Accordingly, The Commercial Observer set out to speak with the real estate industry's most accomplished capital markets and sales practitioners to learn what's in store for 2012. Over the next several days, we'll post interviews with heavy hitters like Richard Baxter of Jones Lang LaSalle, J.D. Parker of Marcus & Millichap, Darcy Stacom and William Shanahan of CBRE and Peter Hausperg of Eastern Consolidated. But, first, after the jump, none other than Woody Heller of Studley.

Woody Heller. (Illustration by Joao Maio Pinto)

The Commercial Observer: In 2011, there was quite a bit of activity between the second and third quarters, but then it became sluggish between the third and fourth. Why did that happen?
Mr. Heller: Well, let me say it this way: This is the first time that I’ve gone away for Christmas before Christmas, so …

Because you anticipated that slow down, or was something else brewing?
It was just the rhythm of the deals we were working on. So it could be completely personal to us, it could be symbolic to what was happening in the rest of the market. I think that it was less year-end-weighted than normal, but I still think it was a pretty powerful year. And I think that this year will continue to be very much the same, perhaps for slightly different reasons.

With regard to year-end sales activity, is it partly just the luck of the draw, or was something else influencing buyers and sellers last year?
I think a little bit luck of the draw. I also think the world began to feel very uncomfortable in August when the European debt crisis began to come into shape. So, there was a lot of uncertainty that came toward the end of the year, and you could argue that either way: either having made it better for real estate or worse for real estate. On the one side, uncertainty is great for real estate because it’s the absolute, you know, so when you’re scared, where are you going to put your money? And, if you’re a European guy and you think your currency is about to go to hell, or the whole economy is about to potentially implode, you want to pull stuff out and get it to a better spot.

Tech companies were active in Manhattan last year. How did that affect pricing overall?
Last year, New York became the second-largest recipient of intra-capital funding as a city—second to Silicon Valley. Traditionally, the second-largest recipient had been Boston, and had been for a long time. So that’s very exciting, and it shows up in a number of ways. It’s no coincidence that Midtown South has the lowest vacancy rate in the country. Why? Because that’s where the tenants are heading.
Well, as these tenants head to Midtown South, and the vacancy rate goes down, which obviously means the rents go up, where do the tenants who are getting priced out of Midtown South go? And the answer is, they go downtown. And so, downtown, a market that has been somewhat sleepy and perhaps a tad overlooked in the last decade, is now the fortunate recipient of a lot of the tenants who are being displaced in Midtown South.

Will Downtown Brooklyn feel that ripple effect after it moves across lower Manhattan?
Yeah, you’re a step ahead of me. We were touring a building there recently, and when we walked outside, one of my younger guys said to me, “You know, I could barely restrain myself from saying, if you live Brooklyn, raise your hand.” And so the answer is, a lot of the workers do work in Brooklyn. Brooklyn is enjoying a remarkable reissuance.

You were involved in the development sale of 400 Park Avenue South. Considering how few development sites have traded, what made that site stand out?
That’s a site that wasn’t in any way in stress. There wasn’t a lender that was taking a discounted payoff. You know, the owner made an enormous profit based upon what they had paid for the site, and I think it was just a family decision by the family that had owned the site that they were happier enjoying the appreciation of the land than going forward and developing it. It’s not always rational reasons that back up those decisions.

Jsederstrom@observer.com

By the end of 2010, in fact, StrongMail had taken such advantage of Magnetik’s business ties and staff—not to mention 2,000 square feet of office space at 350 Seventh Avenue—that making inroads into Manhattan’s so-called Silicon Alley was beginning to seem easy.

So when StrongMail began to outgrow Magnetik’s footprint a year later, the marketing firm’s top officials approached brokers at the Kaufman Organization for a quick solution.

104 West 27th Street. (Photo by Peter Lettre)

“They didn’t want to have to pick out furniture or get their space ready,” said Stephen Benoit, a leasing broker at the Kaufman Organization who represents StrongMail. “They wanted to come in, plug in their computers and be up and running.”

Benefiting from New York’s tech boom, StrongMail spilled into additional space at 350 Seventh Avenue, upping it presence at the property to nearly 3,000 square feet.

“They literally took a vacant office next door to them on their hall and put desks in there and moved people in,” Mr. Benoit said.

In a sector where opportunities favor the expeditious, StrongMail was antsy to slip into a better solution—and quickly. Given the company’s brisk pace of hiring, executives sought 6,000 square feet—at least. The oversize requirement squeezed 350 Seventh Avenue out of contention because the building’s floor plates weren’t large enough, recalled Mr. Benoit. “They really wanted large, open offices, like a lot of firms in their business do,” he said.

Adding to the pressure, StrongMail’s lease at 350 Seventh Avenue had expired late last year, and, ever since, its officials had been renting the office space on a month-to-month basis in an arrangement that was costing the company more than what’s expected of a typical lease.

To be sure, the requirement was a challenge. Midtown South, where StrongMail wanted to relocate, boasts a distinction as the country’s least-vacant office market. On top of that, StrongMail’s ideal midsize footprint was strongly coveted by other office tenants—meaning its executives faced a dense thicket of commercial challengers no matter the space.

“You could literally throw a rock and hit five companies looking for that type of space,” Mr. Benoit said.

Still, Mr. Benoit, a 20-something upstart hired by the Kaufman Organization less than two years ago, said he was suited for the task. Indeed, like many young brokers, he gained his experience and built a reputation by endlessly dialing his way down cold-call sheets.

“That’s how I met StrongMail,” he said. “Hitting the phones. Some people dread it, but I like it. It’s amazing to think that, in brokerage, you can make something out of nothing.”

Mr. Benoit canvassed landlords with urgency, finally hitting a jackpot when he reached Marvin Davis, a landlord who owns 104 West 27th Street and another office building in the area. At 104 West 27th Street, Mr. Davis told of a tenant exiting the building’s ninth floor, a roughly 6,000-square-foot space. The floor hadn’t even been put on the market, he recalled.

“It wasn’t available, which was a tremendous advantage to us,” Mr. Benoit said. “If that space had been on the market, it would have gone very quickly.”

Mr. Benoit negotiated, but securing a lease wasn’t his only concern. One of the attractions was the office’s fully furnished floor, complete with wiring and electricity for workstations and computers, and

StrongMail executives feared the departing tenant might gut the space by night and smuggle the infrastructure to its new location. “We ended up speaking with the outgoing tenant and making sure that they didn’t remove everything,” Mr. Benoit said.

Meanwhile, the building’s landlord, Mr. Davis, wasn’t interested in taking advantage of the tenant’s leftovers. “Marvin ended up telling us that he wasn’t in the furniture business,” Mr. Benoit said. “He let us have the furniture for free.”

StrongMail executives flew in from California to evaluate the space and offer their final blessing. Soon after, they signed a five-year lease. Asking rents for the space straddled the $30s per square foot, which, while relatively inexpensive for New York City, turned several heads among company executives more accustomed to Silicon Valley office pricing.

The lease ranks high among Mr. Benoit’s largest. But judging by his passions outside of real estate, a litany of more ambitious deals is sure to come—each more furious than the last.

To be sure, Mr. Benoit’s career launched in part through a longtime friendship with Michael Kaufman, a principal at the Kaufman Organization. Since then, the pair have bonded by way of drag racing. Mr.

Benoit drives a speedster that roars from 0 to 200 miles per hour in six seconds. That said, it’s no surprise that he understood StrongMail’s need for speed.

“I think most racers and brokers have a similar mentality,” said Mr. Benoit. “Someone who’s not afraid to get their hands dirty.”

dgeiger@observer.com

Such has been the modus operandi of Jack Petrie, a senior vice president at CresaPartners who has amassed a list of clients that reads like a veritable who’s who of Silicon Alley. He’s found these clients through contacts and clients of his in venture capital.

“I [find] that usually I can connect the dots with a lot of these companies with relationships I have with V.C. firms and people I have met through the community,” said Mr. Petrie, 50.

The broker techies (and venture capitalists) trust.

PulsePoint, Clearspring and Jingle Networks have all found new office space through the aid of Mr. Petrie.

Young firms like Sailthru, a behavioral email marketing service, and GramercyOne, a cloud-based software development firm, recently secured seed money from venture capitalists and tabbed Mr. Petrie to find them 15,000 square feet and 5,000 square feet of office space, respectively.

He helped Amazon expand to 60,000 square feet of space at 1350 Avenue of the Americas this year—and the online retail giant is counting on him for future growth.

He’s also done deals for venture capitalists, like 3,000 square feet for First Round Capital at 200 Park Avenue South and 7,000 square feet for Square 1 Bank at 500 Fifth Avenue.

In short, Mr. Petrie is plugged into an ever-expanding network of tech companies both large and small that have a growing need to expand their space.

He has his networking skills to thank for his client roster.

“I really spent a lot of time learning about the [tech] sector, kind of spending time in their playground attending a lot of events, learning who is who and meeting people,” said Mr. Petrie.

While sitting in CresaPartner’s oversize conference room in the company’s office at 100 Park Avenue, Mr. Petrie—a towering figure with salt-and-pepper hair and a gentle disposition—said it was that same conference room that he owed much of his current success to.

“We have the ability to open these walls and host events in our space, so we have been very active in the tech community hosting events for groups such as iBreakfast, Next NY and NY Angels,” said Mr. Petrie of the tech networking groups.

CresaPartners wouldn’t charge the groups for hosting the events. Instead, Mr. Petrie said he used the events to introduce himself to—and build enough good will with—each panelist.

“Many people have said multiple times, ‘We want to work with you because you get it,’” said Mr. Petrie, who was often the lone real estate agent at these events.

That’s not to say that every elevator pitch he has made to prospective clients has led to a guaranteed deal. “The direct connection hasn’t always been there,” said Mr. Petrie. But “building the good will has definitely led to business.”

His father was a Queens native who fled to Cleveland to work a manufacturing sales job. Mr. Petrie went east to attend the University of Pennsylvania, spent a few years running his own business selling commercial art to advertising firms, and then moved to his father’s native city to get his M.B.A. at New York University’s Stern School of Business.

Once he switched to commercial real estate, Mr. Petrie made stops at Equis and at LaSalle Partners, ending up at Staubach, where he worked for Roger Staubach, the company’s namesake and legendary Dallas Cowboy quarterback.

“He was just a great leader,” said Mr. Petrie, who grew up watching Mr. Staubach battle his beloved Cleveland Browns.
Mr. Petrie still adheres to a few “Rogerisms,” inspirational expressions that Mr. Staubach would deliver to his team of brokers, like “There is no traffic on the extra mile.”

He landed at CresaPartners in 2003. He now lives in Scarsdale with his wife, a real estate attorney, and his two children.
In 2006, Mr. Petrie noticed the venture capital firms starting to give seed money to a lot of East Coast tech firms.
“I said to myself, ‘They have a bull’s-eye on their back, and I want to get that business,’” he said.

One company that had a bull’s-eye on its back was Datran Media, a tech and marketing firm that had millions of venture capital funding headed its way.

His obsession with snagging Datran as a client eventually led to an in-person meeting.
“They had just leased expansion space in a small building on the Upper West Side, which they had to build out,” he recalled. “So I offered them project management services.”

He helped the firm, which merged with CONTEXTWEB in September to become PulsePoint, grow from 5,000 square feet in 2006 to 30,000 square feet, at 22 Cortlandt Street and 345 Hudson Street, today.

And he’s bullish on PulsePoint’s Hudson Square neighborhood. The area is still seen by some as a “value play”—especially as it has yet to develop into a 24-hour community. That, in turn, does not make it a space for every company.

But it remains a tech hub.

“It’s different. It’s not the Flatiron area, but it’s also kind of contiguous,” said Mr. Petrie.

It’s also ideal for tech firms that received their first hit of seed money and have plans to expand space toward the tail end of their leases. Which means that Mr. Petrie is negotiating shorter leases—usually three to five years, with options to expand into contiguous space—instead of the traditional 10-year lease.

Clearspring, a web company that publishes advertising software, has doubled its space in two years, going to 2,500 square feet at 584 Broadway.

And Turn Two Media, an online advertising and marketing company, is looking to expand on the 3,000 square feet it currently occupies at 33 West 33rd Street.

“I haven’t been afraid to take on the small assignments in the growth sector,” he said.

When looking at new office space, these small assignments are looking to hit head-count numbers, not square feet.

“That’s really the driver for them … trying to mesh head-count targets with the lease term and not getting burnt,” said Mr. Petrie.

With a slew of other tech tenants hitting the market—Yelp recently moved to 104 Fifth Avenue—will New York see a repeat of the pre-bubble leasing frenzy? Or is this tech tear for real? Mr. Petrie thinks it’s for real.

“These are stronger companies with faster revenue,” said Mr. Petrie. “There’s a buzz around New York.”

drosen@observer.com

Those were the days. And they still are! (Photo: csmonitor.com)

God bless the Silicon Alley trend piece. We've done one (and then another about a colony of the alley); and, incidentally, we cover the industry regularly every day here. No matter how much ink is proverbially spilled in deference to the tech industry's growth, we as New York reporters can't seem to get enough of the nerds-are-among-us-and-they-need-space-to-work angle.

The latest comes today from The Wall Street Journal. It notes that while Silicon Alley has been around since just about the P.C. Jr. (we had one growing up, it was awesome, floppy disks and all), it has gotten a boost via brand-names as of late:

The emergence of Union Square as a destination for technology firms got its start several years ago. But the neighborhood's tech community received a boost this year with the arrival of household names such as computer giant Apple Inc. and the impending arrival of user-review site Yelp.

Those big companies are among nearly a dozen tech firms that have signed leases this year for a combined 135,000 square feet of office space in Union Square, according to the Union Square Partnership.

What's drawing the newbies? Not the rent necessarily—it's cheaper downtown—but the spaces are lovely: wide open, airy, sort of like any rom-com set in San Francisco in the last 15 years.

tacitelli@observer.com  ::  Follow on Twitter @tacitelli

Tenth Street Entertainment has helped revive many a flatlining career, including that of the Crüe, Blondie, Steven Tyler, Royal Underground and even Duke Ellington (who, last time we checked, actually is dead). The marketers have taken 7,000 square feet for five years at 38 West 21st Street. They're currently located at 568 Broadway, but wanted to expand.  

It was a "sleeper building," Yvonne Chang told The Observer. She represented the tenant along with the Kaufman Organization's Grant Greenspan. "I definitely want to say that Tenth Street is adding a whole new caliber," she added. In general, it's getting busier by the day in Silicon Alley. "We're getting a lot of entertainment and digital media companies," she said. "Hot companies are really going toward that market." 

Despite the buzz, apparently great deals can still be done. The tenant will pay $28 a square foot, significantly less than the asking rent. They also got a $100,000 tenant improvement allowance. 

lkusisto@observer.com 

It covers some of the tension between the startup community and the EDC that the Observer highlighted a few weeks back. 

One fascinating nugget is the idea that the city, demoralized by the effect of the financial crisis on their traditional development strategy, changed course for tech in the wake of Lehman Brothers.

"I think Lehman was the fulcrum," said David Lombino, the NYCEDC's senior vice president of public affairs. "There was this wave of understanding that in the established New York business community, something fundamental was going to have to change."

As Chris Dixon wrote told The Observer weeks back on Twitter, "Competition in NYC isn't other VCs, isn't CA--it's Wall Street, ad industry, etc."

They may be battling for talent, but with the IPO market cracking open and banker backed investments sending tech shares sky high, it's clear the two sides have a few things they agree on. 

bpopper [at] observer.com | @benpopper

So my take is that Boston entrepreneurs need to raise their game and put out more stuff that's unique. New York startups may not be the clear-cut competitors that the Jets and Yankees are (or Silicon Valley for that matter), but they are capturing a growing slice of the investor pie. Meantime, the VC and angel money is still here in Boston-but it might not be for long.

It's worth noting that Mr. Huang's post features a picture of Jets coach Rex Ryan. The tech blogger's fears about New York supremacy may be well-founded, but perhaps they've been accentuated by defeats in other areas.

mtaylor [at] observer.com | @mbrookstaylor

But by and large there wasn't much comment from local VCs on the issue, until Lerer Ventures' Jordan Cooper raised the issue on Twitter:

How is my feed not blowing up with news of Accel opening NYC office? Top 3 firm in the country planting a flag here.

"Seems to me forgone conclusion all the top VCs will have offices in NYC in next 12 months," replied Founder Collective's Chris Dixon.

"True & awesome," chimed in Vinicius Vacanti, co-founder of Yipit.

Cooper elaborated on his thoughts in an email to The Observer. "I think they will be the #2 choice of every NYC entrepreneur raising a VC round after USV...they're top 3 in the world...it's a big deal. Hurts the Boston guys who are trying to plant flags here big time...out of towners are going to have a hard time competing on brand alone against the likes of Accel."

As Fred Wilson wrote this morning, finding money is no longer the challenge for talented New York start-ups. The tough part is taking the right money and finding the rare talent. 

Check Out Accel Partner's Ten Greatest Hits >>

"What I'd like to figure out is how we can create a much more sustainable and much more robust pipeline of developers into the NYC innovation community and I'd like to propose a lofty goal to inspire some solutions," O'Donnell wrote on his blog.

Investor Fred Wilson took up the charge next. "Charlie O'Donnell has put forth a challenge to bring 250 new software developers this year to NYC. I think that's a good start but I'd like to see a bolder number, like 1,000 a year, or even more," Wilson wrote yesterday.

Now Nate Westheimer, organizer of the New York Tech Meetup, is taking the idea to the next level.

A thousand non-technical New Yorkers should learn to code, he said.

"For as long as I've been involved in the NY tech industry we've made cries for more engineers to a) move here; or, b) abandon/avoid Wall Street so they can join our silly startups that are 'changing the world.' What if instead of calling on others to do things we just looked to ourselves? Aren't we the change we are waiting for?" he wrote yesterday.

Westheimer is in the perfect position to say this. Until very recently, he was a NoPE--"Non-cOding Product Executive." But two months ago, he decided to learn Ruby on Rails and spent a week at his desk in a mental "sweat lodge," doing nothing else.

Since then, he's built a voting app for the New York Tech Meetup and a meeting schedule called Ohours. He also posted a guide to learning code.

Westheimer already has 51 comments on his post, "Can 1000 of us learn to code?" so far, many of them NoPEs saying "I'm in."

Sounds like a New Year's resolution! Sanford Dickert created a page on nextNY.org where hacker hopefuls can publicly commit to learn a programming language.

ajeffries [at] observer.com | @adrjeffries

"New York has gone through an incredible transformation in the last ten years," he told TechCrunch's Sarah Lacy. "There's an incredibly vibrant community of startups, of entrepreneurs, of real entrepreneurs not people looking to make a quick buck."

New York is killing it because of the big media, advertising and fashion industries based here, Kairouz said.

There is also now a small legacy of people in the city who made money in the tech industry, he said. "You've seen your friends, you've seen your neighbors, you've seen your family be successful at it," he said.

Kairouz is an example of how some talent in New York refocused on the tech industry.

Prior to joining Rho Ventures, Kairouz worked in investment banking and leveraged buyouts in New York with Reich & Co. and Jesup & Lamont. He joined Rho in 1993 where he focuses on investments in new media, information technology and communication companies from seed stage to growth equity.

He's impressed by how active the startup community is now.

"There is literally an event a week," he said. Hmm...managing partners must not get out as much, because we're pretty sure there is a tech event every night. 

ajeffries [at] observer.com | @adrjeffries