Rough and Tumbl: The Broker Behind Silicon Alley’s Next Big Real Estate Deal
Daniel Edward Rosen March 19, 2012, 8:06 a.m.
Matthew Bergey is a vice president at CBRE who has developed a specialty handling deals with tenants in creative industries and the technology sector. He represents several high-profile tenants in the city, including Tumblr, and is also the agent for a number of office properties, including the high-end boutique buildings 414 West 14th Street and 450 West 14th Street in the booming meatpacking district. He joins The Commercial Observer for this week’s Sit-Down, where he talks about how his love of contemporary art helps him secure tech clients.
The Commercial Observer: How long have you been at CBRE?
Matt Bergey: I have been there, oh god, now you’re making me feel old, 12 years.
That isn’t such a long time—you shouldn’t feel old. Is that because you work with tech tenants and many of people who work in these companies are so young?
Some of them are. People at the top of these firms, they’ll be in their 20s. And a lot of the underlings at these firms want to follow in their footsteps and rise through the ranks while they’re still young too.
There has been a huge buzz about tech tenants in recent months, especially at a time when other tenants have been quiet. Is this the most active sector in leasing right now?
I think tech companies, social media-slash-entertainment people are all very hot in the Midtown South marketplace. Midtown South is hot right now. I went to a meeting the other day at 200 Park [CBRE’s New York headquarters] and the people who rep institutional tenants in Midtown and Downtown and 20,000 square feet and above are saying it’s slow right now. But in Midtown South there’s only a few large blocks of space and there’s a lot of people bidding on them.
What space do you handle in that area?
In the Meatpacking district, I represent 414 West 14th Street, which was built by Carlyle [Group], and 450 West 14th Street, which was developed by Winthrop [Realty Trust].
What are the rents like in those buildings?
We’re starting in the $60s at 414 West 14th Street.
And 450 West 14th Street?
Can’t comment. [Market sources put rents there in the $90s per square foot.]
Those are newly developed buildings?
Is there more new commercial construction planned for meatpacking?
Yes. Taconic is building a new office property on 13th Street and Washington that is about 60,000 square feet. The Romanoff family has a 150,000-square-foot building. Bill Gottlieb, another owner in the neighborhood, has a project too.
Can these tech tenants afford to pay out the rents that are necessary to justify new construction?
You’re right. A lot of these tech tenants don’t really want to pay more than the high $40s or $50s. But on the other hand, the big thing for them is to attract young talent and they need to be in cool hip areas that have a creative feel and vibe to do that. So it’s a trade off.
Are more mainstream tenants coming to the area too?
I see a lot of tenants from Midtown, tenants that maybe have 300,000 square feet or 500,000 square feet and they want to put a small office or a subsidiary in meatpacking. Hewlitt Packard moved down to 22nd Street [556 West 22nd Street, near 11th Avenue]. I think with the High Line and everything there, people are seeing this as an interesting, cool location and developers are responding. Related and L&L Holding Company purchased 511-541 West 21st Street and me, Paul Amrich and Ross Zimbalist are going to be repping the landlord on that project. You’re going to see a lot of change in those gallery blocks. Only a handful of gallery tenants are going to be able to afford the retail rents there.
During the dot-com boom of the late ’90s, tech tenants were the big thing in the city. Then it went bust. What’s different this time?
You’ve got a core group of tech tenants that have big backing, major people behind them and some, the ones at the top, with the help of their backers, will survive. Some won’t make it. We’ll know more in the next couple of years. A lot of these companies are started with that hopes that they’ll be acquired by someone a lot bigger.
Some landlords and brokers continue to wonder about the financial wherewithal of these companies. Do you vet tenants before you work with them and what gives you confidence in a start-up?
A lot of it has to do with the amount of financing behind the tenant. The venture capital and the companies behind them. Union Square Venture Capital has a great reputation. If you have a tenant that is backed by someone like them, you can show something to the landlord.
To specialize in tech tenants like you do, what kinds of special skills and knowledge do you have to have?
A lot of it has to do with my personality. I wasn’t your typical Midtown/Downtown broker. Most of the people I know and hang out with are creative so I sort of understand the mind-set of these tenants. It comes down to aesthetics and vibes of the space. Landlords will come to me because they want to know what kind of buildings these creative tenants will like. I collect contemporary art and furniture so I kind of understand the people in the art world and the gallery scene. People want to be where it’s cool. The meatpacking district is cool but it’s such a schlep. But if you understand how important aesthetics are to these tenants, you know that they won’t think about the walk to get to it.
So what’s happening right now at 414 and 450 West 14th Street in terms of leasing?
At 414 we have one last unit left, part of the third floor, about 7,500 square feet. And uh, that’s really the last block, it’s really one of the last blocks in all of meatpacking. The space at 450 is full. There is one last floor but we have a lease out.
You’ve been out with Tumblr in recent months searching for space. Can you give an update on where they are and what they’re looking for and what the search has been like?
I represent Tumblr with Matt Saker [another CBRE executive] and I would appreciate if you could mention him. We have been in the market with them—that’s all I can say.
Where are they located now? Twenty-first Street? Do they want to move in order to expand?
That is correct.
Facebook is rumored to be expanding at 335 Madison. Is that true, and do you see major companies in the sector continuing to grow here?
I do see a lot of growth but I don’t want to comment on Facebook—too much politics [CBRE represents Facebook].
ZocDoc and Idealy are some big names in the tech sector that have been rumored to be searching for space but have been quiet recently. What has been the difficulty for some of these companies to find space?
Listen, they’re in the market and they are pursuing things. I think it’s especially hard, they’re larger, they need large blocks. There are not a lot of buildings with the right mix of attributes they’re looking for that have the size requirement they need, which is probably between 40,000 and 60,000 square feet.With Midtown South so full, is it only a matter of time before this bleeds downtown?
I think what you’re going to see is a lot of deals that get signed with tech tenants in the next three to six months. And most of it will be in Midtown South. When you mention Downtown or Midtown South to these tenants they cringe. But if you’re a good broker you educate them in the market and show them different options.
Wasn’t the Condé Nast deal at the World Trade Center supposed to make Downtown cool?
I do think with Condé the neighborhood there will be appealing to creative and fashion and media and art-related tenants. But I think that will get going once Condé is actually physically there.
What made you want to focus on tech tenant leasing? It was a great choice now that that part of the market is booming!
I wanted to be on the cutting edge. I am a creative person and I feel I speak the same language as these tenants. That’s what N.Y.C. is about, creative type people, younger people who are more aware of art and culture and food. This is why they want to be in these cooler areas of Midtown South. Sometimes I think, god, I’m working with this one and that. It’s exciting.