Game-changer?

South Dakota to build mega-business park in Sioux Falls

BY ROB SWENSON

The creation of a business park that development leaders describe as a “world-class megasite” was inspired by an unsuccessful attempt to lure a major industrial prospect to Sioux Falls, S.D.

Efforts to attract the plant to Sioux Falls derailed three years when, for internal reasons, the company changed its plans.

“The project was put on indefinite hold,” recalls Slater Barr, president of the Sioux Falls Development Foundation.

At the time, foundation representatives had acquired options on several hundred acres of land to help entice the unidentified company to South Dakota. After the project fell through, they decided to keep assembling theland.

“There are some very attractive features to the park. We realized those features would be attractive to other prospects as well,” Barr said.

On June 2, approximately 200 business people and others gathered at a downtown hotel to hear local and state officials announce that the 820-acre park is becoming a reality. An initial tenant has even been signed.

Foundation Park, as the new industrial park has been named, should be a game-changer for future economic development in the Sioux Falls area, officials said.

“World-class companies require global connectivity,” Barr said. “With high-capacity utility and communication infrastructure in place and the transportation options this site offers, we can appeal to some of the largest projects in the country.”

Foundation Park is northwest of the junction of Interstate Highways 29 and 90. A BNSF rail line cuts through the property, providing coveted railroad access to prospective businesses. The site, which has frontage along I-29, also is within a few miles of the Sioux Falls Regional Airport.

Farmland is being acquired from a half-dozen landowners for the park. The property sits northwest of the city’s border but will be annexed. Plans call for the southern half of the new park to be reserved for smaller businesses. The north half will be reserved for a single, large tenant.

“This puts us on the radar of businesses in a whole new way,” Gov. Dennis Daugaard said. There is at least one prospec- tive tenant for the large tract: a manufacturing company from the Chicago area, he said.

Daugaard and his top economic development assistant, Pat Costello, who serves as the commissioner of the Governor’s Office of Economic Development, were among the dignitaries who participated in the celebratory announcement.

In addition to the SFDF and GOED, entities that are helping create Foundation Park are the city of Sioux Falls and Forward Sioux Falls, a community-development program jointly sponsored by the Sioux Falls Area Chamber of Commerce and the SFDF.

“The magnitude of the project, in acquiring this much land and developing it for our state’s largest potential new businesses, required the cooperation of all of our active economic development partners,” Barr said.

GOED is providing SFDF with an $8.5 million loan from a state development fund to help pay for the land. The state is also awarding the SFDF a $3 million grant for the project. Total land costs are expected to be nearly $20 million, Barr said.

The first tenant in the new park will be transportation company, Logistics Buddy, and a sister business, The Fruit Club. The two companies have announced plans to buy 34 acres and build a 600,000-square-foot, temperature-controlled warehouse.

Logistics Buddy is an existing Sioux Falls company that occupies leased space in the city but wants to expand.The privately owned company provides services nationally and internationally. The Fruit Club, which shares business space with Logistics Buddy, delivers fruit to customers in 10 states.

Scott Kear, incoming CEO of Logistics Buddy, said the company expects to invest somewhere between $50 million and $70 million on its new facility. “Our company has decided to make this investment in South Dakota because it is a very business-friendly state,” he said.

Logistics Buddy currently employs 22 people. It has been operating in Sioux Falls for about three years. The Fruit Club, which employs 25 people, is a newer venture. It sold its first box of fruit in 2013, said Lynn Albers, vice president of The Fruit Club, and is on track to sell 3.5 million pounds in 2015.

Kear said the new park will be a great place to expand Logistics Buddy’s operations. “That location at the intersection of two major interstates plus a railroad spur, there’s nothing that can come close to it,” Kear said.

He hopes the presence of Logistics Buddy helps attract other businesses to the park. Foundation Park will be the single largest business park in South Dakota and one of the largest in the region.

The features of Foundation Park, its location in the population center of Sioux Falls and South Dakota’s pro-business environment will give South Dakota the opportunity to court large, national and international projects, Daugaard and others said. Among other attractions, South Dakota promotes itself as a state that has productive workers and lacks personal and corporate income taxes.

Local and state officials will make special efforts to attract manufacturing companies and business that complement manufacturers to the new park.

Manufacturing employment in South Dakota dipped during the national recession of 2007-’09, but it has rebounded. As of April, statewide employment in manufacturing had increased to a near-record of 43,900, according to state labor department data.

Manufacturing employs roughly the same number of people in South Dakota as the leisure and hospitality industry, which is prominent in South Dakota. Retail, health care and education are among the few sectors that employ more.

Sioux Falls has a population of about 170,000 people. The four-county metropolitan area has reached a total of about 250,000 residents, a population category that is thrusting the city into a higher level of business awareness, officials said.

Since the early 1970s, the SFDF has developed nine business parks in Sioux Falls, but they are mostly full. Existing parks total 1,351 acres and host 140 companies with approximately 13,000 employees.

Foundation Park will bring the total acreage in SFDF business parks to more than 2,100 acres. Based on historical patterns, Barr estimates the new park eventually could employ about 8,000 people.

Private companies and other organizations in Sioux Falls have developed several other business parks in the city.

However, development officials refer to Foundation Park as the city’s first “megasite.”

Design work on the new park likely will continue through 2015, Barr said. Tracts ranging in size from 5 acres to 390 acres will be available.Construction of infrastructure and buildings could begin in 2016. Full development of the park is expected to take years.

“It will prove to be an economic development and job-creating juggernaut for generations to come,” Mayor Mike Huether said.

Sioux Falls developer Craig Lloyd is among the business people thrilled by the creation of Foundation Park. He is the CEO of the Lloyd Cos., one of the most active commercial and residential developers in Sioux Falls. Lloyd expects the new park to attract good, clean businesses and stimulate continued growth of the city’s economic base.

“It’s about exciting as it gets. The northwest corner is going to push things forward,” he said.

Most of the foundation’s existing business parks are in northeastern Sioux Falls. But two of its newer parks are in northwestern Sioux Falls. For the past several years, the heaviest concentration of the city’s business and residential growth has been along the southern, eastern and western edges of the communities. So the city is growing in all directions.

A few generations ago, Sioux Falls was a meatpacking town. Its economic well-being hinged largely on the health of the John Morrell & Co. food-processing plant. Morrell and related agricultural services remain a significant economic force in Sioux Falls. But in recent decades the city has diversified its economic base with substantial growth in sectors such as retail, financial services and health care.

“Foundation Park gives us the opportunity to, once again, step up and change the future,” said bank executive Dave Rozenboom, co-chair of Forward Sioux Falls. PB

Rob Swenson Contributing Writer RobSwensonMediaServices@gmail.com