Jan. 12, 2025

Success can bring as many pitfalls as positives.

The business world is filled with examples of companies that experienced growth and then couldn’t manage it.

Sometimes, the leader and team who got the business to one stage aren’t the right fit or capable of evolving for the next stage. In other cases, meeting demand reveals flaws in a business model that struggles to scale. Success can expose you to riskier business relationships, culture challenges and any number of other hurdles.

Increasingly in Sioux Falls, I see a community that needs to be mindful not to become the proverbial victim of its own success.

Shortly before the end of last year, I had the opportunity to meet with the consulting team helping put together the next Sioux Falls comprehensive development plan update, known as Shape Sioux Falls. It will look out to 2050 and help guide planning and development-related activities.

If I’d had this conversation before the last update in 2016, I suspect I would have spent most of my time detailing which areas of the community I felt represented the next wave of growth — everything from the Veterans Parkway corridor to the proposed 85th Street interchange and key future major intersections in every corner of the city.

Instead this time, I found myself repeatedly emphasizing that this community needs a strong blueprint for managing growth that recognizes redevelopment often can be preferable to new development and that acknowledges the broader challenges a larger population represents.

I don’t think Sioux Falls ever sought growth simply for growth’s sake, but a number of things are happening today that demand we be disciplined in how we grow going forward.

First, there is unprecedented investment happening all at once in the road network around the outskirts of the city — both the Veterans Parkway corridor and the 85th Street interchange are going to be here and moving traffic in just a few short years. That naturally drives more interest in developing the outlying areas of the community.

Second, our fairly predictable 2.5 percent to 3 percent annual population growth seems to be back — but that percentage growth now is off a larger and larger base, meaning the 3,000 people we used to add annually to the community not all that long ago now comes in closer to 6,000. More people bring more demand for services, from public safety to amenities. Funding it brings a complex financial picture that demands we continue to grow the city’s revenue while not straining the city with expenses.

Third, the metro area is a presence in development to an extent that has never been seen before, which demands a greater level of regional thinking. When the mayor of Sioux Falls finds himself asking the people of Brandon and Tea to consider how much they shower during a record rain event, as happened last year, you know regionalization has arrived.

The best illustration I have for the approach I think needs to be taken can be found at 41st Street and Veterans Parkway, where a massive storage center is taking shape.

From a business standpoint, this makes total sense given the significant number of apartments in the area and single-family neighborhoods not far away.

But from a community standpoint, we now have what could have been a multiuse major intersection near a large park permanently hosting a less-than-attractive use that does little to encourage additional business activity. This is a problem zoning can fix going forward — and the sort of situation we need to be anticipating as we plan for development.

Here’s another example: Data centers, specifically hyperscale data centers, are scouting sites nationwide and beginning to look at the Sioux Falls area. Some of the nation’s largest tech companies could invest hundreds of millions in a single, massive project. On one hand, it’s a great headline. But on the other, it’s a big commitment of land and infrastructure, including power and fiber, for not all that many guaranteed jobs. Is there a place for it in the context of Sioux Falls-area economic development? Probably somewhere. But should we be so open in our efforts to generate activity that we attract multiple projects in a short time? I’d be cautious about it.

I think we need to accept that it’s OK to say no to new business activity if it doesn’t fit the community’s broader vision. It’s OK to put guardrails around growth. Sioux Falls has earned the right to wait for the right opportunities and not mold itself to accommodate every opportunity.

Sometimes in covering development, I think we use new building activity disproportionately as a benchmark for success. We’ve reached a point where anything less than $1 billion in permits could be viewed like a cause for concern. And I have no doubt we’ll surpass it again this year.

But consider this in a business context. While revenue is key — and record revenue is to be acknowledged — the bottom line matters more. Revenue without profit, without solid cash flow, without strategic leadership behind it, doesn’t keep you in business.

The key, whether a company or a community, is to grow in ways that also position you for the future. I’d rather see a new $30 million building filled with smart, driven people who will build their company but also stay here and start new businesses than a $300 million building with a few dozen Fortune 100 jobs. I’m increasingly more excited about redevelopment prospects than new development, despite the challenges that exist with it, because I think long term the investment is worth it.

The coming year is a chance to show what we prioritize as a community looking out 25 years. It’s important to set the right foundation now so we don’t let today’s success get the better of us tomorrow.

If you’d like to provide input for the next Shape Sioux Falls update, click here.