After decades, Produce Terminal on the cusp of redevelopment

Efforts to save and redevelop the Strip District’s iconic Produce Terminal stretch back decades.

The long, low building stretching along Smallman Street was the heart of the wholesale business at the center of the thriving Pittsburgh neighborhood in the 1920s when it was built.

The city bought the building in the 1980s in an attempt to save it. Later, real estate deals put the building’s future — or at least parts of it — in jeopardy.

But when the Chicago-based development firm McCaffery Interests breaks ground on its plans for the historic building Tuesday, the Produce Terminal could again be at the center of a thriving Strip District.

“I’m delighted,” said Robert Rubinstein, the executive director of Pittsburgh’s Urban Redevelopment Authority. The authority worked for nearly 10 years to hand off ownership of the landmark Produce Terminal to a developer that would transform it into a viable amenity. “It’s been a very long, arduous process. We’ve had, literally, a dozen staff people working on this project for the better part of a decade.”

The URA board of directors earlier this year approved a 99-year lease with McCaffery, which plans to completely rehabilitate the former railroad loading dock and offer it to “food-centric” businesses, the firm said.

McCaffery is paying the URA $2.5 million.

McCaffery also purchased a former warehouse at 1600 Smallman St., across the street from the terminal, for offices and shops. The city is redesigning Smallman Street, once a haven for oversized trucks, to make it safer for pedestrians and drivers.

The Produce Terminal has long been a focus of city and neighborhood efforts to find a suitable buyer. The building is tied to the Strip’s charm.

Mayor Bill Peduto said there were times when he didn’t think the building could be saved. As a council member, Peduto opposed previous plans by the Buncher Co. to redevelop the terminal. As mayor, he halted the project and sought a new deal.

“It would have demolished 40 percent of the building. It would have brought big box national retail to the site, and it would have taken away from the character that is the Strip District,” Peduto said about the project proposed by Buncher. “Now, we not only are getting the terminal building preserved and completely renovated, but the building across the street as well.”

Buncher, which planned to use the building as a focal point for its ongoing riverfront housing development, said it wished McCaffery the best.

“We’re happy for them,” said Mike Kutzer, Buncher’s vice president of real estate. “We hope they succeed, and we look forward to seeing the project competed.”

The Pennsylvania Railroad built what was formerly known as the Pennsylvania Fruit Auction and Sales Building in 1926 as a rail-to-truck transport point for wholesale produce.

The art deco building runs for five blocks, totaling 1,533 feet, along Smallman from 16th to 21st streets.

The URA bought it for $1.1 million in 1983 to save the wholesale produce business. But by the mid-2000s, the produce industry had changed and wholesalers had moved out of the terminal.

“The industry, itself, evolved to a point where it was no longer efficient to distribute wholesale produce in the city center,” Rubinstein said. “At that point, we began discussing a future where we sell that property, get it back on the tax rolls and get somebody to essentially convert the structure — which is, essentially, a covered platform with no utilities, air conditioning or anything like that.”

Officials secured a deal with Buncher Co. for a three-way real estate swap. The Produce Terminal and URA-owned property near the 62nd Street Bridge would go to Buncher, and the company would turn over a large warehouse it owned at 42nd Street in Lawrenceville to the URA.

Pittsburgh wanted the Buncher warehouse to remove semi-trucks from Lawrenceville’s streets and provide riverfront access in the neighborhood, Rubinstein said.

Buncher intended to demolish a large portion of the Produce Terminal for access from Smallman Street to its holdings along the Allegheny River.

Buncher’s plans were delayed by a lawsuit filed by the Allegheny Valley Railroad, which claimed ownership of a rail easement outside the building, and by a historic designation that prevented demolition of the building. Former Councilman Patrick Dowd of Highland Park, who represented the Strip, said he held up a vote on a multi-million dollar tax abatement plan for months because the Buncher plans provided no public access to the river.

“I wanted Buncher to give right of ways on the riverside greater that what they proposed doing. I wanted a larger riverfront piece,” he said.

Peduto, who took office as mayor in 2014, called for a halt of all projects held over from the previous administration of Mayor Luke Ravenstahl and sought a new agreement for the Produce Terminal. The URA eventually paid Buncher $675,000 to take control of the building, Rubinstein said.

Rubinstein and the URA started over. They sought new proposals, and after more than a year of evolving development scenarios, plan iterations and reviews, the URA approved exclusive negotiating rights with McCaffery in 2014.

McCaffery plans to spend $50 million redeveloping the Produce Terminal. The firm expects to spend about the same on the warehouse at 1600 Smallman St., bringing the project total to about $100 million. Pittsburgh is poised to spend $23 million improving Smallman Street.

The warehouse will have space for shops on the first floor and offices on the upper floors, the firm said. The plans call for more than 200 parking spaces in the basement and a new parking garage near the Veterans Bridge.

The Produce Terminal will return to its roots as a food haven with a market at on the 16th Street end. There will be about 40,000 square-feet of space for local and regional businesses, according to the plans. Three walkways at 17th, 18th and 20th streets will cut through the building. Two of them, at 17th and 18th, will give people access to the river.

People can park in 277 spaces at the rear of the building, the firm has said.

Rubinstein said he envisions a building with restaurants and retailers catering to the Strip District’s growing residential neighborhood and other businesses setting up shop in nearby locations. The Strip needs it. It’s the fastest growing neighborhood in the city, Rubinstein said.

“The reality is: the Strip District is now a neighborhood,” Rubinstein said. “Thousands of new residents are coming in. Those new residents will need places to shop.”