March 16, 2026

Vacancy in the Sioux Falls multifamily market ticked up to start the year.

A semiannual report from the South Dakota Multi-House Association found that the overall vacancy increased to 6.62 percent in January from 5.68 percent in the previous reporting period, representing 954 vacant units across surveyed properties.

A total of 14,409 units responded to the survey this cycle.

That makes it somewhat hard to compare with one year ago, when 20,000 units reported and the overall vacancy rate was 9.46 percent.

The report “reflects continued movement in the local rental housing market,” according to an analysis from the organization. “This shift signals a modest rise in availability as new inventory continues to enter the market and absorption adjusts accordingly.”

Overall occupancy “remains strong at 93.38 percent, “underscoring the sustained demand for rental housing in the Sioux Falls area,” it said. “While the market is showing signs of normalization compared to tighter conditions in prior cycles, it continues to operate from a position of relative stability.”

Occupancy for market rate properties increased from 5.52 percent in July 2025 to 6.41 percent in January, with a reported 167 units of new construction now leasing. Those won’t be included in the occupancy report until they stabilize at 85 percent occupied.

“Overall, this is in line with what our portfolio is experiencing,” said Ashley Lipp, vice president of residential property management for Lloyd Cos.

“We have seen a stronger than normal February, and March is typically one of our busiest leasing months, so I expect to see the market tighten up even further as we head into spring.”

At Cresten Properties, “we were lower than that — around 95 percent on all our stabilized products and didn’t dip lower throughout the year and same in January,” senior partner Erica Mulally said. “We’ve been pretty steady through and through around 95 percent.”

Rents have plateaued or even come down a bit, according to the properties surveyed.

Apartment operators report that while some incentives for leasing remain, they’re cutting back.

After a flat year in 2025, “I anticipate rents going back to their normal cycle of 2 to 3 percent increases throughout 2026,” Lipp said.

“There are still some concessions being offered, but those will be tapering off as we head into the busy months, so if you are looking to move this spring, it’s better to secure your new home now while the specials are still available.”

In the affordable housing sector, vacancy increased. Department of Housing and Urban Development properties saw an increase to 3.51 percent vacancy in January compared with 1.85 percent in July 2025, while tax credit properties increased to 8.21 percent from 7.17 percent in July.

“When the market softens a bit, we tend to see more availability at our affordable housing communities as more people choose to live with roommates or family members to save on costs,” Lipp said. “However, we have seen our affordable portfolio rebound in February and expect that by the end of March it will back in-line with our market rate portfolio.”

In 2025, the city issued permits for several large apartment projects. The largest at more than $42 million was the Good Samaritan Society senior living community near 57th Street and Veterans Parkway.

Three of the top five permits were from Empire Cos. Nova Apartments are underway at 6200 S. Ness Place, near 69th Street and Sycamore Avenue.

“I think it’ll just be continued improvement and activity around that location,” co-owner Brady Hyde said. “It’s at the end of the sewer line for now, and it’s going over well. The market seems to like that location.”

There will be 174 units total, with the first 60 plus a clubhouse coming in April.

Empire’s other large permits for the year were additional phases at 41 Ellis at 3400 S. Broek Drive and The Wondery at 5600 S. Rateliff Ave.

“Overall occupancy has been pretty good. We’re 93, 94 percent … so our occupancy has been reasonable,” Hyde said. “We haven’t been able to achieve a lot of rental rate increases. (Incentives) definitely dissipated in general but still more than we’d like.”

This year is starting off solidly with new construction. Through February, the city issued permits for 270 units, compared with 192 last year and 109 two years ago.

This year’s construction will include the third phase of Cresten’s Brix apartments in northwest Sioux Falls at 3909 N. Olympia Drive, where the plan is to build 144 more units in phases for a project called The Vertex.

“We’ve started moving dirt and plan on getting foundations going as soon as the ground thaws in the spring and hopefully the first building turning over 10 to 11 months after that,” Mulally said.

Lloyd Cos.  is opening two- and three-bedroom townhomes with attached double-stall garages at Harvest Ridge near 41st Street and Ellis Road and at Splitrock Village near 26th Street and Six Mile Road, which offers apartments, townhomes and a large amenity package.

Apartment construction has slowed downtown as properties continue to lease up. The One2 on the south end of downtown offers studio through three-bedroom units and is still in lease-up.

“These are unlike anything else downtown and offer a more affordable price point,” Lipp said.