Aug. 7, 2025

The first hyperscale data center in Sioux Falls could serve major tech companies if it’s approved to be located in the northeast part of the city.

Gemini Data Center SD LLC is connected with a California-based family office listed under the name Michael Anvar that invests in real estate, renewable energy and technology. The group acquired 160 acres from Xcel Energy late last year and has started its city approval process to develop a large-scale data center there.

The site is about 1 mile south of the Veterans Parkway exit for Interstate 90, near the intersection with Rice Street. It’s just south of Xcel’s Split Rock substation and Angus Anson power station, allowing it to support a 500 megawatt power load.

“They’re committed and see the value,” said Kyle Peters, a partner with A1 Development Solutions, which is working with Gemini as it develops the site.

“If there’s this much power available from Xcel … it’s not a matter of if but when it’s going to be a data center because of the boom that’s happening. You don’t just find attainable power like this. It’s one of the largest data center projects being talked about in South Dakota right now.”

The project is early in design, so total square footage is being determined, “but there will likely be large, two-story, industrial-looking facilities,” he continued. “It would be comparable to the aesthetics in Foundation Park.”

Some hyperscale data centers end up being used by a single tech company — Amazon, Meta or Alphabet, the parent company of Google, for example — while others “build these facilities and rent ‘shelf space’ to whatever user wants it,” Peters said, adding that the developers are still deciding which model to use.

“We’re early on in this process, (but) this certainly could be home to Amazon, Meta, partnerships … in the future.”

The first step in the process is requesting the city of Sioux Falls to move the property from its Tier III growth area for annexation to Tier I, a rare leapfrogging of development planning but one supported by city officials and approved Wednesday by the Sioux Falls City Council.

Gemini has committed to funding the infrastructure improvements needed to develop the site, including water, fire protection, sanitary sewer and other utilities.

The land is contiguous to the existing city limits and in Sioux Falls’ future growth area.

“They had to agree to pay for all infrastructure improvements in order to bring them in,” said Jeff Eckhoff, the city’s director of planning and development services. “And that’s what they’ve done.”

The site could support 50 to 150 full-time position, including engineers and security, facilities and IT professionals, he said.

Gemini plans to be involved throughout development and construction, Peters added.

“They’re not looking to flip the land,” he said.

South Dakota is an appealing place for data centers because of its cold winters, which reduce energy and water costs. Many hyperscale campuses use a closed-loop cooling system that requires about 10 gallons of water per minute — comparable to a household faucet — or about two-thirds the usage of one home’s annual water consumption, Peters said.

“One of the big misnomers is that data centers are extremely loud,” he added. “There are fans on the side, and there’s noise that comes with that … but it’s no different than Xcel Enegy’s pump stations where power is being generated right now.”

Gemini does not plan to use the site for cryptocurrency mining, which is much louder, he added.

The area is close to the growth area for the city of Brandon, which encompasses everything east of Six Mile Road. The developers met with Brandon officials to answer questions, particularly about noise, Peters said.

“Brandon has the closest residential and will probably get employees who work here buying homes,” he said.

Sioux Falls will benefit from property tax on the land as well as sales tax charged for energy use, Eckhoff said.

“There’s a financial benefit to the city,” he said. “The impact to the city could be millions of dollars a year between property tax and sales tax.”

The next steps for the project include annexation and rezoning. Assuming those are approved, construction would start in 2026 with a facility becoming operational in 2028.

“I think once all the permitting and zoning with the city is done, they’d want to start as soon as possible to get ahead of the curve because the data center industry is taking off, and I think they want to stake their claim in the industry,” Peters said.