Agents of change: Real estate firm at center of development on LI
Tritec Real Estate Co. in East Setauket, run by brothers Bob and Jim Coughlan, marked two milestones this week -- the official opening of New Village in Patchogue and the final Brookhaven Town planning approvals to begin developing the Ronkonkoma Hub. New Village at Patchogue, a $110 million project, is one of the first downtown revitalization efforts that has come to fruition on Long Island. The Ronkonkoma Hub, a $475 million, long-term project to overhaul the blighted area around the Ronkonkoma train station, is expected to add apartments, retail and office facilities on more than 50 acres.
Local officials and real estate professionals say these and other Tritec projects -- such as the construction, in 1994, of Brookhaven's first sewer district -- have had a significant impact on the Island's infrastructure, and suggest a path of economic development that emphasizes reviving downtowns and broadening housing options.
The New Village and Hub are "two of the most important developments in Suffolk County," said venture capitalist David Calone, who has worked with the Coughlans as chair of the Suffolk County Planning Commission. "They're fundamentally changing things -- New Village helped provide an anchor to redevelop Patchogue and the Hub is the biggest transit opportunity on Long Island." Together, he said, they provide "a tremendous example of what's possible and what we need on Long Island."
Two other projects in the works are the $100 million headquarters building in North Hills for Dealertrack Technologies Inc., one of Long Island's fastest-growing software companies, and a $40 million luxury apartment complex in Port Jefferson.
Tritec's roots were in a single-room office in the Chrysler Building in Manhattan in the 1980s. Real estate was the family trade -- the Coughlans' father had worked in real estate financing and ran The Westport Company, a real estate investment trust, and their mother was a broker. The two -- born in Queens, raised in Hauppauge and then Wilton, Connecticut -- say they found their calling to build during their days playing in the sandbox with Tonka trucks.
The Coughlans, now principals of Tritec, founded the company in 1986. The following year, they began a project in Connecticut and also, on Long Island, began construction on the Stony Brook Technology Center -- an office park that stretches over 1 million square feet in East Setauket, finished just two years ago.
Eventually they also formed construction and property management businesses, both of which have been merged into the development company -- hence the name Tritec. Their construction arm has built 13 hotels, and a handful of corporate headquarters and medical offices, on Long Island, though it doesn't own equity in them.
Bob, 54, and Jim, 51, occupy open and adjoining offices in their modest headquarters, so they can keep up with each other's work without meetings or memos. Their close relationship extends beyond the office; in 2010, Jim donated a kidney to Bob.
Tritec operates a separate office in Bethesda, Maryland, which is run by their younger brother, Dan, 48, who is also a principal of the firm.
Bob and Jim Coughlan discussed their projects, Long Island's economic future in downtowns, the often-frustrating process of local development and why they're doing business here.
What do you think of the Long Island economy?
JIM: We're fairly stable. We're not a very elastic economy so we don't go way up or way down. But job growth is not where it could be for an area of our size and the assets we have with the underlying population and the trained workforce.
How can development play a role in aiding the local economy?
BOB: One of the biggest things developers could do is provide additional infrastructure that will naturally lead to greater density of development.
J: There are a lot of underutilized built environments on Long Island that could be reimagined as places that create energy and attract people . . . Development can come in and revive that. Patchogue is a classic example. It's an old lace-mill town that was also a shopping district, then the malls decimated the shopping district and the lace mill no longer functions as an employer. But the building's stock and sewer system and road network were still there, and it just needs to reinvent itself.
How is the Island's housing stock a roadblock for the economy?
B: One of the problems we have is a lack of a mix of housing. Most of our housing is built for the generation 50 years ago where there were two parents and two children. That was about 75 percent of the population and right now that's less than 25 percent of the population. So our housing stock doesn't meet the demands of the population that we have, and that means we're not going to attract a well-educated young workforce.
Why do you think it is harder to get support behind multifamily development projects on Long Island?
B: I'm not sure if that's true; if you look at Long Island Index surveys, over 65 percent of the respondents are in favor of it. That's a pretty positive statement . . . People are starting to see what the majority is looking for (with multifamily housing) and the demographics of our population would demand -- and not what the loud minority wants. I think the political infrastructure is starting to recognize that too.
So you think the negative sentiment toward development has been overstated?
B: There are communities where you're not going to get this done for quite a long time . . . It's kind of interesting because many of these communities will accept high-density condominiums but they won't accept high-density rental housing. And that basically becomes a code word for bigotry. That's a real problem with the population becoming more and more diverse.
How does Tritec overcome opposition to your projects?
B: We're only going to communities that want us to work in them. We don't go to communities that say, 'We don't want what you're doing,' because life's way too short. So we're going to Patchogue, Port Jefferson, Bay Shore, the Ronkonkoma Hub and a whole host of communities that say, 'We want you to build that type of product because we want to keep our young people here and we want to create jobs here.'
You purchased the land for the New Village at Patchogue development right before the recession. How did you get through it?
J: It was difficult when things turned [bad] in 2007. The properties we bought were worth a fraction of what we paid for them.
B: Our partners on the project, a very large venture fund, needed liquidity so we wound up buying them out. We were fortunate that we were just getting out of the worst of the recession and there was money available, and we secured another partnership with UBS. But there were points where we were wondering whether it was going to work out, whether the financial markets were going to be there.
J: During the downturn, Suffolk County National Bank also helped us finance some of the acquisitions.
The Ronkonkoma Hub is huge compared with the Patchogue development -- is that daunting?
J: When you break it up into its component parts it's really not that daunting. The commercial and office area is going to be a few hundred-thousand square feet. We've built millions of square feet over the past couple of decades.
B: The construction itself is not very complicated relative to projects that we've done in the past.
What's the status of work on the Ronkonkoma Hub?
J: We have four parcels of land under contract, which would make up Phase 1 of the project. We're hopeful that by early- to mid-2015, we will be in a position to break ground on Phase 1.
Are you concerned how the uncertain economy may affect this project?
B: Always. We will be going through multiple cycles, this is a long-term project. [Economic] cycles create various challenges but they also create various opportunities. We suspect we'll go through at least one or two cycles over the course of the Hub project.
There's a lot of opportunity outside of Long Island for development work. Why did you decide to stay?
J: As we grew our service company here, it was clear that the core people that were contributing to that business were here.
B: We had already grown Tritec and we were entrenched. We realized we had the ability to develop in a very supply-constrained market here. It's very difficult for our competition to get a foothold in the marketplace.
Aside from Long Island, you have projects in the Washington, D.C. area. Why did you enter that market?
B: It's one of the largest markets in the country. It's an entry city so it attracts foreign capital as well as domestic capital, and it's constantly growing because of the federal government. The job growth there outpaces most communities on an annual basis. Another part of the reason is that our brother Dan wanted to be down there.
TRITEC REAL ESTATE CO. INC.
Company motto: "Have fun, win, be nice."
Residence: Port Jefferson
Education: Northeastern University
First job: Delivering papers for the Norwalk Hour in Connecticut
Education: Brown University
First job: Busboy
CURRENT DEVELOPMENT PROJECTS
* Ronkonkoma Hub
* $475 million, mixed-use development of more than 50 acres at Ronkonkoma station
* Dealertrack headquarters, North Hills
* $100 million office building at 3400 New Hyde Park Rd.; breaking ground in the fall
* Port Jefferson luxury rental development
* $40 million project still awaiting approval, to be built on site of blighted motel
Sources: Dun & Bradstreet; Tritec