Aug. 9, 2022

If you’re looking for an apartment in Sioux Falls, the search likely hasn’t gotten much easier.

Sioux Falls reported 3.72 percent multifamily vacancy in July, according to a survey of nearly 18,000 apartment units by the South Dakota Multi-Housing Association.

In January, the rate was 3.12 percent.

In between, hundreds of new apartments have become available to rent — and the numbers show there is still continued demand and subsequently increasing rental rates.

“Sioux Falls continues to see record-breaking construction numbers for housing, evident by the city’s building permit numbers for multifamily in 2021 and 2022. We don’t see this slowing down any time soon,” said Jill Madsen, chair of the South Dakota Multi-Housing Association.

The vacancy rate is similar to what Lloyd Cos. is experiencing in its portfolio of approximately 6,500 apartments in Sioux Falls, said Ashley Lipp, vice president of residential property management.

“We just can’t build them fast enough,” she said. “We’re doing the best we can to stay on schedule, but as soon as we get confirmed dates, we start leasing, and they fill up right away.”

Town homes with attached garages are in especially short supply, she said.

“My message is if you find something you like, don’t wait. It probably won’t be there the next day.”

The data also shows “there is a shortage of housing, and more building is needed to meet future demand,” Madsen said.

In a nationwide survey recently completed by the National Apartment Association, the U.S. needs to build 4.3 million apartments by 2035 to meet future demand and address the current apartment deficit.

Sioux Falls appears to be doing its part. Through July, permits have been issued for 2,400 apartment units, compared with 1,181 a year ago.

Hundreds of those issued in July are for Sage Meadows, a complex of 230 apartments and 36 town homes in the area of 85th Street and Tallgrass Avenue from developer RMB Associates.

Its portfolio is on average 99 percent occupied, some days 100 percent, CEO Joel Dykstra said.

“A building we’re opening at Grand Prairie has 32 units, and we already have 30 signed leases,” he said. “Part of it is product. We’re doing the stuff people are looking for. We’re in the right end of the market for people looking for higher-end amenities.”

Sage Meadows, for instance, will include a center courtyard with a swimming pool, turfed dog park, putting green and potentially a sand volleyball court. The units are scheduled to open beginning late next year and continuing into 2024, bringing the developer’s portfolio to more than 1,000 units.

At $56 million, though, the project also illustrates what developers are encountering in building. This complex priced out at $160,000 per unit.

“A year ago, it would have been $140,000,” Dykstra said. “And rents are not tied to costs. Rents are market-driven. They don’t go up just because we spend more on construction. They go up because people are willing to pay for the product they are getting.”

Sioux Falls is “still not where Omaha is on a rent-per-square-foot basis,” he added. “And we’re not even close to Minneapolis. Rents have been trending up in Sioux Falls in the last five years, but … the difference between our rent per square foot and Omaha or Des Moines, the margin has stayed the same, so we’re still below those places.”

Lloyd Cos. is bringing multiple new projects into the Sioux Falls market beginning yet this year.

The Carlton, a new mixed-use building at Dawley Farm Village, is scheduled to move in its first residents in November, offering an indoor pool and hot tub, a rooftop patio and “really luxurious finishes,” Lipp said. “It’s going to be a beautiful community.”

On the southeast side of the city, The Slate at Harvest Creek near 57th Street and Veterans Parkway will offer mainly two- and three-bedroom town homes that will be “very spacious, with beautiful finishes,” Lipp said.

And on the northwest side, near Jefferson High School, Aspen Heights is scheduled to move in its first residents in November.

“It has really nice finishes and will have a clubhouse with a fitness center and pool,” Lipp aid. “It’s a great location in an up-and-coming part of town, so we’re starting to see more activity up there.”

As back-to-school season and the end of the year approach, “typically, the rental market does slow a little bit,” she added. “There will probably be some new inventory available as we go toward fall and winter. If you’re looking to move, you will probably have more options than in spring and summer.”