March 20, 2023

Nearly a decade after developers and public officials banded together to advance an interchange at 85th Street and Interstate 29, it officially has been cleared to move forward.

By signing a “finding of no significant impact” environmentally, state and federal officials formally approved the milestone project that’s expected to support major development in the years ahead.

“It’s awesome,” said Mark Cotter, the city’s director of public works. “There’s been progressive growth in the area, and this will complement it.”

In an unprecedented partnership locally, developers with land in the area banded together nearly 10 years ago to advance the concept that had been envisioned several years before that.

“It happened to be a really unusual spot where it was big parcels, they were all held by developers with good reputations and the resources to make it go,” said Joel Dysktra, CEO of RMB Associates. “So we just resurrected the proposal, and it’s been a really, really good story as far as cooperation of the private sector developers and the city of Sioux Falls and the city of Tea.”

Despite the developers advancing funds to support the process, including preliminary design, the interchange project still stalled for years. The pandemic interfered, and then the group had to respond to about 600 comments from state and federal officials.

“We restarted the full design work six months ago when we could see the end of the tunnel,” Dykstra said. “So they’re really in a position where it’s now wrapping up … but it’s all going well. I think final design will be put to bed this year.”

Funding for the construction has been secured.

“We’ve had tremendous support from the Washington delegation,” Dykstra said. “Sen. Thune was able to secure funding in the infrastructure bill, so there are all kinds of reasons it’s set to go. We just had to get the right signatures on the right pieces of paper.”

That happened this month, meaning there’s now a clear time frame for those considering development in the area. The plan is to finish design this year and to bid the project and have right of way secured by November 2024. Construction would start in 2025, and the interchange would open to traffic in the fall of 2026 or the spring of 2027.

In the meantime, “there are deals already going,” Dykstra said.

RMB’s Sage Meadows apartments are under construction near the future interchange, “and we’ll have people living there in 2024,” he said. “We have an offer for a convenience store on the corner. … I think it’s all happening, and it’s not going to take very long.”

His company is developing at total of 130 acres on both the east and west sides of the future interchange.

“There’s years worth of development there,” Dykstra said, adding future businesses “may not be ready to build, but they need to get the land secured if they want to be there.”

Recent land sales activity has given a glimpse of the area’s future. Orthopedic Institute purchased a parcel in Tea’s Bakker Landing development for a future two-story clinic and office that will relocate it from the Avera McKennan campus.

It’s located on the west side of the interstate and was developed by Sundowner Investments Group, led by Dan Lemme and being marketed by Harr & Lemme Commercial Real Estate.

OI “will fill in over time and figure out the complementary uses that are out there,” Harr & Lemme’s Joel Ingle said. “It’s always been our hope to develop more of a professional corporate office campus on the north end if the interchange were going to be built, and now it is.”

The OI announcement generated more interest in the area, he added.

“We’re already getting a bump from that. People are inquiring about property there, maybe not complementary use to medical but (knowing) the idea of how it’s going to develop (means) they could situate there instead of somewhere else.”

While Bakker Landing started with 270 acres, 115 acres have been sold, and 68 are pending.

“We’ve done really well,” Ingle said, adding the interchange now “changes our focus on who our target audience is. What we’ve sold out there we’ve been really happy with, but a lot of it has been light-industrial contractor shops.”

He anticipates increased interest from retail, food uses and convenience stores.

“Depending on the pace that things develop out in that area, you could probably see more higher-density retail on the east side of the interstate,” Ingle said. “The traffic flow shows more vehicles moving toward Sioux Falls as opposed to Tea, so if you were going to plant a big-box retailer, their market studies probably look better on the east side. We’ll pick up smaller complementary retail that will go along with it.”

Lloyd Cos. hopes to start development in the area next year, chief operating officer Jake Quasney said.

“What you’ll see almost certainly lead our portion of the development is a housing component to get some ‘heads on beds’ in the area,” he said. “I think you’re seeing a lot of things start to heat up out there. There are already apartments, the OI announcement is a really good one for that area, hospitality is going to be attractive, but I think if we get more people living there and more activity, that’s where we’ll see the commercial element really pick up.”

At least one of the four segments of the interchange has potential for heavy retail, he predicted.

“When you look at things like Dawley Farms or Lake Lorraine, I think it’s really the next area that has the opportunity to create a heavy retail presence in that regard,” Quasney said. “I think you will see some of that start to pick up. We’re glad to see it to this point. It’s been a really good partnership. Joel Dykstra and his leadership over the last few years working with the city and state and all the various groups to get it across the finish line has been huge. There’s a lot of good stuff happening.”