May 22, 2023

It won’t be long after the Sioux Falls Bed Bath & Beyond closes that a new retailer takes its place, Ryan Tysdal predicted.

“Immediately,” the Van Buskirk Cos. broker said. “There’s already multiple tenants negotiating on it, and they’ve been eyeing the space for over a year.”

The rare available space at Empire East reflects the continued appeal of the Sioux Falls market, he said.

“I know of one national  retailer working on it for months, and it’s a new retailer to the market, so I think it will backfill instantly.”

Despite the challenges of increased construction and financing, retail deals haven’t slowed in the city.

“This has been the busiest first quarter I’ve had in 11 years,” Tysdal said. “It’s been very active. Retailers are growing. Retailers are adding locations. It’s a lot of existing retailers or restaurants in the market adding locations purely because they do well in Sioux Falls. Sioux Falls continues to grow, and they want to grow along with our community.”

This week, a few Sioux Falls commercial real estate brokers are attending the annual retail real estate convention in Las Vegas put on by ICSC, which stands for Innovating Commerce Serving Communities — the organization formerly called the International Council of Shopping Centers.

“I just find it’s very productive post-COVID,” said Raquel Blount, vice president of commercial real estate for Lloyd Cos. “I feel like people there are active and meeting, and there’s lot of activity. It’s strong. And there are lots of good educational opportunities, and that’s equally important, just being around hearing how people are dealing with the environment of higher interest rates and development and construction and just creative ways to keep activity moving forward.”

One frequent exhibitor at the convention, Crunch Fitness, already has announced plans to backfill one of the few remaining “big box” spaces in Sioux Falls — the former Gordmans on the campus of The Empire Mall.

Because the available space offers 60,000 square feet, it will become the largest Crunch Fitness in the nation, according to Hiba Abduljawad, chief marketing officer for the Crunch Fitness Orlando-based franchise group.

“With all these Bed Bath & Beyonds, the Gordmans, the Steinmarts, we’re picking up those boxes that are coming,” she said.

“The (Sioux Falls) location itself I feel is very fitting as suitable for what we aim to accomplish in the market. We aim to instill health and wellness into the lives of everybody in Sioux Falls. I feel like that location is centrally located, it has a good population size, so we’re very excited about coming into the former Gordmans space.”

Crunch Fitness plans to open later this year.

“Crunch Fitness will be a great addition to The Empire Mall property and another first-to-market brand for Sioux Falls found right here at The Empire Mall,” said Dan Gies, the mall’s general manager, adding that “sales for the center are solid across most categories.”

Throughout the city’s perennial retail corridor — 41st Street — spaces are being filled. Jacky’s Restaurant leased the former Fuddruckers space nearly as soon as it became available, for instance.

“Existing box space is down. We’re down to the former Hobby Lobby and Fareway, and we have multiple LOIs (letters of intent) we’re negotiating on those,” Tysdal said. “You have an empty Sears box, but if you take At Home (for example), they wanted to be in the market but didn’t want to be in the mall, so a lot of tenants looking for box space aren’t necessarily looking for mall anchor space.”

Lake Lorraine will add Five Below later this year and has some activity in process on its retail building between there and Dave & Buster’s, Tysdal said.

The Foss Fields north of Menards on the east side also is drawing interest from multiple national retailers, he said.

“I think at some point you’ll see full-service restaurants on the east side,” Tysdal added. “There’s too much population growth for some of these restaurant users to ignore it much longer.”

The northeast also is the next home for Lewis Drug, which is under construction next to the new Sanford Health clinic on the northwest corner of Madison Street and Veterans Parkway.

Retail sales support the growth, CEO Mark Griffin said. Lewis is nine months into its fiscal year, and “we’re running ahead of last year — fairly well ahead,” he said. “We’ve got our friends in pharmacy, both staff and clients, to thank for that, but also our garden center season really kicked off strong. It’s a big deal for us. It’s our second-biggest division, and that’s been excellent. People have pent-up demand after the winter months, and it’s been tremendous.”

Shoppers also are showing signs of cautiousness, though, Griffin said.

“It’s definitely a ‘have to’ not a ‘want to’ retail environment. People will buy the fringe items but not as casually as they used to. And a lot of people (retailers) are struggling around the country. I think we’re kind of in a bubble here, fortunately.”

Other retail centers that will be marketed at ICSC’s event include the former Landscape Garden Centers property at 81st Street and Minnesota Avenue, the area around 57th Street and Veterans Parkway, the Sanford Sports Complex, Dawley Farm Village and Empire Place, which rapidly filled with national retailers in front of The Empire Mall and is leasing out its final spaces.

“We’re excited because we have retail opportunities in all sectors of Sioux Falls,” Blount said. “So anyone looking for space, we have property. We can accommodate them.”