May 30, 2022

Quick-service restaurants, fashion-casual apparel and home-related chains showed strong interest in Sioux Falls at the annual retail real estate convention put on by the International Council of Shopping Centers, according to brokers representing sites in the city who attended.

While the crowd of more than 22,000 was a little more than half of historical attendance, “you were there because you are active in the industry,” said Raquel Blount of Lloyd Cos. “It was a very proactive attendance. People were wanting to deal-make.”

There were added conversations about timing for new stores and construction costs, she said, but that also is leading to “a semi-frenzy for existing space,” she said. “There’s a resurgence of activity on the retail side, on softgood retail.”

Ryan Tysdal of Van Buskirk Cos. agreed.

“I didn’t feel like the retailer count or deal-making was down by any means,” he said. “It was generally positive. People are moving forward with their plans. They are definitely calculated and making smart decisions in their growth plans, but they’re still growing.”

There was especially strong interest from quick-service, or fast-food, restaurants, Blount said.

“They’re trying to target the 41st and Louise corridor, and we had a lot of conversations about Dawley Farms. There’s such a good story to be told out there.”

And it’s getting out nationally, said Alexis Konstant of Lloyd Cos., who also attended the show.

“I think people are realizing the connector to I-90 but also all the housing growth over there,” she said. “I heard from a couple groups that said, ‘Word on the street is Chipotle and Crumbl both had through-the-roof openings, so we want to be right by them.’”

That bodes well both from remaining space at Empire Place and the east side, where each retailer has announced a second location, brokers said.

“I’m doing a lot of stuff on Highway 100 now,” Tysdal said. “But I also had a meeting with a retailer about the northwest part of town, an anchor sort of user, so I’ll be curious to see if that comes together. It was everything from west to east side, south to northwest; I was meeting with retailers at all those sites.”

And it’s not just Sioux Falls drawing interest. Blount and Konstant signed a deal the night before the convention at a networking social to list the former Shopko building in Rapid City.

“I’ve never really had that experience,” Blount said.

“This was literally getting listing paperwork, and we were going to hit the floor the next day with this listing. Rapid is such a growing, strong retail market right now, and there’s such strong activity that it’s a well-positioned property. We’ve had great success in Sioux Falls with the big-box transitions, Kmart and Shopko, so we expect a lot of interest.”

Retailers that have not yet expanded to Sioux Falls, such as Dunkin, sometimes are hampered by distribution challenges, Tysdal said. Or they’re looking for a franchisee to come in and develop the market.

“It’s not that they don’t want to be in a market like Sioux Falls. They need to expand into four states at the same time to add Sioux Falls locations,” he said. “And that’s a hang-up we don’t always have the information to know.”

The convention also touched significantly on emerging technology in the retail industry, brokers said. It included everything from using cryptocurrency in transactions to preparing for drone delivery.

“And how they see that not necessarily replacing deliveries, but a drone can carry up to a 10-pound package, so rather than a line of UPS or FedEx trucks on your street, the trucks can drop the packages with drones throughout the neighborhood for overall efficiency,” Konstant said.

There will be significant follow-up on conversations that took place at the show, brokers said.

“In a 15-minute meeting in person, we can accomplish what might take a month of back-and-forth emails, or this convention is planting the seed and starting those for new deals,” Tysdal said. “In other cases, you’re working through deals already in the pipeline to speed them along and bring them to fruition.”

National retailers show interest in expanding to Sioux Falls — but deals are slow to get done