The 70-30 Solution... "Did you hear about Baxter? They outsourced their corporate real estate department to an exclusive agent! Uh-oh." That was the startling buzz in the early 1990's as anxiety rippled across a brokerage community fearful of losing long-established business relationships.

So it was good to catch up last week with Richard Potocek, Director, Corporate Real Estate Services, at Baxter Healthcare in Deerfield, IL. Currently Baxter owns 11.5 million square feet of space (6m in the U.S. and 5.5m in Europe) and leases 6.5 million square feet (4.5m in the U.S. and 2m in Europe).

When Potocek joined Baxter two years ago, the company re-bid its real estate representation services. Instead of an exclusive agent handling 100% of its business, Baxter chose a "preferred provider" with the percentage of transactions determined at Baxter's discretion.

As it turned out, Baxter's preferred provider (The Staubach Company), handles about 70% of its transactions with the balance handled by other service providers. Potocek believes that this balance provides Baxter "more leverage" and elicits the best level of service.

Potocek uses MacMunnis lease administration software to tie his staff and preferred provider together. MacMunnis also handles invoices, makes payments and helps facilitate SOX (Sarbanes-Oxley) compliance by documenting processes and streamlining disclosures. So Baxter controls and administers its core real estate functions.

Managing a large international portfolio, Potocek knows that the traditional European model is "180 degrees" different than the U.S. model. (Tenants normally pay their agents directly.) But, in either case, it's always a challenge to "synchronize interests" when service providers are largely compensated by commissions dependent upon transactions.

--Peter Pike