Downtown planning process finding opportunities to expand

A planning process that will help chart the course for downtown Sioux Falls out to 2035 is looking at ways the city’s core could extend beyond its traditional boundaries.

Consultants from Leland Consulting Group will share initial findings during a visit this week. Their role is to provide a market analysis that will help create a framework for developing the 2035 Downtown Plan.

“I find Sioux Falls very impressive for a city of its size and not just in terms of the look and feel of the downtown, which is really great, but the performance and the group and all the activity downtown is just a lot going on,” senior associate Ted Kamp said.

Sioux Falls is “outperforming its peers,” his colleague, Chris Zahas, added. “You’ve got a lot of big assets that are outsized for a community of your size.”

The updated downtown plan will address land use, downtown growth, commercial and retail development, housing, safety, transportation and infrastructure, parks and recreation, and community facilities and services.

Here are some initial takeaways from the months these consultants have spent studying the city:

Downtown’s population is growing

Since 2014, more than 1,366 housing units have been built or are under construction, the report found. There has been high demand resulting in low vacancy rates and rising home prices. Downtown could absorb at least 100 units per year based on the city’s historic growth rate, it concluded.

“The ideal is a place where folks can live and bike and walk to work,” said Kamp, adding that in some communities, those living downtown have one vehicle per household or none in some cases, which reduces their cost of living.

“A significant number of downtown residents actually leave downtown for work,” he continued. “Way more than those who live and work downtown, and that’s a lifestyle choice. They may work in suburban office complexes, but they live downtown for the lifestyle.”

Downtown office market is ‘surprisingly healthy’

The consultants said they were surprised by the robust activity downtown Sioux Falls is experiencing in its office market, especially compared with others nationwide.

“You’re really not seeing some of the office vacancy issues a lot of downtown markets are seeing as a result of work from home. Post-COVID, you sort of bucked those trends, and that’s definitely helping your real estate market,” Zahas said.

More than 300,000 square feet of new office space is under construction at Cherapa Place and The Steel District, and much of it is already leased or in process. Other major completions in recent years included the First Premeir Bank headquarters and City Center offices. Class A, which is the highest-end office space, has only a 2 percent vacancy rate in downtown, compared with the city’s overall 9 percent vacancy.

The two new projects “are not competing, really. They both have pre-leased their buildings, and that’s also pretty unique,” Zahas said. “In Portland, (Oregon) where I live, there are office buildings going up, but they’re sort of holdovers from the pandemic when there was so much demand for everything they would build spec buildings without pre-leasing. In Sioux Falls, they already have tenants for most of those buildings.”

Downtown could start attracting a different mix of businesses

With the growing population, downtown is beginning to put itself into contention for more retail, including something like a smaller format grocery store, the consultants said.

“Those types of tenants are getting more and more used to downtown because the incomes are shifting downtown,” Zahas said.

While they praised Sioux Falls for attracting and retaining local retailers, the growing population also means national names likely will start looking, they said.

There are several areas where downtown could grow

Maybe most exciting, the consultants identified at least four major areas that could see redevelopment.

They include the 2.6-acre site Wells Fargo property on Phillips Avenue, the parking ramp on 10th Street east of Phillips Avenue where the city already is planning to solicit interest in development, the remaining 4.2 acres of former rail yard property and the state’s social services building – a 7.2-acre site just east of downtown on 10th Street that the report identifies as a potential sports location or mixed-use development.

“The next wave of development is going to be a little more incremental, a little more infill,” Zahas said. “So the rail yard site and the state office site, to me, are the last remaining large parcels that would be low-hanging fruit for developments where you could master plan them and do centralized parking and something at scale.”

To learn more

The downtown planning process will hold a public workshop Thursday, Oct. 13, at the Downtown Library, 200 N. Dakota Ave. Two separate sessions are available at 4 to 5:30 p.m. and 6 to 7:30 p.m.

The workshop will include a presentation summarizing the results of the public engagement process and the market analysis, as well as a series of engagement exercises to help gain additional feedback for the plan.

To stay up to date on the planning process and additional opportunities for engagement, visit siouxfalls.org/downtown.