Feb. 10, 2025

For years, the Yankton Mall struggled.

A 1960s-70s-era shopping center in the center of town, “it was substantially vacant,” said Dave Mingo, community and economic development director for the city of Yankton.

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Throughout the years, JCPenney, Pamida, maurices, Staples and smaller retailers had filled the property.

One by one, they closed, until “it was just a blighted eyesore in the middle of the community on our busiest street,” Mingo said. “It was falling into disrepair, and we were looking for local ownership.”

That came in the form of Matt Evans, who purchased the more than 250,000-square-foot property in 2023 and has renamed it Event Central. At the time, Dunham’s Sports remained, but when Ryan Tysdal of Van Buskirk Cos. was hired to fill the vacancies, it meant finding the sort of national retailers willing to consider a community the size of Yankton — with a population of just over 15,000.

It turned out, the interest was there.

Late last year, the community announced Hobby Lobby, Marshalls and Five Below would be filling 100,000 square feet of space in the building, bringing three new national names to town.

“It’s a totally new offering for the community in Yankton,” Tysdal said. “The broader story is you have all these national junior-box retailers that do well in Sioux Falls, and then they’ve been really attracted to these tertiary markets around the state. Markets like Yankton or Watertown that weren’t even on the radar half a dozen years ago suddenly are highly sought-after by retail dealmakers because they’re existing buildings.”

For retailers like the three headed to Yankton with business models that revolve around value-priced goods, the margins often don’t accommodate the cost of building new, he continued.

“New construction just doesn’t work right now,” Tysdal said. “It’s just too expensive for large-box space. There’s demand; we just don’t have the product.”

So instead, retailers such as Marshalls, Planet Fitness and Harbor Freight are filling old Herberger’s and OfficeMax spaces in cities such as Aberdeen and Watertown.

The Northridge Plaza mall in Pierre has T.J.Maxx, Hobby Lobby and Five Below.

“I think for them if they need to grow, that’s where,” said Raquel Blount, vice president of commercial real estate at Lloyd Cos. “You can’t just continue to overbuild these primary markets. And as long as they’re right-sized and the economics are there, then these are great markets to be profitable and operate.”

In Sioux Falls, existing big-box or junior-box space increasingly is hard to find for retailers, especially in major traffic areas such as around The Empire Mall. There aren’t many closures, and when there are, the spaces tend to draw fast interest.

Ashley furniture store was the winning tenant among multiple interested in the former Bed Bath & Beyond space, while KPOT Korean BBQ & Hot Pot filled a former Dress Barn, and Urban Air Adventure Park is going into the former Hobby Lobby space.

“New construction doesn’t work right now for retail. It’s just too expensive for large-box space,” Blount said. “There’s demand, we just don’t have the product. I could do a handful of junior-box national retail deals if I had existing space available in Sioux Falls.”

In Yankton, the community also offered more than just cheaper existing space. The city commission approved a 10-year sales tax rebate, returning the city’s 2 percent sales tax on revenue of up to $1.7 million generated on the property to the owner, who then can use it to offer more favorable leases.

Mingo calls it “one of the few tools we have in our toolbox to help.”

While it’s a more aggressive incentive than granted previously, the community has offered a 10-year sales tax abatement on 1 percent multiple times, including more than a decade ago to land Menards.

“Our commission is pretty conservative with the use of that tool,” Mingo said. “We target areas where we’re experiencing retail sales leakage.”

In the case of Menards, the community addressed a gap in home improvement retail, and now “we’re selling more home improvement items per capita than a town typically would this size,” he said. “We flipped that 180 degrees.”

Construction is underway at Event Central, with the hope of retailers taking occupancy in the coming months and opening yet this year.

As word of the deals spreads through the community, “relief I would say is a really good word” for the collective reaction, Mingo said.

“Finally, that blighted space is being repurposed for the good, not just the developer but for the community. We’ve had a ton of people asking about clothing stores, especially. A lot of people online shop, but there’s a big segment of the population that wants to try things on in person. I think joy and relief would be the best two words to describe it. It was a long time in the works.”

The newly announced deals in Yankton also are generating additional interest from retailers.

“You get a certain level of momentum,” Mingo said. “I know of at least three others that are constantly monitoring us.”

A former Staples space is 22,000 square feet with a loading dock, which “is attractive to many potential tenants,” Tysdal said. “We also have a couple additional spaces ranging from 6,000 to 12,000 square feet.”

The sales tax rebate made the difference, Mingo added.

“From what the developer tells us … it’s what allowed the deal to happen,” he said.

It also makes a conversation about coming to Sioux Falls more challenging, Tysdal added.

“All these tertiary markets are giving municipal incentives to get retailers there,” he said. “That is a concept I believe Sioux Falls is likely going to have to embrace to see another wave of retail development in our market.”