STRIPPED-DOWN EXPECTATIONS
Focus shifting over retail mix at Strip’s produce terminal
DanaBeck was hoping for more from the Strip District’s revamped produce terminal. A Strip resident, Ms. Beck has been disappointed with the results so far, with a merchant mix that includes a bookstore, a nail salon, a state store, an ice cream parlor, golf and fitness operators, and a Chipotle.
She wanted more of an open-air-market feel, a destination filled with vendors, eateries and places to drink. “I was hoping for something that was more like markets in some of the bigger cities I’ve been to in the U.S. and Europe,” she said.
She’s not the only one feeling let down by what the renovation of the historic terminal building and
Chicago-based developer McCaffery Interests have produced so far.
In recent months, some have taken to social media to complain about the $62.6 million remake. One described it as the “city equivalent of a suburban strip mall.” Another saw it as the latest sign of gentrification. Others lamented that it wasn’t more like the Reading Terminal Market in Philadelphia or public markets in other cities.
“It’s a great concept and a great building but it is reminiscent of a strip plaza in Ross or Robinson. What a missed opportunity for our city. Just more sameness,” one posted on Twitter after work started on the Chipotle restaurant.
One poster on Reddit said the terminal should be filled with highend stores like Prada, Burberry and Chanel to siphon traffic away from Ross Park Mall and bring more money into the Strip to support nearby local merchants.
“There’s nothing exciting or unique about it,” another added. “It tastes like the same lameness in other cities. I really hope we can get the city to intervene. It’s turning incredibly basic. It’s going to end up like SouthSide Works.”
A very public redevelopment
The produce terminal has been a landmark in Pittsburgh’s Strip District for decades. The sheer size of the place makes it an anchor for the neighborhood — 1,533 feet long stretching from 16th Street to 21st Street.
The massive warehouse once was the distribution center for dozens of fruit and vegetable wholesalers who took produce deliveries off trains that rolled through and then sold the goods to grocers and restaurateurs from around the region.
One of the distinctive views of the building was of rows and rows of openings where trucks could back up to the docks and pick up their loads.
Chicago developer McCaffery Interests spent five years trying to secure the rights to help usher the site into a new future. Redevelopment began in 2019, just before the pandemic hit, and the development has played out in front of an interested, often opinionated public.
Some observers like the fruit that the iconic warehouse on Smallman Street has been producing.
Jared Imperatore, vice president, retail brokerage, for the Jones Lang LaSalle real estate firm, believes the tenants that McCaffery has picked so far are neighborhood-oriented and serve the burgeoning residential population.
“I think they’ve taken the old terminal and converted it and blended it quite well,” he said.
And Kevin Acklin, former board chair of the city’s Urban Redevelopment Authority, which selected McCaffery to remake the terminal, said the project is already serving as a catalyst to transform the Strip.
He maintained the luxury townhouses built behind it and the apartment buildings constructed a stone’s throw away never would have happened had it not been for the redevelopment.
“I guess I would ask for some patience,” he said, noting that McCaffery undertook the project just before the COVID-19 pandemic hit.
“My expectation is that over the next couple of years the promise of the terminal building playing a continuing role in the growth of the Strip District is going to come to full fruition.”
‘Give it more time’
The man leading the development would agree with that assessment. Dan McCaffery, CEO of McCaffery Interests, urged critics to give it more time.
Still to open is City Winery, a 10,000-square-foot spot that will feature eating, drinking and live entertainment at the warehouse’s western edge, and Virginia-based Aslin Beer Co., whose brewhouse in the terminal will be its first in Pennsylvania.
The developer also is nearing a deal on an Asian food hall-type concept that will feature as many as seven kitchens and chefs, five of whom already have successful restaurants here, Mr. McCaffery said.
“I would only say, whether it’s Sally, Sam, or George, to give it time,” he said of the criticism.
Judging the overall redevelopment at this point, when only about 40% of the terminal’s 125,000 square feet of space is open and occupied, amounts to “premature moment.”
“We don’t have the whole team on the field yet,” he said. “When we have the whole team, we’ll see how
people feel and how merchants do.”
McCaffery gained control over the terminal in 2019 under a 99year ground lease with the URA, the building owner, under which he is required to pay property taxes. He paid $2.5 million to the authority for the lease.
At the time, McCaffery promised a “food-centric” locally owned market at the terminal’s western end near 16th Street, one that was to hold a chef incubator kitchen, grab-to-go foods, and coffee and cocktail bars.
He also pledged to lease at least 40,000 square feet within the complex to local or regional businesses. Plans called for offices, restaurants, brew pubs and retail, including potential “urban-size” drug and hardware stores.
Since then, some of the focus has shifted.
The biggest change was the elimination of the market. Mr. McCaffery said two years ago that the tenant he had for the space didn’t pan out and that he was looking at a “different variety of retail” to fill it.
McCaffery also is concentrating all office space in the Auction House portion of the terminal at its east end. That included a deal with the Southwestern Pennsylvania Commission for 17,960 square feet.
The developer paid $1.3 million to the Society for Contemporary Craft, now known as Contemporary Craft, so that the arts group could move from the building and relocate to Lawrenceville,
While the original plan has changed, Mr. McCaffery grades the overall product he has fielded so far as an “A plus.” That’s particularly the case given the hand he was dealt in trying to lease the fiveblock-long warehouse as COVID raged.
“There have been a lot of quiet heroes to get a thing like this leased during the pandemic,” he said.
Given the environment, Mr. McCaffery acknowledged he had to make some concessions in order to land tenants, including offering six months of free rent to some. But he added he’s pleased with the overall mix, calling it “representative of what works.”
Despite the challenges, he said he has lived up to his commitment to lease at least 40% of the space to local vendors, noting that it’s actually closer to 60% or 70% now.
McCaffery’ Terminal website lists 11 of 18 merchants as local, including City Grows, Envy Nail Spa, OnPar Now, Pip & Lola’s Soaps & Sundries, Primo Hoagies, Walk Run Lift Studio, Mayweather Boxing + Fitness, and the Fine Wine and Good Spirits Premium Collection state store.
“We stuck to our word, we delivered on our word, and we will continue to do that,” Mr. McCaffery said.
Non-compete pledge
While some have complained that the terminal is not more of a full public market, he said there are reasons for that. One is that many of the markets in other cities are publicly owned or subsidized, while his project is privately financed.
Another, he stated, is that he had pledged not to do anything that would compete with the Strip’s famous Penn Avenue corridor and its eclectic mix of retail, including multi-generational merchants like Pennsylvania Macaroni Co., Stamoolis Brothers, and Wholey’s Market.
He fears a full-fledged public market would do so.
“I’m damned if I do, damned if I don’t,” Mr. McCaffery said. “I’m not trying to put them out of business. I did my best not to compete with them.”
That’s not to say Mr. McCaffery doesn’t want to give the terminal more of a market feel.
Beyond the proposed Asian food hall concept, he’d like to continue to expand the farmers and artisan markets the terminal has been hosting in the past, adding more vendors and offering them a spot at a reasonable price.
If possible, he would even like to include some of the renowned Penn Avenue merchants in the mix.
“The more the merrier,” he said.
The neighbors weigh in
At Stamoolis Brothers, co-owner Gus Stamoolis stands next to bins dating back to the store’s opening in 1909. He talks about the old wood floors that he refused to remove during a remodeling because they add to the “flair of what this was.”
For him and some other longtime merchants, the impact of the remodeled Smallman Street warehouse so far seems to be more positive than anything else.
Mr. Stamoolis, who owns the store with his daughters Catina and Connie, said some of the terminal advertising and promotions have helped draw more people to the neighborhood— and Penn Avenue.
“The more places there are for people to visit down here, the more people will come. Competition is healthy, let’s put it that way,” he said.
Nino Sunseri, who owns Jimmy and Nino’s, another longtime Penn Avenue store, concurred.
“A crowd brings a crowd. If they can bring people down, we love having them there. I think in time
they will bring more people down once they fill up,” he said.
“The Strip to me is a diamond in the rough. If we can be that diamond in the rough and have new things come in, I think it will be better for everybody.”
Still, the way Mr. Sunseri sees it, the terminal right now doesn’t have enough retailers open to be a big draw. And he wondered if the current tenant mix will be enough to make it a destination.
“Pittsburgh isn’t Chicago. You’re not going to get numbers by accident. You have to get them on purpose. Unless they do something to get them down there, I don’t think their investment is going to bring back the return they expected it to. I hope it does because that means more people for us.”
At Wholey’s, proprietor Jim Wholey, who likes to refer to himself as the “customer keeper,” offered tips to shoppers as they passed him on their way through the store. His motto is, “You’re only as good as your dinner tonight.”
He, for one, has been pleased with what McCaffery has done with the terminal a block over from his place.
“I think it’s good,” he said of the tenant mix. “I think they’re doing a great job. They’re doing a really good job of filling it up.”
The parking problem
If there are any concerns among longtime merchants, it’s a perennial one — parking.
While McCaffery has added 275 surface spaces at the terminal itself and built a garage with more than 200 spaces, across the street from it, it’s still not enough, according to some.
Jim Coen, owner of Yinzers in the Burgh, said the Strip could lose more than 1,000 parking spaces if McCaffery follows through with a planned residential development on Smallman across from the terminal.
He said some merchants lost 35% of their business during the terminal remodeling and during the rehab of Smallman around it. He doesn’t want a repeat of that any time in the future.
“Right now, we’re desperately in need of parking,” he said.
As for the terminal itself, Mr. Coen, president of the Strip District Business Association, said he doesn’t have an issue with what McCaffery has done so far.
“I think they’re trying a little bit to complement [Penn Avenue]. But at the end of the day, it’s a mall,” he said. “They’re so different. It wouldn’t complement us because it’s completely different than what we are.”
While there have been some issues with traffic during some of the terminal events, Mr. Coen said everyone is trying to co-exist as best as possible.
“To be fair to them, we’re still trying to get used to each other,” he said.
‘We made money’
At the terminal itself, some of the merchants say business has been decent despite the challenge of opening during a pandemic.
“Business has been great. We get a lot of support from the neighborhood,” said Rachel Nguyen of Envy Nail Spa.
City Grows, a garden and gift shop, was one of the first retailers to open. Manager Tony Ciotoli said business has been fine. “I was surprised last year that it went as well as it did. We made money,” he said.
While business has slowed down a bit this year — which he attributed in part to construction in the Strip — he is expecting a big Christmas season. As more stores have opened, it has made a difference, he said. McCaffery also has brought in events such as the farmers markets to help generate business.
Saving the terminal
Mr. Acklin said people sometimes forget that Mr. McCaffery took over a “rotting building.” He not only restored and preserved a Strip landmark but saved the western third of it from being demolished, as a previous developer, the Buncher Co., wanted to do as part of its own proposed redevelopment.
McCaffery installed passageways through the building to give pedestrians access to the riverfront. In addition, the redevelopment led to a much-needed overhaul of Smallman to make it safer, Mr. Acklin said.
“My view as somebody who worked with him in city government is that he took on a very complex, politically charged project and preserved the building for future generations of Pittsburghers to enjoy and catalyzed other development,” Mr. Acklin said.
Mr. McCaffery said there will always be people who complain about the project. Overall, he is comfortable with the progress made to date while expecting even bigger days ahead.
“I’m more than content with those people who will come out and enjoy it because there’s going to be a lot of them. There are going to be a lot more people enjoying this building.”