to move me kind of tucked away in a different part of the shopping center. I'm going lose this visibility. It's going to be terrible for the parking and the patients. said, well, hold on a second. I know we got that out of your lease. They do not have the right to do it.

So you do not have to actually move, right? Unless you want to. So we were basically able to negotiate a better spot in that shopping center upfront, right on the road that had become available and about the same square footage and the landlord paid for the entire build out, the relocation, et cetera. There was no downtime for her. So it could have been a really bad situation as a new practice going into a shopping center and then being forced to move to a less desirable location within same shopping center.

actually turned out for her to end up being windfall. She's super successful today. And yeah, that was kind of one of those things that you see and you hear about. And there's a lot of clauses like that in leases that if you're not on top of it and you're not having the right people look at and try to mitigate the risks involved with some of these places, you can end up in a very bad situation.

Benjamin Suggs (06:29.484)
Oh, and that's, that's huge. mean, we're in a half in that's still startup phase. That would have been catastrophic if you had not with that, that clause in there. Uh, so that I think that just, a good reminder for Dennis to use someone who specializes in what you do to, do these, these deals. mean, it's, it's a long commitment and a lead. So you gotta, you gotta protect yourself for sure. Um, and so I wanted to ask you to, you know, uh, you know, these days,

Andrew Riepe (06:49.848)
Yeah, absolutely.

Benjamin Suggs (06:55.914)
based on what you're seeing, like what do you think? And I'm probably not an easy answer to say one over the other, but you know, what is the most ideal place to open a dental plaque? Cause is it a rural town, more in an urban city area, you know, retail or in one of those medical buildings or an office building? And what are you seeing?

Andrew Riepe (07:15.982)
Yeah, I think that's really interesting question. You know, I don't think there's necessarily any one right way to do it, right? There's lots of practices that are in high rises that are super successful. I think as a startup, it is important, you know, if you're going into a competitive area to put yourself in the best location you can from a visibility, accessibility, parking, right?

Benjamin Suggs (07:36.598)
doing.

Andrew Riepe (07:38.702)
I certainly think there's a lot of opportunities, there's less competition in some of these rural markets. If a young doctor is wanting to be willing to commit or to commute to a rural area, they can be successful, no doubt. And a lot of those rural practices are very, very successful because of the competition factor as well. I think the one thing we try to stress or we try to really understand too through the process with our clients is what is the vision for their practice, right? So we want to make sure as we're going through this,

you know, if you're committed to practicing a certain part of town and you want to serve a certain patient base or provide a certain type of dentistry or focus on a certain model that we're aligning that real estate that fits that, right? Cause ultimately I think if you do that, you can still be successful in competitive markets. It just might mean is we got, you got to, you got to do more marketing. You got to do something different. You got to provide something different to out compete.

But I think by and large, I there's, I've had plenty of practices to have gone the other way and said, listen, I want to be within 30 minutes. This is where I'm to live with someone raise a family. do not want to go to the rural, to rural in an area. so let's get the best, let's get the next best thing and I'm to make it work. Right. So think if you have that attitude and you have that conviction and you're going to work at it, you can really be successful a lot of ways. Right. So there's not any one way to do it. I think that's going to make you successful. think there's a lot of, there's just a lot of different things that you got to consider.

Benjamin Suggs (08:58.924)
Right.

Andrew Riepe (09:04.0)
at the whole picture of ultimately what is your practice going to look like and what do you want it to

Benjamin Suggs (09:09.396)
Absolutely. And I feel like there's a, there's certainly Dennis out there that had no problem with that hour long reverse commute, listen to podcasts, do whatever. But then there's others who no way they don't want to be that far from home.

Andrew Riepe (09:18.54)
Yeah. Yeah. Yeah. think, think one other thing to point out sometimes too, when you're doing research, we've had it where, you know, a consultant or demographic study will say, Hey, I got to be in this area. Well, that area doesn't have any competition because there's no commercial space yet. Right. So where's the next best area we can be to serve those patients that we know may be moving to a growing area where there's going to be the space that actually you can do it.

Benjamin Suggs (09:41.578)
Right.

Andrew Riepe (09:45.046)
So that's sometimes two bill. Well, this is a great area. There's nobody here. Well, there's nobody there because there's no space yet. So it's sort of keeping all those things kind of in mind as you're going through the process.

Benjamin Suggs (09:50.753)
Yep.

Benjamin Suggs (09:56.072)
Absolutely. this is a strange question, but I just thought of it on average, how many locations do you view with a dental or a medical startup before they find the one that they

Andrew Riepe (10:07.692)
Yeah. Yeah. Again, depending on the market or the sub market that they want to be in is going to kind of dictate that. I mean, sometimes too, we'll have startups, for example, that are thinking of a couple of different markets. So we'll end up surveying several different areas. mean, there may be a list, you know, three or four lists of eight to 10 properties that could potentially work. Obviously, we try to pare down that list and focus on the true prospects.

Benjamin Suggs (10:13.352)
you

Andrew Riepe (10:33.48)
and utilize a whole host of things, whether it's competition studies that we perform for clients, pull demographics, understand kind of, okay, what makes this area more appealing to this area, and then tie the real estate in those areas. But yeah, certainly when we're looking at an area, being on the tenant side of things, I want to make sure my clients and our clients are seeing everything that could work. And then obviously we're paring that down to get to what is actually the best option at the end of the day.

Benjamin Suggs (11:02.24)
The ideal one. Awesome. And so I've noticed a lot of our startup dental clients that we've worked with for marketing. They get a pretty sizable, I'm trying to remember what they call it, but basically build out money from the landlord as part of their lease agreement. What is that called? And how common is it to see that?

Andrew Riepe (11:18.592)
Mm-hmm. Yeah.

Andrew Riepe (11:23.502)
It's typically called a tenant improvement allowance or an allowance. It's very common. I think part of it is going to depend on the landlord, the rent or rate, the lease term, the type of building. For example, a medical office building that's underwriting transactions, knowing that they're going to have to provide more allowances to attract medical and dental into those buildings will typically provide the highest amount of tenant improvement allowances.

But they also, the rate is adjusted sort of accordingly. Retail landlords, it's going to depend whether they're a large national REIT that may have deeper pockets or mom and pop landlord that may cut your deal on the rate or free rent or come up with some blend of the two. I think in today's market, the construction costs have continued obviously over the past several years to escalate where it's not impossible.

Benjamin Suggs (12:09.388)
I think it's a very good question.

Andrew Riepe (12:19.854)
But it's definitely not as easy to work within a budget if we're not getting an allowance and a somewhat healthy allowance, right? Cause you still got to equip it. You got provide technology, you got to have marketing spend, you know, some working capital, all those things that go into a successful startup that's still, you know, we got to make that work. So it is important to negotiate that as aggressively as we can to get the most money from the landlord ultimately. And it just going to vary whether it's X per square foot or Y depending typically rate, lease term.

Benjamin Suggs (12:35.734)
So, yeah.

Benjamin Suggs (12:41.878)
Great.

Andrew Riepe (12:49.814)
landlord capability and what their overall goals are too.

Benjamin Suggs (12:53.612)
Got you. And would you say that a dentist or a medical practice is a pretty high value tenant for a landlord? I mean, as far as attracting other businesses?

Andrew Riepe (13:01.262)
Absolutely. Yeah, absolutely. 100%. And that's part of our leverage too, right? I mean, you're getting, you know, top quality tenant, even if it's a local operator or local doctor, the odds of them practicing for a very long period of time in this space paying rent every month are very high, right? So they are very attractive for landlords and oftentimes can be one of the tenants because of that. You know, I think I heard a stat that the average dental office

Benjamin Suggs (13:17.846)
Right.

Benjamin Suggs (13:23.916)
because

Andrew Riepe (13:27.85)
is in the same space for about 17 years. May not be the same practitioner, but once the space is dental, it's going to be dental for a very long period of time. And there's value there. Obviously, there's a ton of value and upside for landlord to know that they can, if they're going to invest and they're going to go into the hole to provide allowances and things like that, that they're going to get their money back over the period of time. And certainly we leverage that.

Benjamin Suggs (13:38.604)
Mm-hmm.

Benjamin Suggs (13:51.232)
Gotcha. And I imagine that, you know, the dental, the failure rate for dental practices is so low, it's got to be nothing like other businesses that they're putting in those places.

Andrew Riepe (14:00.544)
You're exactly right, right? We talk about some of the lowest default rates across all industries. So sometimes we've got to kind of educate landlords on that fact and certainly get third parties, lenders, et cetera, to provide their statistics to get them to see the light. Because sometimes they look at it and well, Jesus, this isn't Starbucks. So why am I doing this? Well, here's why. And don't take my word for it, but look at the statistics and actually the facts of low default rates, great quality.

Benjamin Suggs (14:29.611)
Right?

Andrew Riepe (14:30.316)
and good tenants, obviously.

Benjamin Suggs (14:31.948)
Gotcha. And if a dental startup, dentist out there listening is considering doing a dental startup, how long in advance should they engage you guys to start that process? I mean, I know everybody has like, I want to open next March at this date. And sometimes things happen that doesn't happen, but how long in advance does the process take for you to find the perfect spot for

Andrew Riepe (14:48.374)
Yeah.

Andrew Riepe (14:55.982)
think it's a great question. I always say, if you're thinking about it, if someone's thinking about it, have a conversation with us. We want to kind of plan along those timelines, even if it is two years out. We'll have the conversation, right? There's no obligation. But what I would typically say in today's world from start to finish, depending on how the space is currently laid out and what work needs to go into it, realistically, I'd give yourself probably every bit of eight to 12 months, right?

Benjamin Suggs (15:24.748)
you

Andrew Riepe (15:25.858)
to start the process, take your time, plan it, design it, construct it, et cetera. I'd give yourself eight to 12 months in today's world. It used to be a little bit faster, but with lead times and construction timelines, that's gonna be a big chunk of it. We're seeing, call it four months of construction on a new dental build out. So you kind of work your way backwards from there and give yourself enough time to be able to fully, to find it, to focus and to fully negotiate letters of intent, leases.

and get plans and permits and all that done, I think you're gonna be in that range to be fine. But even though we have plenty of clients who are thinking a year and a half, two years out, then we kind of start that process. then sometimes things change, we always think in a year, but gosh, if I can get in there sooner or let's go, I'm really, ready to do this now.

Benjamin Suggs (16:13.578)
And I imagine you see so many potential spaces all the time that if you talk to a dentist two years ago and they told you what they ideally and you see the perfect spot, then you're on your radar. You can let them know like here's a, here's a perfect opportunity for you.

Andrew Riepe (16:27.63)
Yeah, absolutely. I'm constantly, anytime I'm driving, I'm always looking at things and paying attention and mentally going, oh man, that'd be a great spot. You know, we're constantly getting marketing information from developers or new plans or things that might be coming down the horizon. But man, that'd be a great spot for a new office. know, so yeah, I'm constantly kind of building that database or filing stuff away that I get email blasts on, et cetera, just to kind of have in mind and to, I'm working on a project for a specialist in an area and

Benjamin Suggs (16:32.726)
Yeah.

Benjamin Suggs (16:45.163)
Yeah.

Andrew Riepe (16:57.165)
It also kind of helps us know what's going on in that market, what the sub market is, what the other opportunities are, even for a different healthcare client, right? If you kind of put a see it and learn it and, you know, with all of us and all our brokers here working on projects, we kind of, we're a resource for each other as well, right? So if someone's done a project in a certain part of town within the past couple months and kind of talking to them through and getting their insight as well, I think is certainly helpful.

Benjamin Suggs (17:15.66)
fashion.

Benjamin Suggs (17:25.292)
Gotcha. And we talked about like the dentists who starting their first practice, if talk about a dentist who started a practice a few years ago, they have a lease, it's got, know, let's say it's a 10 year lease and they're in year six. How, how early should the, cause y'all do a lot of renegotiations as well, which is huge. Um, or these dental clients that they can, you know, again, use the leverage they have to get either a better deal or whatever it is. So talk a little about that. Like.

Andrew Riepe (17:39.181)
Mm-hmm.

Andrew Riepe (17:46.104)
Here.

Benjamin Suggs (17:54.582)
How early should you be engaged on renegotiation? What do you guys do as part of that renegotiation process?

Andrew Riepe (18:00.046)
Yeah, great question. You know, obviously we'll be staying in touch throughout the course of the practices is life. So we kind of know, certainly we know when the lease is coming up, but we want to be in touch throughout that lease too, because you may be thinking of doing a second location or an alternative transaction. You know, I think we've got a lot of clients who end up going to buy their own buildings and build that dream office or do ground up construction. So those, some of those lead times take a little bit longer, but as a general rule, you're thinking,

that you want to stay in that same space beyond the current lease expiration, you know, two years, one and a half to two years. You know, I like to have more time than less because it just time is leveraged when it comes to renegotiating deals. And, you know, in some of that is too, is going to depend on what the market is at that point in time. You have rents continue to escalate and we still have low vacancies like we have now in certain sectors or have things soften a bit. Where all of a sudden we're getting different concessions or if we went to a new space, we might get

A, B, C, and D that we can use with our current landlord to level the playing field or get allowances again to update the space. Obviously, if you're in a space for eight to 10 years, typically some things are going to need to be redone or touched up or refurbished, et cetera, et cetera. So we want to make sure that we've got enough time to leverage that to end up at a less than or at market deal that we would get. I should say better than.

right, and less than a rate or better than or market deal that we would get somewhere else if those terms are not in line with market at that point in time. So I say that to I think things to be thinking about, too, because we have we've got a lot of clients that do end up going the purchase route. So knowing that, too, where we can kind of parallel process, what does this look? What does this look like? Model out those costs, understand what's the best decision based on where you are at your practice, what your goals are, what your investment goals are.

to kind of have more of a holistic approach, if you will, than just your lease is up, let's redo another lease, right? We wanna make sure that we're on top of all those things as far as we can be.

Benjamin Suggs (19:59.052)
Hey.

Benjamin Suggs (20:03.02)
you. Okay, awesome man. Well, I really appreciate it. So can you tell it just lastly, what what states are you currently operating in? Because I feel like every time we catch up, it's a another state that you're in.

Andrew Riepe (20:17.292)
Yeah, so we are, we're here in Georgia. We're in Florida. We're in the Carolinas, Tennessee, Indiana, and we're licensed in Alabama and we'll be back there soon.

Benjamin Suggs (20:28.534)
Gotcha. Also, and how many brokers are you working with now and you're under you?

Andrew Riepe (20:32.11)
There's 11 of us now at Crown.

Benjamin Suggs (20:34.496)
Wow. Keep growing. That's great. And, really want to thank you for being here, man. and I, I will just add a note, like I've known Andrew for a few years now, and we have worked with a lot of the same clients. And I do have to say that I have never heard anything, but completely, Uber positive feedback about, working with you that experience they've had had been great. So anyone out there who is, looking to start a new practice or potentially looking to renegotiate your lease, I would definitely recommend.

reaching out to Andrew or one of his people on his team. If you could just tell us where's the best place for people to find you.

Andrew Riepe (21:12.194)
You can go to our website, www.crowntenantadvisors.com. If Ben wants to share my contact information, cell phone, email, feel free to reach out anytime. Always love to talk about real estate and dental specific real estate as well.

Benjamin Suggs (21:19.66)
So.

Benjamin Suggs (21:27.902)
Awesome man, well I really appreciate you being here. Andrew, this has been really informative and I think people get a lot of value from it, so thank you for taking the time to do it.

Andrew Riepe (21:35.66)
Wonderful, always great. Thank you, man. Appreciate it. Take care.

Benjamin Suggs (21:37.292)
Yeah, thank you. Talk to you soon. Bye bye.