Sioux Falls apartment vacancy edges up to start year
Feb. 29, 2024
A biannual survey of apartment occupancy in Sioux Falls is showing some increase in vacancy, with more expected as the year continues.
The South Dakota Multi-Housing Association analyzed almost 16,000 units reporting to obtain an overall vacancy of 6.05 percent. That’s up from 5.6 percent in July 2023 and just below the occupancy level seen three years ago.
“The influx of new construction units continue to affect the market,” according to an analysis included with the report.
“This will most likely continue through 2024 and into 2025 as we continue to absorb the new units.”
As the city of Sioux Falls continues to experience significant multifamily construction, “this surge in supply may lead to a potential softening of rents and raise the likelihood of concessions in the foreseeable future,” the report predicts.
Vacancy for conventional properties rose slightly from 5.25 percent in July 2023 to 5.87 percent in January and reflecting almost 13,000 units. There also are 2,583 units that are newly built and now leasing. They won’t be included in the occupancy calculation until they stabilize at an occupancy of 85 percent.
A look at rents shows an obvious increase in the past few years, with the average two-bedroom now renting for almost $1,200 compared with $827 in early 2020. The average three-bedroom has gone from $971 in early 2020 to $1,456 four years later.
Tax credit properties decreased slightly in vacancy from 7.54 percent in July 2023 to 7.21 percent in January. There were 2,691 total units reported, with 194 of them vacant.
HUD properties saw an increase in vacancy from .93 percent in July 2023 to 2.34 percent in January. There were 214 units reported, with five one-bedrooms vacant and no available two-bedrooms. No new HUD units are under construction at this time.
The city of Sioux Falls issued building permits for 7,324 multifamily units last year, compared with 3,343 in 2022 and 1,821 in 2021. Here’s a look at the largest projects by value:
“The steady demand for multifamily properties continues to demonstrate resilience, reflecting the enduring appeal of renting your home,” the report said.
“The market, as we know, is influenced by various external factors, and staying attuned to these dynamics is crucial for our members. The ever-evolving economic landscape and potential shift in what our consumers want necessitates a strategic approach to navigating the uncertainties. We remain optimistic about the opportunities the Sioux Falls market presents.”
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