June 5, 2024

Downtown’s next new development is set to move forward along East Eighth Street.

Iowa-based Christensen Development plans to purchase about 4 acres of former rail yard land from the city of Sioux Falls east of 8th & Railroad Center.

The land sits south of Eighth Street, and the development plan includes four multi-story buildings plus a parking ramp.

Renderings by ISG

Jake Christensen, who founded the firm in 2003 in Des Moines, was introduced to Sioux Falls by ISG, which designed the nearby Cherapa Place expansion and located its office there.

His estimated $95 million plan “really hasn’t changed dramatically” from what was announced in early 2023, Christensen said.

“We’ve been working diligently to land our anchor tenant,” he continued, calling a deal “really close” on an office tenant that would lease a story and a half of the first building, which is planned as five stories and 56,000 square feet. The first floor is planned as retail, and the upper floors would be all office with a shared rooftop gathering space.

“I think now that we’ve got that one seemingly locked down, we’re pushing hard on the balance of the retail, and now we know what we have left for the six or eight tenants we’ve been holding off from the office standpoint,” he said.

Based on current demand for downtown office space, Christensen said he “absolutely” thinks the market can support another new building.

“With Sioux Steel and Cherapa, their floor plates are larger and we’re really experiencing that our floor plate would offer opportunities for the 3,000 to 10,000-square-foot tenants to have significant visibility, window line and presence,” he said.

On the first floor, Christensen said he’s working with a Twin Cities restaurant that he described as “an awesome brunch concept” as well as a brewery and another retailer from Iowa.

“If you look at some of our projects in Des Moines, we spend a lot of time making sure we get the right tenant on the first floor, especially because it sets the tone,” he said.

The project hasn’t yet been named. The balance of the property is planned as three apartment buildings totaling 233 units and a parking ramp with 180 spaces to support the development.

The apartments would be less geared toward the luxury market and designed more for other professionals seeking a downtown lifestyle, Christensen said. The development will include a rooftop amenity and could include a pool, he said.

“I think Jake moving forward with this project is such a testament to the strength of the market, on top of historical investment being made north and south of him,” said Jeff Eckhoff, director of planning and development services for the city of Sioux Falls.

“The capacity is still there.”

Christensen’s ability to bring a new perspective to the area is valuable, Eckhoff added.

“A lot of the initial tenants are from out of town, which is a whole new aspect and part of why we’re excited to be working with Jake,” he said. “He introduces a new market to Sioux Falls, new design ideas and we’re hoping to see new tenants. So I think it’s a great complement to what’s been going on here.”

The deal will require approval from the Sioux Falls City Council and the development is requesting tax increment financing to support the parking ramp, environmental work and blasting and other site improvements. The land currently is being used for overflow parking and generates no property taxes. Its estimated future value is $45 million initially and $60 million by the end of a 20-year TIF. Some of the land is being retained by the city for a bike trail connection.

ISG is serving as the architecture firm on the development, and Journey Construction is the general contractor.

Christensen hopes to begin some site work yet this year and open the first building and the parking ramp likely in early 2026. The apartments wouldn’t start until a good portion of the lofts currently for lease downtown are absorbed, he said.

“I committed to (Cherapa developer) Jeff (Scherschligt) that we wouldn’t start putting units on the market until he reaches stabilization and I fully expect he will be fully stabilized before we begin putting units on the market,” Christensen said.

The land sale would leave just one parcel of the former rail yard still available to purchase, a more oddly shaped triangular piece off Sixth Street behind LSS.

“It’s always out there for consideration and obviously it’s probably best developed at some future time along with our partners at LSS,” Eckhoff said. “We have had good discussions and they have been good partners with the city and provide an essential service for residents, so we’ll work with them to maximize the site when the time is right.”