Jan. 9, 2025

Sioux Falls growth seems to be normalizing, both in building activity and population growth.

For the fourth consecutive year, city building permits ended the year with more than $1 billion in valuation. The city estimates that the population grew to just under 220,000 people, representing 2.6 percent growth, or almost 5,700 people.

“There’s still an incredible amount of investment that’s happening in our city and our community right now,” Mayor Paul TenHaken said in announcing the year-end report Thursday.

“I really believe this is going to be our new standard, our new benchmark being about $1 billion.”

The 2.6 percent population growth also returns to historic growth levels after spikes in recent years.

“It’s pretty typical for what we’ve been experiencing as our new norm,” TenHaken said, adding that the consistent growth could move Sioux Falls up to between the nation’s 110th and 120th largest cities.

At $1.076 billion, building permit valuation was below $1.11 billion in 2023 and behind the record of almost $2 billion in building permits in 2022, when major projects including two downtown redevelopments were issued.

The number of building permits issued at 6,183, was down from 7,324 in 2023 and below a high of 11,171 in 2022 that was driven by storm-related repairs.

Last year, 161 building permits were issued for new commercial buildings, which consisted of 87 apartment buildings and 74 permits for other new business construction. The total valuation for new commercial buildings in 2024 was $602.4 million.

In 2024, commercial construction in Sioux Falls included:

• $67.3 million for manufacturing.
• $171.6 million for apartments.
• $91.1 million for office, educational and institutional occupancies.
• $272.4 million for all other commercial buildings such as strip malls, hotels and restaurants.

The total construction valuation for commercial additions, renovations and remodels in 2024 was $172.2 million. Here’s how that compares with previous years:

• $215 million in 2023.
• $340 million in 2022.
• $266 million in 2021.

Including apartment buildings, permits were issued for 14 commercial projects in 2024 with construction valuations of $10 million or more.

Here’s a look at the top projects by construction valuation:

The third quarter was the strongest for building activity, TenHaken said.

“People and developers really kind of waited the first half of the year,” he said, pointing to uncertainty around interest rates.

Building costs are a factor bringing “a lot of headwinds,” he added.

For instance, the same fire station the city built for $3.2 million in 2020 now is budgeted at $6 million when the next one is built in another location.

“Same blueprint, same architect, same everything, so we’re dealing with that as well,” he said.

While 2024 lacked for “mega projects,” the diversity of permits is encouraging, said Kevin Smith, assistant director of planning and development services.

“One of our benefits is that we’re not entirely dependent on just one thing to be successful,” he said.

In housing, single-family permits increased to 532 after falling to 421 the year before.

The residential sector also had a strong third quarter, Smith said.

“The single-family housing market is picking up again because people are getting foundations dug and continuing construction through the winter. They’re not stopping,” he said.

Residential additions and remodeling projects finished the year at $87.2 million, down from $98.7 million in 2023.

The multifamily sector also looks like it might be rebounding a bit to start the year after finishing at 1,256 units in 2024.

“If you were to look back over a 20-year period, what you would see is almost a predictable trend of peaks and valleys, where there’s a lot of apartment construction and it takes awhile for those apartments to get filled up where they’re reaching capacity,” Smith said.

The first couple of weeks of the new year already have brought permits for 94 apartment until, with two more buildings totaling 340 units in for plan review.

“Within the next 60 days we’ll be permitting 400 units,” Smith said. “2025 seems to be starting off as a strong year in housing.”

While there’s momentum entering the new year, “the big thing for us is to continue to keep our community investable,” TenHaken said, pointing to everything from planning to policies and the cost of living and doing business.

For an interactive map of last year’s building activity, click on the locater pins below.

Mega-projects combined with softness provide mixed outlook for 2025