It's official: Strip District produce terminal is getting a $50M makeover

Pittsburgh Urban Redevelopment Authority board members cleared the way Thursday for the long-awaited makeover of the historic produce terminal in the Strip District.

 

In 4-0 vote, board members gave permission to Chicago-based McCaffery Interests to start construction on the $49.5 million project.

The vote was greeted with applause — whether in joy over the project’s approval or relief that the long struggle to get the development going finally is over.

 

McCaffery is wasting little time in getting started after its five-year quest to gain control of the five-block-long Strip landmark.

 

Pamela Austin, McCaffery senior project manager of development, said after the vote work would start on the terminal in March.

 

Rendering of pedestrian passageway at Strip District Produce Terminal (McCaffery Interests)

 

“It’s been a long journey for my company and me personally, and I’m very thrilled that we finally actually get to build what we’ve been dreaming for so long,” she said.

 

The proposed redevelopment includes a “food-centric” locally owned market at the terminal’s western end near 16th Street, one that is expected to feature a chef incubator kitchen, grab-to-go foods, and coffee and cocktail bars.

 

At the request of the city, work on that end of the 1,533-foot-long warehouse will start first, Ms. Austin said.

 

As part of the deal, McCaffery has agreed to lease at least 40,000 square feet within the complex to local or regional businesses focused on artisan food, crafts, produce, meats and creative arts.

 

Plans also call for offices, restaurants, brew pubs, and retail, perhaps to include “urban-size” drug and hardware stores to serve the Strip’s growing residential population.

 

McCaffery already has signed some letters of intent with prospective tenants for the terminal, although the names have not been divulged.

 

The redevelopment will include three pedestrian passageways at 17th, 18th, and 20th streets, with the first two offering access directly to the Allegheny riverfront.

 

In addition to widening the dock facing Smallman to provide for outdoor dining and walking, McCaffery is planning 277 parking spaces behind the building.

 

After years of delays, including two failed arrangements with other developers, the deal fell into place when McCaffery agreed to provide $1.3 million to the Society for Contemporary Craft, now known as Contemporary Craft, as part of its relocation from the terminal’s east end to Lawrenceville.

 

In conjunction with that agreement, the URA will provide a $1 million “bridge” loan to Contemporary Craft to be reimbursed by McCaffery.

While acknowledging that the redevelopment has experienced “some bumps along the way,” URA executive director Robert Rubinstein said the final version represents a “great plan that everyone can be proud of.”

 

“We envision the Strip District terminal becoming a regional destination -– an epicenter for entertainment, dining and shopping -– and continuing the neighborhood’s longtime status as one of the most authentic parts of Pittsburgh,” Mayor Bill Peduto said in a statement.

 

To fund a nearly $3.8 million tax increment financing plan being used for public realm and Smallman Street improvements, 75 percent of the real estate revenue from the terminal and the 1600 Smallman redevelopment that McCaffery will be doing across the street will be diverted to pay debt service.

 

Although the URA will retain ownership of the terminal, McCaffery will maintain control under a 99-year ground lease under which it will be required to pay property taxes. The developer will pay the URA $2.5 million for the lease.

 

If tax revenue falls short of what is needed for the tax increment financing payments, McCaffery has agreed to make up the difference, URA officials said.

 

McCaffery is planning to do the 1600 Smallman redevelopment, which will include street level retail and three levels of office, at the same time as the terminal, Ms. Austin said.

 

That project also will involve 51 parking spots in the basement of the property as well as an adjacent parking structure with 177 spaces.

In all, the two projects represent $100 million in investment. They are being funded with equity from investment advisor Bentall Kennedy’s U.S. Core Fund.

 

The Employee Real Estate Construction Trust Fund is involved in the financing for the tax increment financing plan.

 

Combined, the developments are expected to create 1,039 union construction jobs and 1,242 retail and office jobs, according to McCaffery.

 

The developer also was involved in the Cork Factory and Lot 24 apartment developments in Strip.

 

The terminal project, Ms. Austin said, is a “natural extension of what of what we have been doing here before — investing in old buildings and giving them new life, creating economic vitality for the neighborhood.”

 

McCaffery first became involved in the produce terminal in 2014 after Mr. Peduto objected to a plan pitched by the Buncher Co., which at one time held the development rights to the property, to demolish the western third of the structure as part of a proposed makeover.

 

Mark Belko: mbelko@post-gazette.com or 412-263-1262.

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