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Growth spurs revamp of East 10th corridor

May 18, 2016

The tenants of a retail center at 10th Street and Cleveland Avenue each recently received an old photograph of their property.

In it, tiny white cabins dot the landscape – part of what was called the Sioux Heights Tourist Park from the 1930s until the 1970s.

When Scott Schoenen’s grandfather bought the property in the 1950s, people rented out the cabins “to get away from the hustle and bustle of the city,” said Schoenen, who co-owns and manages the property. “It’s less than two miles from the city, so it’s kind of a shocking thought process.”

Times clearly have changed.

Schoenen recently returned to Sioux Falls from Florida and is helping oversee a $1.5 million renovation to the property, including an updated facade, signs, lighting and landscaping.

It became a retail center in the 1970s but hasn’t been significantly updated since that time.

“I think it’s a wonderful opportunity,” Schoenen said. “Tenth and Cleveland is one of the 10 busiest intersections in the city already, so you’re starting to see huge volume increases in terms of people living and commuting that direction.”

His project is one of several new or planned redevelopments along the East 10th Street corridor, which steadily has attracted growing interest, particularly from retailers.

The population surrounding it is driving much of the development. Sandwiched between new residential growth on the far east side and continued development downtown, 10th Street is more positioned than ever to capitalize on new business.

“The demographics are the attraction,” said Mike Cooper, the city’s director of planning and building services. “We’ve had more inquiries about potential redevelopment along East 10th Street, and there are still opportunities within that area.”

Retail growth

When most national retailers enter the Sioux Falls market, they still typically look to locate near The Empire Mall.

So it speaks to the strength of 10th Street that Popeye’s Louisiana Kitchen will open its first location in the city next month on the former Pizza Inn property.

“The growing interest (in the area) continues to be from many restaurant groups,” said Ryan Tysdal of Lloyd Cos., who put the Popeye’s deal together. “They like the traffic. They like the proximity to Interstate 229. For lunch traffic, proximity to downtown is important.”

The lunch draw is what attracted Qdoba and Pita Pit, restaurants that were among the first to open in redeveloped sites along the corridor.

“The interest has always been there,” said Ron Nelson of Nelson Property Consultants, who did those two deals. “They’re very pleased. As you get further east, your daytime population drops off, and it’s more of an evening strength. And their businesses aren’t evening business. More than 50 percent of business is lunch.”

Restaurants also helped fill a redeveloped retail center on land that used to be the Mint Casino at 3607 E. 10th St. The casino now is a co-tenant in the new center, which includes Jimmy John’s, Gilberto’s and most recently Toppers Pizza.

“It’s a nice full center and a really nice facility, so we’re excited to be in it,” said Toppers franchisee Shane Quail, who chose it as a second location. “The position we chose was based on having a good radius of households around us, great visibility and high traffic counts on East 10th.”

In the past five years, traffic along East 10th Street between Fairfax Avenue and Interstate 229 has grown at some intersections between 50 percent and 70 percent. It now averages between 20,000 and 29,000 vehicles daily depending on the exact stretch of road.

“Tenth Street is a major corridor,” Cooper said. “It has that morning and afternoon commuter traffic, which is a primary attraction for that area. So the market obviously is there for land versus buildings that are on the property because we’re seeing tear-downs more frequently along that corridor.”

Redevelopments in progress

The most large-scale redevelopment in progress is the original campus of the South Dakota School for the Deaf that was most recently used by Communication Service for the Deaf Inc.

Bruce Nerison, owner of Wheel City Auto, bought the 7.5-acre property last year. He moved his corporate office into two floors of one of the historic buildings.

“We’re real happy with the progress. We love the building and the location,” he said. “I wasn’t sure when we bought it how it would come together. You just don’t see a lot of historic buildings sitting around in this good of shape, so I was excited to be part of it, and it ended up working out really well.”

The third floor of his building recently leased to Taco John’s as office space.

Another building on the property, the historic Simpson building, was sold to Soukup Industries LLC, which is using it as office space and leasing some of it.

It’s listed with NAI Sioux Falls, which has a concept for executive suites on the second floor as well as an idea to make it an incubator for small businesses.

“We think there is a lot of promise with the building,” broker Michael Martin said. “It’s unique with its vicinity to downtown yet has a lot of green space with trees and plants and doesn’t have hassle of finding parking like in downtown.”

The historic Old School building was sold to Paul Gourley, who renovated it into apartments.

“They really turned out beautifully,” Gourley said. “The colors and fixtures and finishes all came together for a very designer look.”

There are 27 units in the building and 16 are leased. New residents are expected to start moving in during June.

Rents in Olde School Apartments will range from $500 to $750.

“People like the location. It’s right in the middle of everything,” Gourley said. “You’re walking distance to downtown as well as restaurants and amenities, and people like the history of it and the look of the building but with modern amenities inside.”

The remaining existing building is a call center that has drawn a lot of interest, said Brad Gullickson of Harr & Lemme Commercial Real Estate Inc., who has it listed.

“It’s an affordable option for people in the office market, and it just comes down to people getting it on their radar,” he said. “People have been driving by that campus so long they haven’t really paid attention to what’s there.”

The look of the area will be changing, too. A new retail center is being planned with 11,600 square feet on the first level and 7,200 on a potential partial second story.

The facade is being designed to complement the rest of the campus.

“It’s a very attractive building,” Gullickson said. “We have a food tenant lined up and have inquiries from a gym and coffee shop, so it’s area retail.”

Farther east, a redevelopment is being planned on the southwest corner of Arrowhead Parkway and Gordon Drive.

The plan is to remove two houses and vacate the street in front of the property, said Craig Hagen of NAI Sioux Falls, who has it listed.

“It’s going to probably be a strip mall and a built-to-suit site or maybe we’ll sell an out lot,” he said. “It’s going to be a great site. It’s really an entrance to the whole Arrowhead Parkway area.”

The project could start construction this year.

“We’ve had interest,” Hagen said. “It’s exciting watching the housing going on out there. All of it is really going to lend well to any retail use out there.”

New entertainment options

Tenth Street also has started to attract new arts and entertainment-based businesses.

Last Stop Studios opened in April in the lower level of Last Stop CD Shop at 2121 E. 10th St.

The new space is the home of "The White Wall Sessions,” which is starting its fourth television season of showcasing local musicians from across the U.S.

It includes a studio with room for an audience of 75 and a separate recording studio that doubles as a greenroom. Last Stop Studios also includes the new contemporary art gallery Post Pilgrim, curated by artist Jennifer White.

“It’s very exciting. We can see downtown,” said Jeff Zueger, founder of “The White Wall Sessions.” “When we were looking for a new space, we were really looking downtown, but it didn’t work out financially. Then when I talked to (Last Stop owner) Brian (Deutz), he thought it was a great idea, and it just kind of evolved from there.”

The area, too, is evolving, said Zueger, who grew up four blocks south of 10th and Lowell Avenue.

“I would love to see this become more of a little neighborhood,” he said. “If a bar opened up around here, it could be a cool little spot.”

Farther east, entrepreneur Kellen Marson also is investing in the area. He’s opening Marson’s Wacko Comedy Club & Event Center at 3224 E.10th St. in the Dacotah Town Centre retail plaza. The space used to be NitWits Comedy Club.

“It gets about 25,000 cars through there a day, and it’s right off the interstate and easily accessible without having to drive through Sioux Falls,” said Marson, a comedian and hypnotist. “And it’s got parking.”

He plans to open Aug. 12 and offer local, regional and national comedy acts on weekends. He wants to add a beer and wine license and eventually offer food. Plus, he will rent the space for special events and bring in other acts.

“There’s a dinner theater that wants to do something in there, so we’ll open it up to those kinds of things, and I plan to bring in acts like dueling pianos or a magician,” he said. “I want to bring some variety to Sioux Falls.”

Courtesy of Jodi Schwan, Sioux Falls Business Journal