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San Francisco market breaks ground on expansion

On Tuesday, Nov. 5, the San Francisco Wholesale Produce Market held a ceremonial groundbreaking event for market tenants on the first phase of a 10-year renovation project that will ultimately expand the market by 200,000 square feet.

In reality, pre-construction work has been going on for two months since the actual groundbreaking occurred in mid-September. Market Manager Michael Janis said the November event, held at 10 a.m. as the industry was finishing up its work day, was put together as a private market party for tenants to celebrate the success of the expansion process, which has been years in the making.

During the event, John Monfredini of Pacific Agri-Products, who is the president of the governing board of the SFWPM, welcomed the crowd and discussed the history of the market. This market on the south side of San Francisco City proper was built in 1963 to accommodate market tenants who had been ousted from their downtown location because of redevelopment. It was a contentious time that included the development of another market in South San Francisco, which continues to operate today. Monfredini said the effort to update and expand the San Francisco market has been going on since 2000 when a 55,000-square-foot building was added to accommodate a Whole Foods Distribution Center.

The first phase of this new expansion involves the construction of an 84,000-square-foot warehouse distribution center on a three-acre site adjacent to the current market. It is expected to be completed near the end of the summer in 2014. The new building will feature a dock-high loading configuration, floor sales space, refrigerated units and office space.

The expansion is part of a $100 million long-term investment announced by the city last year to grow and modernize the market over the next 10 years. Once complete, the project is estimated to create 800 jobs, 350 of them permanent, and expand the market from 300,000 square feet to 500,000 square feet. The nonprofit San Francisco Market Corp. signed a new 60-year lease last year with the city that will use rent revenue for the redevelopment and expansion. The market is located on city-owned land.

Monica Melkesian, who is project manager for the San Francisco Wholesale Produce Market, recently said the renovation plan has been broken into five phases and that there will be gaps in construction over the length of the project. She added that there is also flexibility built into the effort to allow the market corporation to design future construction based on tenant needs. For example, she said a future phase might include renovating an existing building rather than building a new one.

The first phase, which has a price tag of $20 million, is being funded through an innovative financing package that includes market tax credits as well as direct loans from Bank of America and the San Francisco Community Investment Fund.

Monfredini called the expansion "extremely necessary" to keep up with the growing demands of the marketplace. He thanked many private and public figures for creating and advocating for the private-public partnership that has made it possible. He had very kind words for San Francisco Mayor Edwin Lee, who he called a "great champion for the wholesale food industry."

At the event, Stan Corriea, owner of Stanley Produce on the market and the president of the merchants association, said the expansion and the 60-year commitment by the city gives the merchants' customers "100 percent certainty that we will be here for the long run." He added that the future of the San Francisco produce industry is "901 Rankin," which is the address of the first phase of the expansion.

Currently, the market consists of 29 individual produce vendors and is the largest wholesale produce market in Northern California. A combination of new tenants and existing ones are expected to lease the additional space in the new building.

The goal is to keep the market primarily a produce market and the majority of new space will be devoted to that use, but the buildings within the market confines do house other food wholesalers. In addition, retailers have distribution facilities in the center, including Whole Foods and Mollie Stone's Markets, a popular San Francisco area upscale chain.

In recent years several produce tenants have expanded their product lines to include other food items such as cheeses and oils, and that no doubt will continue and be encouraged. San Francisco is one of the top restaurant markets in the world, so the market has long catered to the needs of the area's chefs, which includes specialty food items beyond fresh produce.

The market also services the Northern California retail trade, which has a very strong independent and regional supermarket focus. The market also serves as a distribution center for many Northern California wholesalers and purveyors that independently cater to the communities in the top half of California as well as the neighboring states of Nevada and Oregon.

The city of San Francisco estimates that the market generates about $2.2 million in rent revenue annually. Its economic impact for the Bay Area was estimated at about $900 million in 2009, and is expected to hit $1.4 billion annually with the expansion.