A City to be Reckoned With

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A City to Be Reckoned With

You don’t have to look around too far around Sioux Falls to know that we are growing at an exceptional rate. The names of developments around town have become household names in these parts. Going out for dinner at one of our great establishments you’ll most likely hear the terms Washington Square, Lake Lorraine, Dawley Farms, the University Center Campus, or Foundation Park muttered by your neighboring tables. Yes, Sioux Falls does have a few minor league professional sports teams such as the Sioux Falls Canaries. We also boast a few universities & great high school athletic programs, but it seems like 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 United States. 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. We now look to our neighbors in Des Moines, Omaha, and Lincoln rather than communities our size or smaller for expansion examples. In fact, in some cases we now outgrow these communities in commercial development projects. Over 5,000 people moved to Sioux Falls in 2016, smashing local projections. So where do these 5,000 people live, work, and play? Let’s dig in further.



The multi-family market in the Sioux Falls area is entering a completely new arena of units being built at one time. We shattered our building permit record for multi-family units in 2016 with 812 units built & all indications early on are telling us that 2017 will be keeping up with the past 3 years of growth. The housing market keeps being pushed out of reach for first-time homebuyers with average prices being around $200,000.


The development land in the Sioux Falls market seems to be primarily driven by housing – both single family and multi-family. Just think about the process it takes for a growing city to absorb over 5,000 residents – at a rate of 3 per household that’s a lot of houses! But this isn’t slowing down commercial development as some of the areas I mentioned above have filled in with many large commercial projects.



The office market in Sioux Falls can be described as healthy, but continually changing. Sioux Falls is built around the healthcare industry and they take up the large majority of the office space, along with the financial service industry, but the supply seems to continually keep ahead of the demand giving tenants plenty of options. Until the supply starts to slow down, which is doubtful to be soon – it seems likely this trend will continue.


The industrial market in Sioux Falls, and around the country might be reaching its highest peak in our nation’s history. Nationally, we are seeing vacancy rates that hover between 5-6% and locally, those numbers are said to be between 2-3%. This means that the demand is continually outpacing the supply – raising prices and creating a sellers’ market.



Nationally, all you hear about is the demise of the retail industry – being led by the uptick in online sales. Amazon is king and will put a dent in the local brick & mortar stores. Well, it seems the Sioux Falls residents still prefer walking down Phillips Ave, because our retail scene is not retracting, but seems to be expanding at a rapid rate. Announcements of new national retailers such as Marshall’s, an expansion of Hobby Lobby, or the increase in the local brew pub scene come to mind.

Sioux Falls, mostly a result of the South Dakota friendly business climate is very resilient. During the financial crisis of 2008-2009, Sioux Falls grew when the coasts and some other Midwest communities suffered. While agriculture commodity prices are down, Sioux Falls is growing at faster clip than ever before. It all comes back to the resiliency of the community and determination to grow and assert ourselves as a regional destination. My fellow Midwesterners, please take note – Sioux Falls has become a destination city to be reckoned with.

Marcus Mahlen, Broker Associate
NAI Sioux Falls
605 228 9744