Industry  ·  Players

TerraCRG’s Ofer Cohen Wants to Build Housing in Brooklyn — A Lot of It

Cohen partnered with Totem’s Tucker Reed and Vivian Liao to start housing developer Ailanthus

reprints


Not long after TerraCRG founder Ofer Cohen passed the baton to a new CEO, Dan Marks, the 20-year Brooklyn real estate veteran is trying something new. 

Cohen partnered up with Totem principals Tucker Reed and Vivian Liao to launch Ailanthus, a new development firm named after the sumac species adept at growing in cracks in concrete. It’s an apt metaphor since the firm aims to build 10,000 housing units in New York City’s most populous borough over the next five years. The news was first reported by Crain’s New York Business.

SEE ALSO: Prologis Bullish on Data Centers and AI

To do that, the trio plans to perfect the art of the Uniform Land Use Review Procedure — the public review process developers must pass through to rezone a property for higher density. 

The partners plan to merge their expertise in getting large-scale housing developments through that gantlet, which often means winning the support of the local New York City Council member and getting a thumbs up from one of the city’s 59 community boards. To make its case at the local level, Ailanthus will specialize in grassroots community engagement and government relations, according to the firm.

“Our first task when we’re looking at a neighborhood is to do a lot of listening and ask what people want even before we have a project,” Cohen said. “Every community is different, and that’s the key element to how we’ve been doing this in Brooklyn successfully.”

In fact, Cohen, Reed and Liao have already been doing just that. They’ve quietly built up a pipeline of nearly 600 under-development housing units in the past few years, with more on the way.  

That includes 737 Fourth Avenue, a 187-unit development in Greenwood Heights which the City Council approved in April 2021, and the much larger 1057 Atlantic Avenue, which will bring 456 units to Clinton Hill and was greenlighted later the same year.

The partners hope other developers will hear their call to action for more affordable units in Brooklyn, where average monthly rent for a one-bedroom apartment hit $3,710 in April

Part of the problem has been capital markets unwilling to fund affordable projects, something Cohen said he wants to change with his new venture.

“If you call for five providers of equity, they will all tell you, ‘Yes, we’d love to do housing, but we cannot take entitlement risk,’” Cohen said. “We want to challenge that and say there is a path here and we have the ability to navigate it.” 

Investors prefer to back shovel-ready sites over ones that need to go through a substantial pre-development process, Cohen added, but Ailanthus will persuade them to cast a wider net. 

Ultimately, he said the industry needs to rightsize the investment risk of applying for zoning changes. For proof, Cohen said to look no further than their track record of doing just that.

The Atlantic Avenue project is on track to be completed in 2026 , and it will take advantage of the expired 421a state tax break for mixed-income housing. But going forward, Ailanthus’ founders plan to use the new 485-x program state lawmakers passed last month, along with other future policy tools like Mayor Eric Adams’s “City of Yes” zoning initiative, which would make small-scale housing development easier in almost every neighborhood across the city.

“The confluence of the housing shortage, together with complex city and state policy frameworks and capital markets that have been burdened by high interest rates, further exacerbate our current affordability crisis,” Reed said in a statement Monday.

Reed got a crash course in city planning when he joined former Mayor Michael Bloomberg’s administration and helped usher through a major rezoning of the Downtown Brooklyn waterfront, transforming Dumbo into a creative office hub. 

After a stint at Two Trees, Reed teamed up with Liao, a former managing director of the Downtown Brooklyn Partnership, to co-found Totem in 2017. The firm now has more than 1,500 housing units in various stages of development across the borough, including four towers that will bring 650 units to Broadway Junction and Bedford Stuyvesant Restoration Corporation’s massive 1368 Fulton Street, for which Totem is acting as the owner’s representative, according to its website

Cohen, for his part, has been an adviser to Totem for several years while also running TerraCRG, the “Brooklyn only” brokerage he founded in 2008. 

In April, Cohen handed off the day-to-day operations of TerraCRG to Marks, a 13-year veteran at the brokerage. Cohen will continue as chairman while he adjusts to his new identity as a developer.

For now, Ailanthus’ will keep the focus on Brooklyn, where Cohen has worked for the past two decades, but it will eventually start looking for development sites across the region, according to the firm.

Abigail Nehring can be reached at anehring@commercialobserver.com.