Sioux Steel nearly $200M development plan includes Canopy by Hilton hotel

Nov. 25, 2019

A nearly $200 million plan to redevelop more than 7 acres of the downtown Sioux Steel site will include a seven-story Canopy by Hilton hotel, a nine-story mixed-use building and a parking ramp surrounded by 100 apartments.

“It’s huge. It’s going to change the complexion of downtown,” said Jake Quasney, executive vice president of development for project developer Lloyd Cos.

The 217-room hotel will include a bar overlooking Falls Park, a coffee shop, a restaurant connected to a pedestrian alley, a ballroom that will seat up to 500 people and multiple smaller meeting spaces to host conventions or corporate events.

Canopy is an “upper upscale” brand focused on locally inspired stays that launched in 2014 and is mostly expanding only in the top 50 cities worldwide. The closest one to Sioux Falls is in the Mill District of Minneapolis.

“It’s a unique brand that targets forward-thinking communities that want to create a neighborhood,” Quasney said. “Having a brand that recognized the importance of community was crucial to this. It create an openness and a concept that welcomes the community, and that was huge for us.”

The hotel is scheduled to break ground in the spring and open in 2022.

“This is a neighborhood hotel, really meant to be an extension of the neighborhood,” said Gary Steffen, vice president and global head of Canopy by Hilton.

“Working with our owners and designers and architects, it’s going to feel non-branded. It’s going to feel like the Sioux Steel redevelopment and however they interpret bringing that to life from an architecture and design standpoint, and once you enter those doors, it’s going to make a statement.”

The Canopy by Hilton in the Minneapolis Mill District.

It’s not going to feel like a traditional hotel, Steffen said. The goal is to create a unique, boutique, residential-feeling property.

“It should feel like walking into someone’s home — the warmth of the materials used and the spaces created, all of that. Yes, it’s part of Hilton — one of our 17 brands — but it is the hyper-local brand, which is all about bringing great neighborhoods to life.”

Canopy hotels emphasize artwork, offer guests a locally sourced welcome gift, host evening tastings of local microbrews and cocktails, and include access to orange Canopy bikes to explore Sioux Falls.

“We are so proud to be working with Canopy and can’t wait to introduce this brand to Sioux Falls,” said Jennifer Seifert-Brenna, who leads the Lloyd hospitality division.

“There are less than 12 Canopy hotels open in the world right now. This brand is developing in markets such as Washington, D.C.; Chicago; London; and Reykjavik, so to have their leadership decide that the Sioux Steel site was a fit says so much about our community and the fantastic opportunity that awaits us.”

The hotel will connect via a skywalk to a 900-stall, eight-story parking ramp, which will be wrapped by 100 apartments and 30,000 square feet of retail or office space.

The parking ramp will be owned and maintained by Lloyd Cos. That phase of the development is scheduled to open in 2022.

“In order to achieve the amount of density I think the community wants on a project like this … and that looks out 40 years from now, you need more parking than we could sit on the street and in surface parking lots,” Quasney said.

Lloyd worked with a parking consultant to maximize the efficiency of the ramp, from its construction – priced at less than $20 million for 930 stalls – to its design, which includes options for repurposing the ramp if parking needs evolve in the future.

“You’re not going to see a parking ramp,” Quasney said. “We’re focused on doing something where we’re going to enclose it. You’re going to see first-class buildings wrapped around a parking ramp.”

Lloyd Cos. is seeking $21.5 million in tax increment financing, which will require approval from the Sioux Falls City Council. It will be used to support the proposed parking ramp.

“Without it, the project will not happen as conceived,” Quasney said. “The whole thing starts to break down (because) we’ll have to build surface parking for all the projects. Its proximity to the river makes underground parking virtually impossible.”

There are several differences between the tax increment financing requested by Lloyd Cos. and the city’s failed public-private partnership involving a parking ramp at Village on the River.

Most critically: “We’re the ones taking the risk,” Quasney said. “We’re going to go out and guarantee a loan to finance the parking structure, and the only way that gets repaid is if we build something substantial enough to increase the tax revenue to the point where it does repay. That’s how we’re backing our promise to give the community something great.”

The 11-acre Sioux Steel property currently pays about $57,000 in annual property taxes, he said. The proposed development on 7 acres of it is projected to pay $1.5 million.

The plan is to bring the proposed TIF district to the Planning Commission and the City Council in the coming months.

Lloyd also is starting to talk with potential office tenants about space in the planned third element of the development — a nine-story building that includes 152,000 square feet of office space and 10,000 square feet of retail space. It’s scheduled to open in the winter of 2021 and was designed by the late Jeff Hazard of Koch Hazard Architects.

Quasney said it will be a unique turn-of-the-century design with an emphasis on clean, comfortable materials.

“We’ve had really good conversations with a handful of prominent office users that I think view this as a unique opportunity,” he said. “I think everybody sees it as something that doesn’t come along very often and in this instance will never come along again.”

Lloyd has been finding interest from restaurant groups in the development too.

“We have talked to local restaurant and bar operators who have interest in the site, and we continue to work on those conversations,” Quasney said.

“In addition, in order to not leave anything to chance … we’ve brought in consultants who have created incredible concepts like Manny’s Original Chophouse and Pittsburgh Blue Steakhouse out of the Twin Cities to help us create restaurant concepts to ensure for our hotel guests and office users that that activity exists.”

The project team for the Sioux Steel development includes:

  • Box Interior Design
  • Confluence
  • ESG Architects
  • Koch Hazard Architects
  • Norman Engineering
  • VanDeWalle Architects

Assuming tax increment financing is approved, construction will start as early as possible in 2020, Quasney said.

Sioux Steel has been gradually moving some of its manufacturing operation to a location it owns in Lennox. The office and main receiving building sit on the remaining 4 acres not yet being redeveloped and will remain for now.

“We’ve been operating on this site for 100 years and are now honored to make it available to the community,” said Hugh Dodson, Sioux Steel’s development director.

“Our hope is to draw people from all walks of life to share in this destination and build on the inclusiveness that began with the Levitt.”

Lloyd Cos. is committed to being “an exemplary partner” with the city of Sioux Falls, CEO Chris Thorkelson added.

“We appreciate the city agreeing to bring our proposal forward,” he said. “We look forward to opening up this site for the public to enjoy, and we are grateful to be involved in redeveloping this once-in-a-generation opportunity that will transform our downtown forever.”

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Sioux Steel nearly $200M development plan includes Canopy by Hilton hotel

A nearly $200 million plan to redevelop more than 7 acres of the downtown Sioux Steel site will include a seven-story Canopy by Hilton hotel, a nine-story mixed use building and a parking ramp surrounded by 100 apartments.

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