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

Electronic Arts, the interactive software and video game company headquartered in Redwood City, Calif., has signed a five-year lease at 1515 Broadway.

Covering 7,213 square feet on the 36^th floor, the game developer will be neighbors with other high-impact media companies like Nickelodeon, MTV and Paramount Studios, said Steve Durels, executive vice president and director of leasing and real property for SL Green, the building's owner.

Natasha Brown of Jones Lang LaSalle represented Electronic Arts in the deal while David Kaufman, of SL Green's in-house team, acted on behalf of the owners.

"We are excited to welcome such a prestigious international software provider to 1515 Broadway," Mr. Durels said in a statement. "Electronic Arts is an ideal complement to the building."

jsederstrom@observer.com

And yet in the past two years, the city has turned out some of the coolest startups in the country: Foursquare, Kickstarter, Tumblr, Etsy and bit.ly among them. The city's economic development arm has ramped up its efforts to bolster the local tech scene, the new TechStars incubator is a local answer to the Valley's Y Combinator, and even Google is starting to pay more attention to the city. The money to New York startups is flowing, to the point that some investors wish some companies would go under already.

Entrepreneurs Rowan Wernham and Edward Talbot moved to New York from New Zealand five months ago to continue growing Snapr, which aims to link the disparate photo sharing mobile apps into a photo and location-based social network.

There were four main reasons Mr. Wernham chose New York over San Francisco:

• New York seemed hotter on location-based services because of Foursquare.
• Some of his favorite companies, like Tumblr, are here.
• New York's tech scene is energized, growing and collaborative, whereas San Francisco's is established and competitive.
• It's New York City.

"We thought it might be easier to join an 'emergent' tech scene rather than an 'institutionalized' one like in the Valley," Mr. Wernham wrote in an email. "Since we don't have huge track records working for massive companies or previous venture successes (and of course we are foreigners!) we thought we might have a hard time in SF where there were already stacks of ex-Google people, Y Combinator companies, etc."

The pair have already found an American lawyer who specializes in New Zealand transfers, gotten hooked up with free office space, made inroads through Hashable and rubbed elbows thanks to Meetup.com, as Mr. Wernham wrote in a blog post today about tips on moving to New York as a startup.

They've also found seed funds and VCs to be abundant, the food to be delicious, transportation to be easy, and investors much more receptive to the way social media companies grow (read: monetize your product only after it gets traction).

At the same time, Mr. Wernham and Mr. Talbot have had to travel in and out of the country every three months to maintain their visas, which is unsustainable. Even with free desk space, rent is still expensive for the two entrepreneurs. And they weren't able to bring their employees with them.

"The rest of our team is based in New Zealand, safe from the ravages of the intense demand for tech talent in NY," Mr. Wernham wrote.

David Albert and Nick Bergson-Shilcock, founders of HireHive, a website for employers and jobseekers, returned to New York after a summer at Y Combinator. Y Combinator startups The Fridge and MessageParty also returned to New York after the incubator's summer 2010 session.

The growth in New York was too attractive to pass up, Mr. Albert and Mr. Bergson-Shilcock told The Wall Street Journal.

"I don't think anyone would say the Valley isn't still the cream-of-the-crop startup Mecca," Mr. Albert said. "But things are changing for the better in New York, and it's just an awesome city."

ajeffries [at] observer.com | @adrjeffries

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 >>

The 316,971 people employed in the high tech industry in the New York City metro area bring in an average wage of $98,541. Washington came in second place, with 292,969 jobs, and San Jose/Silicon Valley came in third with 225,575 jobs.

There's this, though:

The Valley still leads the country in its average high-tech wage, which in 2009 was 67 percent above the average private sector salary ($132,057).

Want to see who's hiring? Check out the NY Startups Who Are on Fire in 2010. >>

ajeffries [at] observer.com | @adrjeffries

"I'm not saying Quora, Foursquare, Square aren't eventually worth a lot of money, but the price to pay to get into those games is kind of amazing - $50 to $80 million?" said Dave McClure, founding partner of 500 Startups, a technology incubator in Silicon Valley.

New York investor Fred Wilson agrees: "I have never seen phases like this end nicely."

Money for startups has been flowing easily in Silicon Valley and in New York as well, where lightweight startups with less-than-airtight business models like Tumblr and GroupMe seem to have no trouble rustling up cash ($3.2 million in the latest round and $9 million, respectively).

The current bubble won't have quite the same widespread effect as the dot-com bubble if it bursts because companies are not going public (although excitement over Facebook's IPO is so high that investors have started selling derivatives of the limited pre-IPO stock).

But a bursting tech bubble would hurt more than just angel investors in New York and Silicon Valley. Having millions of dollars thrown at them isn't always the healthiest thing for a startup, as the success of Y Combinator's light-on-investment, heavy-on-mentoring approach has shown. And a major crash could scare investors and dry up funding for worthy startups in the future.

ajeffries [at] observer.com | @adrjeffries

On the other hand, it's kind of a downer, because as Foursquare made explicit in a blog post, New York's tech scene just couldn't provide the talent they needed to grow. 

In the past year, we had a major growth spurt: from about 100,000 to over 4.5 million users; from a single phone platform to six; from 50-person foursquare flashmobs to 1,000 person epic swarms; and we now have thousands of developers building on the the foursquare API. The biggest challenge: hiring fast enough to support that surge. Despite growing from 5 employees to 35, we can't expand as quickly as we want.

So, to help attract the best talent in the world, we decided it's time to open an outpost in San Francisco...So, if you love Mission-style burritos, temperate climates, and want to work on some of the most exciting data and engineering problems in the world, contact us.

New York's tech scene continues to grow in size and stature, but when it comes to engineering talent -- especially for the more complex data problems -- Silicon Alley just can't compete with the Valley.

bpopper [at] observer.com | @benpopper

But things have changed recently. "For the first time in my 20 years of search, the deal flow and investment lines have begun to blur as NY has become a hot-bed for building great tech companies and leadership talent is migrating to New York."

Daversa has a unique insight into this world, since his job consists of convincing talented tech types to take new jobs. As recently as 18 months ago, Valley execs would more often than not say "NFW" (no effing way) when called about New York opportunities, Daversa says.

Along with these anecdotes, Daversa dropped this nugget: VC godfather Ron Conway, attending a private Daversa event, said that, "25 percent of his current portfolio is based  in NY - up from 5 percent just two years ago."

There is still a lingering question in Silicon Alley. When will NY get a big exit that helps to establish a foundation for the ecosystem? "Can NY create 2nd and 3rd generation legacy much like executives at Google, eBay and Paypal that have been a part of the Web 3.0 emergence?" asks Daversa.

The more talent headed this way, the better the chances.

More importantly, as Nick Saint notes, New York -- which has traditionally been viewed as a little brother to Boston on the tech scene -- is now #2 in terms of new startups, while Beantown is a distant fourth.

The $5.4 billion in funding recorded in Q3 2010 is a drop from last quarter and a well below the $6.1 billion from this time last year.

But New York is benefiting from an explosion in early stage seed funding, which has grown tenfold since this time last year.

The small, agile, web-based firms that can afford to operate in the Big Apple's pricey real estate market are taking home a much bigger chunk of overall VC funds. 

Add in the fact that advertising, one of New York's strong suits, is the best funded sector in tech and the report is an strong endorsement of Silicon Alley's future.

Follow me @benpopper

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Google, Apple, Intel, Adobe, Intuit and Pixar have all agreed to quit putting in place crazy restrictions on hiring from each other, less than a week after HP and Intel fought over departing CEO Mark Hurd.

The DOJ got down to the brass tacks with this wonderful legalese.

"One of the principal means by which high tech companies recruit these types of employees is to solicit them directly from other companies in a process referred to as, "cold calling." This form of competition, when unrestrained, results in better career opportunities, the department said."

Yes, when people can offer you new jobs, that certainly can be good for your career. Wonder how much that insight cost the taxpayers.