SAN FRANCISCO — The city of San Francisco in August approved an improvement plan that will ultimately mean nearly 40% more space for the San Francisco Wholesale Produce Market.

“We feel very fortunate that we have tenant-merchants here that are very positive about the future and the demand for space,” said Michael Janis, market manager.

The expansion and renovation plan has been six years in the works.

When completed, the three-phase plan will add 200,000 square feet to the market’s existing 300,000-square-foot footprint.

That doesn’t take into account two-story buildings that have additional square footage, Janis said.

As part of the plan, a newly created governing group signed a 60-year lease with the city to provide the long-term commitment needed for development, he said.

The current 50-year lease was set to expire in 2013.

“It really provides a strong foundation to continue the market and to make improvements to meet the needs of the industry,” Janis said.

The market, in existence for 137 years, moved to its current location near the Port of San Francisco in 1963.

A building housing Whole Foods and Earl’s Organic Produce was constructed about 10 years ago.

Under the plan, the governing group will use about $5 million put aside from rents for initial construction.

The group will borrow the remainder, using rent revenue to repay the loan.

The three-phase plan calls for rerouting two blocks of the main road that cuts through the middle of the market.

It also involves constructing a building on a city-owned lot adjacent to the market. Construction is expected to start in 2013, Janis said.

Renovation of existing buildings will be guided by the governing group’s board of directors of tenant merchants and outsiders, Janis said. Among those will be a brand manager to help publicize the market and experts on design, logistics and food systems.

“As we make the improvements, we make the ones that make sense at the time and looking forward,” he said.

“We’ll work with the merchants closely to bring on what makes sense.”

The expansion can’t come soon enough for Greenleaf Produce, the market’s largest tenant, said Dale Van Matre, director of purchasing and managing partner.

The firm currently operates two warehouses, one onsite for mainly produce and one offsite for dry goods, specialty cheeses and other items.

Together they comprise about 75,000 square feet.

Each day, a fleet of 30-plus trucks loads up to make deliveries to 700 customers, which include restaurants, universities and large corporations.

“Since we do most of our work at night and we also have product coming in at night, it’s a very challenging juggling act to get it all in and out from two warehouses,” he said.

“If the market didn’t expand, we would have been forced to leave the market.”

When the new building is completed, Greenleaf will occupy about the same square footage, but all under one roof, greatly simplifying logistics, Van Matre said.

Earl’s Organic Produce moved into the market’s newest building and won’t be relocating this go-round.

But Earl Herrick, owner, said the expansion will help all tenants, whether they’re relocating or not.

For example, just moving the proposal through the various government entities has raised the profile of the market publicly, he said.

“We want to be more a part of the conversation of the food culture in San Francisco,” said Herrick, who also sits on the governing group’s board of directors.

“It’s such a strong and vibrant food culture here. It goes a lot of different directions, and the market has been slow to realize those benefits.”