Nov. 11, 2019

By Steve Young, for SiouxFalls.Business

Imagine for a moment the day when a ribbon of highway cutting across eastern Sioux Falls explodes from a daily traffic count of 10,000 vehicles to 30,000, 35,000, 40,000 and more.

It’s closer than you think. And when the new and evolving state highway called South Dakota 100 finally connects with Interstate 90 and opens to traffic by this time next year, retail, commercial and residential developers already busy on Sioux Falls’ east side say the impact will be immense.

More neighborhoods will spring from the area’s agricultural fields. Additional restaurants, national retailers, medical facilities, apartment complexes, business offices and more will expand on significant development and growth that has already occurred since Dawley Farm Village emerged in the mid-2000s along the part of South Dakota 100 called Highway 11.

That connection of I-90 to S.D. 100, which includes parts of Veterans Parkway and Highway 11, “really is a game-changer in terms of traffic on the east side,” said Ryan Tysdal, a commercial real estate broker for Van Buskirk Cos.

“Our traffic studies show that once that connection is made, the traffic numbers triple to 30,000 to 35,000 cars per day. That’s equivalent to Louise Avenue traffic now. It’s very attractive to retailers to go where the traffic is, and that’s what you are going to see there.”

The portion of the interchange going north opened in the past week. The southern end of the project — projected to open by this time next year — will drive traffic into the heart of eastern Sioux Falls, building on groundwork put in place more than two decades ago.

When the city put in the east-side sanitary sewer system in the mid-2000s, and the state was envisioning S.D. 100 as a second southeastern bypass around Sioux Falls, “those were always kind of seen as the catalysts that were going to drive growth on the east side of Sioux Falls,” said Joel Ingle, general manager for Harr & Lemme, which includes residential and commercial real estate companies.

Sure enough, Dawley Farm Village rose from the cornfields as a major retail center, as did Walmart and other stores along the stretch of Highway 42 that became Arrowhead Parkway. New neighborhoods like Van Buskirk’s Copper Creek development emerged at 26th Street and the Highway 11 section of S.D. 100 – and are still growing. Businesses, apartment complexes and single-family homes continue to evolve both at that intersection and farther south along Highway 11 at 41st Street.

Ulta will open at Dawley Farm Village this month, becoming the most recent national retailer to build a second Sioux Falls location on the east side. Smaller medical offices have been leasing space, and a child care center will help support a proposed office park in the development.

“Here’s what makes all this attractive to people moving out to this area,” Tysdal said. “At Copper Creek, for example, people live a minute away from Target. They live a few minutes from Walmart. That, in my opinion, is very attractive to these people.”

That’s a reality that resonated both with Jim Dunham & Associates when it decided to put in the Huntington Apartments at the southeast corner of 41st Street and Highway 11, and with Enclave Development out of Fargo, which is making its first foray into Sioux Falls by developing and constructing the Silverthorne Flats complex in the southeast quadrant of 26th Street and Highway 11.

The Huntington Apartments are comprised of three four-story buildings with 60 units each and underground parking in each building. A separate complex in the middle has a pool, community room, guest suite, athletic facility and a leasing office. Jim Dunham said rents range from $970 to $1,200 for one-, two- and three-bedroom apartments.

“We’ve got one of the buildings delivered and being occupied,” Dunham said. “We started leasing that first building Aug. 1, and the other two buildings are substantially complete and about to be delivered also. I would say people will be moving in there by the end of the year.”

Just up north at the southeast corner of 26th and Highway 11, Silverthorne Flats is a five-building apartment complex with 230 apartments and a standalone clubhouse, said Donna Block, president of Lux Communities, the property management company working with Enclave.

Four of its buildings in the complex are open, Block said, and the last one will open in early 2020. Its clubhouse area includes an outdoor pool with a patio that features a grill and fire pit. Inside the clubhouse, residents enjoy a big-screen TV, pool tables, retro arcade games, shuffleboard, a yoga stretching area, plus cardio equipment and free weights. Silverthorne’s leases for efficiency, one-, two- and three-bedroom apartments range from $775 to $1,275, Block said.

Both Huntington and Silverthorne cater to animal lovers. Silverthorne has a pet washing and grooming room. Huntington has a dog run and dog park.

“You know, that young professional or that young person just out of college, a high percentage of them own pets,” Block said. “So if you’re not catering to their pets, they’re not even going to look at your property.”

Pet friendly, then, is a must. But the other big selling point about these complexes is location, Dunham and Block said. “We’re basically one block off of South Dakota Highway 100, so people will be able to get on that and go anywhere,” Dunham said. “The largest park in Sioux Falls (Harmodon) is right across the street. And we’re a mile from Dawley Farm and Walmart.”

That convenience of access coupled with growing area neighborhoods has brought Diamond Field Storage LLC to the southeast corner of 41st Street and S.D. 100 with its three-story, climate-controlled, self-storage venture.

Ron Bowden, managing partner of Diamond Field Storage, said his group plans to open the doors to Storage Center on or immediately after Jan. 1, providing a service with a high-end security system, large unloading bay and temperature control that “is unlike almost anything you would find in Sioux Falls.”

“This is not your grandfather’s storage,” where stored items are subject to pests, dust and the forces of unregulated climate, Bowden said. “The customer wants something that is clean, secure and convenient.”

He envisions Storage Center as an extension of people’s households, where they move items back and forth to their homes based on seasonality or other needs. In that vein, the location near existing and evolving neighborhoods is ideal because of proximity and easier access, Bowden said. Instead of dealing with a facility in a busy commercial area, he said locating it just off the intersection closer to residential provides “a little slower pace that I think people want.”

He also thinks those people will be surprised by Storage Center’s amenities and its affordability. The business is already getting inquiries about availability and is directing people to a rapidly-filling “first dibs list” on its website at StorageCenter.com. Once the center opens, Bowden said they will go down that list and notify customers.

It appears that the potential neighborhood customer base for Storage Center and other area businesses will grow larger in the years ahead. Ingle with Harr & Lemme and Tysdal with the Van Buskirk Cos. are both involved in developing roughly 200 acres of land on the southwest corner of 26th Street and S.D. 100 now owned by the Kappenman family.

Harr & Lemme is buying roughly two-thirds of that to turn into as many as 250 single-family dwellings. Tysdal said Van Buskirk is brokering the sale of the remaining 60 acres of frontage property for commercial, office and multifamily development.

“I think you’re going to see a mix of professional users, medical users on that property,” Tysdal said. “On the commercial end, it wouldn’t be far-fetched to see a hotel. The hard southwest corner is zoned commercial. That’s going to be likely a big medical user or hotel of some sort.”

The engineering work on that corner is just beginning, Ingle and Tysdal said. “The single family, you’ll see dirt moving next spring for that,” Tysdal said. “And in terms of commercial, office, multifamily, I think in the next 12 to 24 months, you’ll see activity there.”

There has already been significant development in the southwest corner of 41st Street and S.D. 100. Harr & Lemme moved its office to the property three years ago, Ingle said. Kum & Go bought an acre to the north for a convenience store. Nearby, a new location for B&G Milkyway has gone in, as has the SportGames Center – a 22,000-square-foot indoor sports complex that includes areas for basketball, baseball, volleyball and other sports. The SportGames building also includes Truks-N-Trykes Playcare.

And they’re not done, Ingle said.

“Right now, we’re working on some site planning and inching toward a contract with a national retailer right at the hard corner of 41st and South Dakota 100,” he said. “About a year ago, our ownership group in that parcel … acquired a retail liquor license so that we could market that parcel for a neighborhood sports bar and restaurant, and we’re pursuing that. We’ve got an interested operator now that we’re pursuing that with, so there’s good activity there.”

With 5.5 acres still remaining, Ingle said he sees the possibility of four or five more deals being done at that site. “We have an optometry clinic that has been prodding away over the last year or so at some preliminary ideas to build a clinic,” he said.

Certainly, development will continue north of Arrowhead Parkway and the Menards complex in what is called the Foss Fields projects, Tysdal and Ingle said. There are 400 acres to be developed on both sides of the part of S.D. 100 called Veterans Parkway, from Arrowhead Parkway to Madison Street.

While that development could include residential, with apartments and homes, Tysdal has said his company has had conversations with large retailers about a potential next wave of retail north of Menards. Any big-box retailer over 75,000 square feet would have to go north of Menards as there is no additional big-box zoning – C-4 commercial – remaining south from Century East at Dawley Farm, he has said.

“The corner of East Sixth Street and Highway 100, that will be a big retail commercial corner,” Tysdal said. “A lot of the big retail is going to move north from Dawley Farm, not south. It might take a decade or more, but someday, yes, the commercial development will continue to make its way north.”

In time, S.D. 100 will veer off of what is now Highway 11 near 57th Street and begin working its way farther south and west to Interstate 29. As that occurs, there will be an exit off of S.D. 100 near the Walmart at 85th Street and Minnesota Avenue, Tysdal said. There will be exits off of the highway at Cliff, Western and Louise avenues as well.

All that will likely spur development as well, Tysdal predicted.

“There’s a lot that has happened,” he said. “There’s a lot more that will happen. Can you imagine living in Luverne, Minn., and you can be to Target in 20 minutes? That’s going to be very attractive. So again, yes, I believe that highway will make a huge difference in terms of traffic on the east side.”