July 9, 2024

The Sioux Falls Convention Center is turning away millions of dollars in business and could benefit from a new downtown venue for events, consultants told city officials today.

A proposed downtown Convention Center at the Riverline District on downtown’s east side is “feasible and supported by the market,” John Fleming, a senior project analyst with Johnson Consulting, said in an interview before the city briefing.

The Chicago-based consulting firm first identified a convention center as the “highest and best use” of the proposed Riverline District at 10th Street and Franklin Avenue and has spent the past five months evaluating the idea’s feasibility, he said.

Simultaneously, Illinois-based Williams Architecture, which recently oversaw the master planning for Frank Olson Park, is working on options for repurposing the existing Convention Center. That report is expected later this year.

“Downtown Sioux Falls is growing toward 10th Street and Cliff Avenue, so it’s important we are strategic in the steps we take now to maximize the potential of the Riverline District,” Mayor Paul TenHaken said in a statement. “This market analysis is part of our due diligence with the Riverline District to ensure this visionary plan emphasizes the well-being of our community and economic vitality for Sioux Falls.”

Johnson Consulting evaluated the current use of the Convention Center as well as its missed opportunities. That included evaluating how the facility operates, market forces at play, case studies of comparable facilities and industry trends.

“If we look at existing conditions, the first thing to highlight is that the Convention Center has returned to pre-pandemic levels of demand,” Fleming said in the interview.

In 2023, the Convention Center counted 397 event days compared with 392 in 2019.

The building’s largest spaces are drawing especially heavy use, with the exhibit halls and ballrooms occupied at least 80 percent of the time. That’s despite maximum usage typically at 70 percent to allow for holidays and changeover.

“A lot of the existing market is looking for those larger spaces,” Fleming said. “At this point, (the staff is) changing over from one show to the next overnight because there is such demand they don’t have the usual buffer days.”

The Sioux Falls Convention Center lost out on hosting 139 events, representing about $3 million in lost revenue, the Johnson report estimates.

“When we look at what’s driving it … the vast majority is due to the Convention Center not having enough available space,” Fleming said. “There is a lot of demand being missed out on just because the facility is so busy they’re not able to find dates available.”

The size is an additional issue driving decisions not to book events. Plus, 14 percent of existing events surveyed expect to outgrow the building in the next five years — and many of them represent the largest and most impactful events, the consultants said.

When asking both current Convention Center customers and those who chose not to book about the facility, perception generally was positive but lagged in areas such as the cost of attached rooms and services, attractiveness of the surrounding area and proximity to tourism, leisure, entertainment and recreation opportunities.

Here is a sampling of the comments received:

• “The SFCC seems to be at capacity. We haven’t been able to secure all the rooms needed due to other events being held at the same time.”
• “I feel bad having a speaker stay on-site, especially when they don’t have a car. There’s nothing to do there and nothing to walk to.”
• “Sioux Falls is desperately behind in the convention business due to lack of convention center space — not enough attached hotel rooms – no ‘walkability.’”

None of this is news to Teri Schmidt, CEO of Experience Sioux Falls.

“Johnson Consulting is validating what Experience Sioux Falls hears over and over again from current and prospective clients: Our Convention Center is too small, it’s not walkable to dining and retail experiences, and another full-service hotel is needed to support the Convention Center,” she said.

“We look forward to continuing to partner with the city of Sioux Falls and Friends of the Riverline to see this project transform our community physically and economically.”

Johnson Consulting encouraged the city to look at several other markets as models for what a convention center can do to drive business activity, beginning with Fort Wayne, Indiana, which has multiple parallels with Sioux Falls.

Its Grand Wayne Convention Center downtown “is for business customers, conferences and conventions and to bring in people looking to stay overnight and go to a nice restaurant and spend a lot of money downtown,” Fleming said.

It’s adjacent to multiple hotels, a baseball field and other arts and entertainment.

The community’s older 1950s-era Allen County War Memorial Coliseum is used as flexible event space when combined with an adjacent expo center and conference center “with a large parking lot on the outskirts of the city,” he continued. “That’s more your farm show, your car show, some of the home and garden shows looking at serving the residents.”

Other more aspirational communities include Grand Rapids, Michigan, and Des Moines, which both draw national business to their downtown convention centers.

Johnson Consulting is recommending that the city of Sioux Falls consider a phased approach with a new downtown convention center, beginning with a footprint of 135,000 usable square feet that could expand to 210,000 square feet, with additional exhibit hall and meeting space added after it opens.

“That essentially doubles the exhibit hall space available to the city of Sioux Falls as it currently stands,” Fleming said, while allowing the city “not to bite off too much upfront from a capital perspective and allow some other amenities in the market to grow with the convention space.”

Additional capacity for the Sioux Falls Regional Airport and more hotels in the area would be necessary to support the expansion, he said.

Johnson Consulting also is recommending that the focus for a new downtown building be on conventions, conferences and corporate meetings.

That’s a change from some of the biggest events that currently fill the Sioux Falls Convention Center, which are trade and consumer shows.

The targeted events are the kind that will be “bringing in out-of-town visitors,” Fleming said. “There’s a strong corporate base within Sioux Falls and the state of South Dakota, and tapping into that is really helpful. We think this is a really strong idea and has a lot of market support behind it.”

The next step for Johnson Consulting is to work through a business plan and funding strategies for a Convention Center project. A timeline for that hasn’t been determined yet.