While Pittsburgh's produce terminal shutters, other cities' markets are ramping up

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SAN FRANCISCO -- It's 6 a.m., and the San Francisco Wholesale Produce Market is still bustling, even as a workday that began at midnight is winding down.

One grocery owner surveys the boxes of vegetables and fruits stacked before him in the North Bay Produce Co., looking for the plumpest of the plump, the ripest of the ripe. All about him, in a rhythm that seems simultaneously chaotic and precise, workers push dollies loaded with peppers, melons, peaches, cherries, lettuce, tomatoes and other produce to waiting trucks bound for many of the city's restaurants, supermarkets or corner stores.

It's the same scene that has played out for nearly a century at the Strip District's Pennsylvania Railroad Fruit Auction & Sales Building, known by most as the produce terminal.

Pittsburgh eyes San Francisco's expansion of produce market

The San Francisco Wholesale Produce Market is starting a $100 million expansion and modernization at a time when the city of Pittsburgh is allowing the wholesalers in the Strip District's produce terminal to fade away. (Video by Mark Belko; 9/8/2013)

But while the city of Pittsburgh has all but abandoned its terminal's wholesale produce business, San Francisco is reinvesting in its market, seeing the produce exchange as a source of jobs and economic development.

San Francisco has teamed with wholesale vendors on a $100 million, multiphase investment project that includes the construction of a new 86,000-square-foot building on city-owned property and the renovation or reconstruction of four existing warehouses.

While Pittsburgh and its handpicked developer, the Buncher Co., want to demolish a third of the produce terminal to extend 17th Street to the Allegheny River, San Francisco plans to close off a road that now cuts through its market, a move it believes will facilitate expansion.

To clear the site for the new structure, the city of San Francisco will relocate government employees who now work there. "The city is literally moving the uses to allow the market in. You can't get any more committed than that," said Michael Janis, the market's general manager.

San Francisco isn't alone. Wholesale markets in cities like Philadelphia, St. Louis, New York, Chicago and Columbia, S.C., have updated, expanded or built new facilities -- or are planning to do so -- as they seek to capitalize on the rising demand for fresh fruits and vegetables and locally or regionally grown produce.

"Every city's a little bit different but, as a whole, the movement toward local and regional food has been serving the markets very well," said Ben Vitale, president of the National Association of Produce Market Managers, based in Columbia.

While wholesale markets experienced a downturn in the 1970s, 1980s and 1990s, they are now bouncing back, he said.

"People are very much interested in eating fresh fruits and vegetables. The business is definitely thriving," Mr. Vitale said.

Wholesalers clear out

But in Pittsburgh, the produce terminal that defined the Strip for decades appears to be ready for last rites.

Nearly all of the wholesalers have left the five-block-long terminal opened in 1929, as they make way for Buncher's proposed $450 million riverfront residential and office redevelopment. Buncher, which is leasing the terminal from the city's Urban Redevelopment Authority, has an option to buy it for $1.8 million.

At one time 70 strong, it appears that only two produce wholesalers remain -- Premier and Coosemans -- and they are at the mercy of month-to-month leases. That's down from seven just three years ago.

Longtime produce wholesaler J.E. Corcoran Co. has moved to Thornburg. La Prima Espresso Co., a coffee wholesaler, transferred to Manchester on the North Side. The Euclid Fish Co., a seafood and meat wholesaler, is operating out of another distributor in Lawrenceville.

While Buncher president Tom Balestrieri said all merchants left "on their own volition," the city had made it clear that it did not see them staying much beyond the expiration of their leases. Charlie Young, general manager of Euclid Fish, said he was under the impression that he had to leave by the end of his lease.

Local preservationists are now fighting just to keep the terminal intact. They are trying to get a city historic designation to prevent Buncher from tearing down the western third. The city's Historic Review Commission sided with them in a preliminary vote in July.

As a result, Buncher's plans are "in limbo" until a final decision has been made on the designation, Mr. Balestrieri said. The HRC is scheduled to hold a public hearing and possibly take a final vote at its Oct. 2 meeting.

Nonetheless, reinvesting in the building and the wholesale industry as San Francisco and some other cities are doing doesn't appear to be an option for Pittsburgh or Buncher -- and for good reason, said Robert Rubinstein, URA acting executive director.

He said the terminal's wholesale business largely vanished over the past 20 years. Some vendors, like Consumers Produce, left on their own accord for more modern space. Others simply went out of business, he said.

"It was either reinvest tens of millions of dollars that we don't have in a building for a use that is no longer viable, for an industry that's no longer viable, or look at it in a larger context" to reposition the terminal in a way that benefits the Strip, he said.

Likewise, Mr. Balestrieri said Buncher doesn't see wholesale produce "as something that's going to work there."

Mr. Rubinstein said changes in the industry have left the terminal -- a "covered platform," as he called it -- obsolete and in need of a new roof, new windows and doors, and structural repairs. He estimated it would cost $10 million to $25 million to upgrade the terminal for wholesale uses.

He questioned whether such an investment would be worth it when the traditional wholesale business that made the Strip famous "while greatly romanticized, really hasn't existed in 30-some years."

Others dispute such contentions.

In September 2012, Allegheny Valley Railroad sued the URA over the terminal's use, seeking to preserve the terminal as one of the stations along its route. Jonathan Kamin, an attorney representing railroad, said the URA had been leasing about 84,000 square feet to wholesalers in 2010 -- about the same amount as in 1989.

"Their position is total crap," he said. "If it's leased at 91,000 square feet in 1981 when the city thought it was critical to have them there as an economic engine and it's now leased at 84,000 square feet 30 years later, how has it changed in any way that is quote 'antiquated' or a dying industry?"

Another who laments what has happened to the terminal is Alan Siger, the Consumers Produce chairman.

Although his company moved to new modernized quarters on nearby 21st Street with city help in 1997, he said it wanted to stay close to the other merchants in the terminal.

Such synergy allows wholesalers to compete more effectively with those in cities like Cleveland, Baltimore and Philadelphia, he said. Wholesalers in San Francisco and Chicago also talked about the advantages of being together in one place, which makes it easier for buyers to shop for and truck produce.

Mr. Siger sees the terminal's demise as a missed opportunity.

"They could have modernized the terminal. They probably could have attracted new businesses to come into the market," he said. "It suffered for years from benign neglect."

No longer a 'centerpiece'

At one time, the city had a more active interest in maintaining the terminal as a wholesale produce hub. In 1982, it spent $2.7 million to upgrade the building, replacing the roof and broken windows and making improvements inside.

In ceremonies to mark the start of the work, Richard S. Caliguiri, the late mayor, said he thought the renovated terminal would become the Strip's centerpiece.

Thirty-one years later, in San Francisco, city leaders see much the same value in their much larger wholesale produce market, which sits on city-owned land in Bayview, an industrial area a few minutes from downtown.

Rather than turn its back on the industry when a 50-year-old ground lease expired in January, the Northern California city reached a deal with the market on a new 60-year agreement, paving the way for the expansion, which is expected to start this month.

It estimates the improvements will increase the number of full-time employees from 650 to 1,000 and boost the market's direct, indirect and induced regional impact from $900 million a year to $1.4 billion.

Without a new lease deal and the expansion, the city feared that it could lose some of the wholesalers to competing markets in Oakland or other parts of the Bay Area.

"We really wanted to send a clear message upfront that this was an activity and set of users that we wanted to keep in San Francisco and provide an opportunity to grow," said Jon Lau, city project manager.

As in Pittsburgh, many of the vendors have been part of San Francisco's wholesale produce industry for generations, since the days it was located on the Embarcadero along the city's waterfront.

Over the years the market has become a source of good-paying jobs for people from all walks of life, including those without college degrees, said city supervisor Malia Cohen, whose district includes the complex.

"They're hiring people from communities of color, they're hiring people where English is a second language and providing jobs," she said. "When you have a job, you're providing stability for people and their individual families."

Ms. Cohen, who earned a master's in public policy and management from Carnegie Mellon University's Heinz College in 2008, has teamed with the market to deliver fresh produce to a handful of corner liquor stores in her district.

The liquor stores are located in "food deserts" -- low-income or working-class neighborhoods without healthy food options available to residents. So far the stores have been able to turn a profit by selling fresh fruits and vegetables, she said.

"It's a simple concept, but it's actually had a huge impact on peoples' lives," she said.

The expansion also has the backing of the Golden Gate Restaurant Association. Rob Black, the association's executive director, said the produce market is a key contributor to San Francisco's dynamic restaurant scene, one of the city's top tourist attractions.

"The last thing we would want to do is drive out of our city one of the main drivers for people to come to it. So, really, investing in the fresh local produce market is part of that investment in our larger economy," he said.

A centralized market, with the wholesalers grouped in one place rather than scattered, also helps reduce greenhouse gas emissions and fuel and delivery costs, all of which is helpful to the environment and the city's 4,200 restaurants and their profit margins, he said.

The expansion is being funded through rents paid by the 30 vendors that lease space in the market. Once the debt has been retired, the rents will revert to the city, generating an estimated $1.5 million a year in revenue.

With the improvements, Ms. Cohen sees even bigger things for the market in the future. She would like to build on the public's growing interest in fresh and organic food and eventually make the market a tourist destination.

"People come to Fisherman's Wharf to walk around, to see the shops and eat the food," she said. "People will eventually come to the produce market and experience and see what's going on. I think it's developing a healthy relationship with how food gets to our table. There's a story there and the happy ending is that we get to eat."

Ms. Cohen, who is familiar with the Strip District from her time at CMU, urged the city and Buncher to reconsider plans for the produce terminal. She believes the terminal and the wholesale industry could complement the proposed office and residential development to be built around it.

"You've got an opportunity to do a lot of new development and use the produce market as a jewel to attract people -- hey, come live in this swank new part of Pittsburgh, brand new development, all the amenities of urban living, plus you have the produce market at your front door," she said.

Could be 'completely reborn'?

Whether such a scenario is the least bit realistic at this point is debatable, perhaps dependent on the historic designation or the outcome of the Allegheny Valley Railroad lawsuit against the URA.

But some are willing to give it a shot.

Given the opportunity, or a victory in the lawsuit, Mr. Kamin believes the property could be "completely reborn" as a wholesale produce terminal in 18 months.

"There's a ton of demand. The demand hasn't changed. The only thing that has changed is that the URA has looked the other way on it," he said. Mr. Kamin added that he is confident enough of the terminal's continued value as a facility for produce wholesalers that he's willing to invest his own money to help make the upgrades necessary.

In its 2012 lawsuit, the railroad claimed a 1981 covenant required the URA, in buying the terminal, to use its "best efforts" to provide space for produce wholesalers or "other rail-oriented use." A judge has ruled against the railroad's injunction request to block the Buncher plan. An appeal is now before Commonwealth Court.

At the same time, architect Rob Pfaffmann said he has been talking to investors interested in converting the terminal into a 21st-century incubator for the food economy and unique retail shops. Mr. Pfaffmann led the unsuccessful bid to save the Civic Arena from demolition after the Consol Energy Center was built across the street.

As to whether the city would entertain any such proposals, Mr. Rubinstein referred such questions to Buncher, saying the developer is now in control of the leasing. Mr. Balestrieri would not say whether he would consider such uses.

"That's not what we're thinking about. What we're thinking about right now is whether we're going to get the terminal," he said.

But Mr. Rubinstein didn't seem to put much stock in efforts to return wholesalers to the terminal, arguing the cost of renovating versus the rents needed by the merchants to be profitable make such endeavors "economically unfeasible." He added that trying to build a residential community around the odors and truck traffic produced by the terminal and its wholesalers "doesn't work."

Some 2,500 miles away in San Francisco, Larry Brucia, a wholesale produce market board member, can't imagine what that city would be like without its terminal. "When you start losing the historical and traditional parts of a city, you start losing its soul," he said. "I love San Francisco and I don't want to see that happen. I want to have the soul flourish and become more exciting."

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Mark Belko: mbelko@post-gazette.com or 412-263-1262. First Published September 8, 2013 4:00 AM


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