Strip District produce terminal, 1600 Smallman construction finally ready to start
A Chicago developer has completed transactions to secure the Strip District’s historic produce terminal as well as a vacant building on the opposite side of Smallman Street, clearing the way for construction to begin on both.
McCaffery Interests has given the go-ahead to contractor PJ Dick to begin work, with construction expected to start this week, said Pamela Austin, senior project manager of development.
“We’re just very excited to get going. It’s been awhile. We think it’s going to be really important for the Smallman Street area to get these done,” she said.
McCaffery closed on the Pittsburgh Urban Redevelopment Authority-owned produce terminal last week — nearly five years to the day that the original request for proposals was issued to redevelop the five-block-long Strip landmark built in 1926.
While the URA will retain ownership, McCaffery is taking control under a 99-year ground lease under which it will be required to pay property taxes. It is paying the URA $2.5 million for the lease.
The developer paid $10.5 million for the 1600 Smallman building earlier this month, according to Allegheny County real estate records.
That works out to $87.44 a square foot, based on 120,073 square feet of retail and office space as listed in a fact sheet issued by McCaffery.
Gerard McLaughlin, executive managing director of the Newmark Knight Frank real estate firm, called the purchase price “a pretty big number” but not out of line for property in one of the hottest markets in the region.
“I don’t think they overpaid for it. I think it’s an excellent location. The bottom line is that with the amenities that are going to be around that building, it’s going to be able to command a pretty high rental rate,” he said.
“McCaffery’s a pretty savvy developer. Generally, they’re not going to overpay for a building. I do believe even at that price, they’ll be able to do well with it.”
At the produce terminal, McCaffery is proposing a “foodcentric” locally owned market at its western end near 16th Street — one that is expected to include a chef incubator kitchen, grab-to-go
foods, and coffee and cocktail bars.
Work is expected to start at that end of the 1,533-footlong warehouse first.
As part of the terminal 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.
In a recent interview, Pittsburgh Mayor Bill Peduto vowed that the terminal’s redevelopment won’t mess with the varied mix of restaurants, bars, shops, and markets on Penn Avenue.
“It won’t compete with Penn Avenue. It will complement Penn Avenue,” he said.
While Mr. Peduto expressed some hesitation about the idea of possibly including drug and hardware stores as part of the development, he said he was confident that if McCaffery pursued such ventures, “It will be done in a tasteful way that will not take away from the historical character of the building.”
Beyond the offices and retail, McCaffery is proposing three pedestrian passageways through the building at 17th, 18th, and 20th streets.
There also will be facade repairs, an extension of the Smallman Street dock, a new roof and windows, and new stairs and ramps to make the old warehouse ADA compliant. McCaffery is planning 277 parking spaces behind the building.
At the 1600 Smallman building, the developer is mixing street-level retail with three floors of office. The project also involves 51 parking spaces in the basement and a new parking structure with 177 spaces.
McCaffery intends to relocate the lobby to Smallman; add a new roof and windows; provide a dock-level sidewalk, stairs and ramps; and create bike storage and showering facilities.
According to the developer, the main building at 1600 Smallman dates to 1921 and includes two pre-1951 additions. At one time, the complex was home to the Standard Underground Cable Co., which manufactured telegraph, telephone and electric cables.
Together, the two developments are expected to cost $100 million.
In conjunction with the work, Smallman Street itself has been undergoing a massive makeover, funded in part by $3.8 million in tax increment financing.
As part of that deal, 75 percent of the tax revenue generated by the produce terminal and 1600 Smallman projects will be diverted to pay debt service.