Developer lands more Strip real estate
The developer behind the reincarnation of the iconic produce terminal has harvested another prized slice of real estate in Pittsburgh’s Strip District.
Chicago-based McCaffery Interests has acquired a 3.5-acre site next to the terminal from Rugby Realty, which at one time had plans to build an $80 million office and retail development there.
McCaffery closed on the acquisition last week. It paid a cool $19.5 million, or almost $130 a square foot, for the sprawling tract, which runs along Smallman Street from 21st to 23rd streets.
The purchase adds to McCaffery’s considerable holdings in the Strip.
In addition to redeveloping the historic 1,533-foot-long terminal, a longtime hub for fruit and vegetable wholesalers, it is converting an old warehouse across the street into office and retail uses.
McCaffery’s latest acquisition, now used primarily for parking, sits directly across the street from the terminal.
One of the tracts dates back to 1884 when it was home to the Star Fire Brick Works, a firm that made specialty bricks for steel mills. Decades later, it was the location of produce wholesaler Tom Ayoob Inc. and Acme Banana Co.
Another parcel included in the sale housed Benkovitz Seafoods, a Strip fixture that closed in 2013.
Dan McCaffery, CEO of McCaffery Interests, said he has yet to decide what to do with the property.
“We have to spend some time and figure it out. It’s a big piece of property,” he said. “It’s going to take some time. We’re in no rush.”
For the time being, he said, McCaffery will continue to use the
site for parking, a precious commodity in the Strip even without all of the construction taking place.
Mr. McCaffery jumped at the chance to buy the property when he learned it was for sale.
“It’s a well-located piece of property. When you have invested as much as we have in the last few years in the Strip, you tend to start to believe that it’s a good place,” he said.
New Jersey-based Rugby decided to consider selling the tract after it started receiving unsolicited offers for it from large international real estate investors, said Larry Walsh, Rugby principal and chief operating officer in Pittsburgh.
Rugby never officially listed the real estate for sale but let it be known that it would listen to offers.
It saw McCaffery as the “right buyer,” given its investments in the Strip, and reached out to a representative to see if there was interest.
Alluding to McCaffery’s stake in the produce terminal, Mr. Walsh likened it to a Monopoly board.
“They own Boardwalk and we own Park Place, and the owner of Boardwalk should own Park Place. That way, they could maximize the assets,” Mr. Walsh said.
“They’re so invested in Pittsburgh and the Strip District. We felt like giving them Park Place to their Boardwalk would put them in position to do great things for the city of Pittsburgh.”
While Rugby doesn’t consider itself a from-the-groundup developer, it was prepared to move ahead with its project had it not been for the interest from others in acquiring the property.
Rugby’s seven-story Brickworks at 21st and Smallman development would have been done in two parts — a $39 million first phase featuring 230,000 square feet of office space and 20,000 square feet of retail.
The second phase would have added another 175,000 square feet of office and 10,000 square feet of retail space.
Rugby had received approval from the Pittsburgh Planning Commission to move forward with the project and had teamed with Cincinnati developer Al. Neyer to help with it.
“It was going to happen until we decided that this was the best exit strategy for us,” Mr. Walsh said.
He added that McCaffery has the approvals it needs to proceed with the Brickworks project should it decide to go that route.
McCaffery is back at work on the produce terminal and 1600 Smallman across the street after construction was halted for about a month because of the COVID-19 pandemic.
The developer is hoping to have the work done this fall.
“It’s getting close,” Mr. McCaffery said, adding that the company has started some “pretty serious outreach” with potential tenants.
The terminal makeover includes about 157,000 square feet of shops, restaurants, brewpubs and a food-centric market at the western end. Pedestrian passageways will go through the building at 17th, 18th and 20th streets.
With the sale, Rugby, meanwhile, has secured a chunk of cash to make other investments. It owns some of Downtown’s most historic real estate, including the Koppers and Frick buildings and Gulf Tower, all on Grant Street.
“We are definitely looking at some other acquisitions in Pittsburgh,” Mr. Walsh said. “There are a few available, and we are actively pursuing them.”