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JUNE 2, 2015 - VOL. 50 No. 9

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COVER STORY

Boom Town: Sioux Falls Continues to build on success

By Amy Smolik
Marketing & Communications Manager

Sioux Falls has quietly and steadily grown by several thousand new people per year – adding an additional 45,000 residents since 2000. Those may not sound like "boom town" definition numbers, however continued growth and development across the community say otherwise. In 2014, building permits issued broke three records. Numbers for the first third of 2015 are also indicating another strong construction year.

"Employment numbers are up from last year, which means population is up, which means there is an increased demand for housing and retail," said Mike Cooper, Director of Planning and Building Services for the City of Sioux Falls.

It´s not original to say Sioux Falls is a boom town – as part of 2013 series of stories about Sioux Falls, The National Journal asked the question: "Is Sioux Falls, S.D. the Next Boom Town?" The story cited the city´s thriving industry, consistently low unemployment (which was then 3.3 percent) and "few of the woes that plague larger urban areas" as key indicators for the Boom Town moniker.

Two years later, the story remains the same. In 2015, building permits are again at a record-setting pace. From January-April of this year, 3,849 permits were issued – nearly 2,000 permits more than in 2014 for the same time. The projects are varied, from additions at medical centers to new single and multi-family dwellings across the community. Schools are expanding on campus and building at the K-12 level as well. Non-residential construction numbers and residential construction numbers are well above the 20-year averages. See the lists on pages 28-29 for details on some of the recently-permitted projects.

COMMERCIAL BOOM

As of May, Cooper said he anticipates a number of development projects still in early stages that will go through the approval process yet this year but that 2015 is on track to do better than 2014´s numbers or at least as strong.

Many contractors go where the work is and Fiegen Construction is keeping busy in Sioux Falls as well as along the Interstate 29 corridor and the southeastern corner of the state.

"It´s a welcome surge in construction. We´re seeing industrial growth that is long overdue," said Jeff Fiegen, President of Fiegen Construction. "Currently we´re working for three healthcare organizations and they continue to expand, which is good for the local economy. Private industry is growing, as well. If you look at all four corners of Sioux Falls there´s growth in every direction and that´s also good for the local economy."

Keeping up with the demand for infrastructure to support new development opportunities is by far the greatest challenge, said Darrin Smith, Director of Community Development for the City of Sioux Falls.

"We always need to strive to maintain balance between investing to capture new opportunities with maintaining the more than 3,000 lane miles of streets and more than 1,000 miles of water and sewer lines in our city," Smith said.

Both Cooper and Smith said Sioux Falls does very well with growth management practices compared to cities of the same size and even larger. Smith cited the Shape Places ordinance, which will provide for a more efficient use of land with respect to development and redevelopment. He said this should also improve traffic flow efficiency and help make the community much more pedestrian and bicycle friendly.

POPULATION: 250,000

Population estimates and projections are used in planning the city´s growth management strategies, which relates to housing units needed and the amount of land area and infrastructure required for those housing units. Population is more than just rooftops, however. For many developers, hitting the magic number of 250,000 people in the Metropolitan Statistical Area (MSA) means the city enters a new category of competition; the City of Sioux Falls anticipates that the MSA will reach that number in 2015.

Whether it is site selectors looking for new locations or to expand or relocate a business, being included in the next tier of cities should have positive benefits for the Sioux Falls area. "It is a game-changer," said Sioux Falls Development Foundation President Slater Barr. "Being at that 250,000 mark opens up a number of doors for our community. Businesses and industries who weren´t paying attention to us before may start to take a look now."

For the past few years the Sioux Falls Development Foundation has actively built relationships with site selectors across the country. This has included bringing site selectors to Sioux Falls for familiarization tours as well as visits to their cities and continued communication with them about positive growth and development taking place in Sioux Falls. In addition, the Development Foundation and Chamber, through Forward Sioux Falls, have actively marketed the community at the national level through media stories. Barr has seen these relationships with site selectors grow because of these efforts.

"When we first started, there was still some educating we needed to do about who we are and where we are," Barr said. "Now, word is getting around about Sioux Falls and the positive things happening here so they know about our community. They are interested in coming to South Dakota to learn more."

Cooper echoes Barr´s sentiments. "Reaching the quarter of a million people mark puts us at a different level," Cooper said. "It increases our visibility for businesses and employers. It strengthens our market for more economic development projects."

In addition to new industries considering Sioux Falls, national retail franchises will also take a closer look at the market and eventually move into the Sioux Falls area because of the increased population, Smith said.

HOUSING

The housing market is also seeing a boom. Numbers from the Realtors Association of the Sioux Empire show that new listings for the region increased 7.6 percent in April and pending sales were up as well. So far 2015 shows an even split between single family and multi-family housing permits. Cooper said that is typical as the market tends to go in cycles and 2014 was a robust year for multi-family housing projects.

"In talking with our members this spring, they seem very optimistic about the housing industry this year," said Julie Terrell, Executive Vice President of the Homebuilders Association. "Many have even said that they´ve been booked solid since this time last year."

"The largest area of concern we´ve heard from our builders is the labor shortage," Terrell said. "This extends into the areas of service and product suppliers, too. It´s challenging to find skilled labor in this industry and because of that some builders are encountering delays in building homes."

People are still investing in additions and remodels, both on the housing and commercial side, Cooper said. While there is still substantial land available for new construction, he said the demand for particular parts of the city means some older businesses will be removed and replaced with new construction.

"We have an amazing community that just has so many things going for it. It´s easy to call Sioux Falls home when you have friendly people, great businesses and affordable housing," Terrell said. "Combine great community with low interest rates and it makes for more people choosing to either put down permanent roots in Sioux Falls or upsize to their larger dream home."

LOOKING AHEAD

Keeping the booming economy going is high on the city´s priority list, Smith said. "We encourage and support responsible development that provides quality job opportunities for our residents and helps grow our tax base so that we can expand city services to citizens and support our educational system at the highest level possible," he said.

For companies like Fiegen Construction, addressing workforce challenges and finding additional workers will be key for the building industry – and many other industries. Contractors need people, Fiegen said, but workers are needed with building materials, truck deliveries, operators, subcontractors with finishers and more. Everyone is in the same situation, he said.

"There are multiple things happening at national, state and local levels to address our workforce issues. It´s fantastic and it´s time that it´s done," Fiegen said. "There are some great plans that have been put forth. I love the collaborative efforts. We´ve been in dire need for skilled craftsman for many years."



BOOM TOWN: 2015 PERMITS*

Following are the 10 highest-value business-related projects permitted as of April 30, 2015. The 19 projects represent a value of $85.5 million.

Project Permit Value (in $millions)
Augustana College (Froiland Science Complex) $20.4
The Evangelical Lutheran Good Samaritan Society (Ryan Building Addition) $15.3
Sanford Medical Center (Addition Edith Sanford Cancer Center) $8.5
The Evangelical Lutheran Good Samaritan Society (Hoeger Building Addition) $7.3
Sanford Health & USD Medical Center (Edith Sanford Cancer Center) $6
Avera McKennan Hospital & University Health Care (Remodel 4th Floor NICU) $3.7
Zuercher Technologies (Office Building) $3.2
Avera McKennan Hospital & University Health Care (Patient Room Upgrade) $2.2
Sunset Villas LLC (26 Unit Apartment) $2.2
Sunset Villas LLC (26 Unit Apartment) $2.2
The Evangelical Lutheran Good Samaritan Society (Jerstad Building Addition) $2
Amerco Real Estate Comp. (Remodel for U-Haul) $2
Midwest Bank (Bank Branch Interior & Exterior Remodel) $1.6
J & J Land Co LLC (Office Building) $1.5
Volunteers of America, Dakotas (Addition & Remodel) $1.4
Diamond Field Commons LLC (14 Unit Apartment & Garages) $1.4
Diamond Field Commons LLC (14 Unit Apartment & Garages) $1.4
Interstate Crossing Dev Corp (New Day Care) $1.2
Midwest Motor Express (Midwest Motors) $1.1
Sioux Falls Regional Airport (Check Point Redevelopment) $1
Source: City of Sioux Falls Planning & Building Services;
*as of April 30, 2015
 

BOOM TOWN: 2014 NUMBERS

Following are the 10 highest value retail and office commercial projects permitted in 2014:

Retail/Office
 
Project Valuation
(in $millions)
Plaza LLC/DocuTAP $6.7
Burlington Coat Factory $3.44
The Evangelical Lutheran Good Samaritan Society $3.44
Montgomery Furniture $3.08
Kum & Go $2.19
Get-n-Go $2.14
Primary Holdings $2
First Savings Bank $2
Plains Commerce Bank $1.96
The Foundry $1.62

Business

Following are the 10 highest-value business-related projects permitted in 2014 relating to both the public and private sectors:

 
Project Valuation
(in $millions)
Hi Roller Conveyor $7
TJN Enterprises $5
Senproco $2.84
Sanford Cancer Center $2
Sanford/Home 2 Suites $1.9
ADP $1.8
Sioux Falls Fire Rescue $1.68
Galvanized Properties $1.6
A-Ox Welding $1.5
Sioux Falls Public Works $1.25

Education

A significant number of projects relating to education facilities were permitted in 2014:

 
Project Valuation
(in $millions)
Susan B. Anthony Elementary $8.03
Tea Area School Elementary $3.98
R. F. Pettigrew Elementary $3.1
Axtell Middle School $2.88
Robert Frost Elementary $2.8
Discovery Elementary $2.13
Froiland Science Center $1.73

Assembly/Entertainment/Recreation

Following are the 10 highest value projects related to entertainment, recreation or assembly occupancies for 2014:

 
Project Valuation
(in $millions)
Sioux Falls Regional Airport $10.5
The Country Club of Sioux Falls $8
SCHEELS IcePlex $8
Sioux Falls YMCA $5
Great Life/Woodlake $5
Huether Family MatchPointe $3.48
All In Clubhouse $2.02
Ransom Church $1.19
Shenanigans Pub $1.14
Westside Lutheran Church $1

Other Developments in 2014

The cumulative number of dwelling units (single-family dwellings, duplexes, non-transient apartments, independent and assisted living, and nursing dwelling units) permitted in 2014 set a new record for the second year in a row: there were 2,056 total dwelling units permitted, a 1.2 percent increase, as compared to 2,039 in 2013. The next highest number of total was 1,909 in 2001 and 1,825 in 2000. There were 1,069 new multifamily dwelling unit projects permitted in 2014, an increase of 5.2 percent compared to the 1,016 in 2013. The 2014 number is the second highest number of multifamily dwelling units issued, compared to the 1,086 issued in 1977.

The number of temporary or transient residential projects continued from the strong pace of hotel construction in 2013. Projects from 2014 included two hotels: Aerostay and Town Place Suites. In addition, the Carroll Institute and Bishop Dudley Hospitality House were also permitted in 2014.

The Avera Prince of Peace Retirement Community additions and renovations consisted of 110 assisted, rehabilitation and skilled care dwelling units. The Trail Ridge Retirement Community facility added an assisted living and memory care addition with 40 new dwelling units along with a supporting commons area addition.

 

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