The Effects of Sioux Falls’ Growth

By Marcus Mahlen

Sioux Falls is growing at an exceptional rate. The developments around town are well-known: Washington Square, Lake Lorraine, Dawley Farms, the University Center Campus and Foundation Park. Yes, Sioux Falls does have a few minor league professional sports teams such as the Sioux Falls Canaries. We also boast a few universities and great high school athletic programs, but it seems there’s one mascot everyone in our community gets behind — growth.

I recently learned that Sioux Falls is now in range of being ranked the 140th largest city in the U.S. So, how did this town in southeast South Dakota eclipse familiar locations such as Jackson, Mississippi or Fort Collins, Colorado? By having an entire community rally behind the concept of growth.

More than 5,000 people moved to Sioux Falls in 2016, smashing local projections. This influx of people affects real estate in multiple sectors.

Housing

The multi-family housing market in the Sioux Falls area is entering a completely new arena. We shattered our building permit record for multi-family units in 2016 with 812 units built, and all indications are telling us 2017 will be keeping up with the past three years of growth. The housing market maintains average prices around $200,000.

Development land in the Sioux Falls market also seems to be primarily driven by housing — both single family and multi-family. Commercial development is keeping up, too, with many large ongoing projects.

Office Space

The office market in Sioux Falls can be described as healthy, but continually changing. Sioux Falls is built around the health care and financial service industries, so they occupy a majority of the office space. But the supply seems to continually keep ahead of the demand, giving tenants plenty of options.

Industrial

The industrial market in Sioux Falls and around the country might be reaching its highest peak in our nation’s history. Sioux Falls has vacancy rates that hover between 5 and 6 percent. Nationally, the rate is between 2 and 3 percent. This means the demand is continually outpacing the supply — raising prices and creating a seller’s market.

Retail

Sioux Falls seems to be bucking the national downward trend in retail, instead expanding rapidly. Announcements of new national retailers such as Marshall’s, an expansion of Hobby Lobby and the increase in the local brew pub scene are examples.

Sioux Falls is resilient. During the financial crisis of 2008 and 2009, the city grew when the coasts and other Midwest communities suffered. While agriculture commodity prices are down, Sioux Falls is still growing. It all comes back to the resiliency of the community and determination to grow and assert ourselves as a regional destination. PB