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NAI SIOUX FALLS
Year End Market Report
2007
∞ INDUSTRIAL
∞ RETAIL
∞ OFFICE
∞ LAND
∞ INVESTMENT
∞ MULTI-FAMILY
∞ CORPORATE SERVICES
∞ PROPERTY MANAGEMENT
INTRODUCTION
We are pleased to present The NAI Sioux Falls Year End 2007 Market Report, an analysis of the Sioux Falls
commercial real estate market. Our goal is to provide you with a detailed perspective on the area’s
vibrant commercial real estate market.
NAI Sioux Falls is one of Sioux Falls’ largest and most active commercial real estate firms. It is the Sioux
Falls area representative for NAI Global, the industry’s largest managed network of global real
estate service providers, comprised of over 3500 professionals in 300 markets in 45 countries.
The process of building the comprehensive computerized property database necessary to produce this
detailed report began in June of 1999 when Dennis Breske founded Sioux Falls Commercial, Inc. Through
the efforts of our licensed agents, summer interns and our full time database administrator, we have detailed information on 753 industrial properties, 635 office buildings, 988 retail buildings and 953 multi-family
properties. We are now gathering information on properties in the surrounding
communities of Tea, Brandon, Harrisburg, Dell Rapids and Hartford.
This report is being sent to approximately 3500 Sioux Falls area business leaders. You have been
selected to receive this report because you are either a current owner of commercial property in the Sioux
Falls market, or a professional serving individuals involved in the local commercial real estate
market.
NAI Sioux Falls’ agents are in the market daily, insuring the most current, comprehensive market
knowledge for our clients. Give us the opportunity to earn your trust, and we will deliver results.
Sincerely,
Dennis Breske, CCIM, SIOR, MBA
President and Co-owner
Troy Fawcett, CCIM, SIOR
Vice President and Co-owner
Methodology
The NAI Sioux Falls annual market update for the City of Sioux Falls is a comprehensive report designed to
provide you with an accurate, objective representation of the local commercial real estate climate. We have
drawn on our resources, expertise, and supporting data to compile this detailed snapshot of the local market.
The statistics have been extracted from our internal database, with up-to-date information supplied by our
brokerage and management staff. We have also utilized data available from the City of Sioux Falls.
our agents
Dennis Breske
CCIM, SIOR, MBA
President
Troy Fawcett
CCIM, SIOR
Vice-President
Tom Ode
Broker Associate
CCIM Candidate
Land Specialist
Kathleen Hovland
Broker Associate
CCIM Candidate
Retail/Office Specialist
Dan Tunge
Broker Associate
Industrial Specialist
Mike Hauck, J.D.
Vice President & Chief Operating Officer
Office Properties/
Business opportunities
Jeff Brooks
Broker Associate
CCIM Candidate
Multi-Family Specialist
Jim Wilber
Broker Associate
Ag Land Specialist
2007 Building Permit Statistics
I. New Residential Buildings
1. Single-Family Dwellings
2. Townhouses (40)
3. Duplexes (65)
4. Apartments (25)
New Dwelling Units
Building Permit Value
889 (-9%)
$127,111,551 (-6%)
234 (+95%)
$15,368,067 (-2%)
108 (+217%)
$14,921,069 (+292%)
426 (+19%)
$30,422,275 (+31%)
5. Other (2)
$679,000 (-84%)
II. Residential Buildings
1. Additions (545)
$5,000,719 (-25%)
2. Repair (859)
$4,119,920 (+13%)
3. Remodel (1254)
$10,259,138 (-26%)
4. Roofing and Siding (1234)
$7,270,271 (+12%)
5. Foundation (44)
6. Change in Use (9)
$2,179,400 (+356%)
1
7. Accessory Buildings (298)
$384,700 (-19%)
$825,914 (+15%)
8. Accessory Buildings-Garages (105)
$1,836,841 (+15%)
9. Other (93)
$
III. New Nonresidential Buildings
1. Light Manufacturing (13)
$9,578,000 (26%)
2. Heavy Manufacturing
3. Transportation (1)
$2,500 (-99%)
4. General Commercial (5)
$2,781,000 (-72%)
5. Intensive Commercial (10)
$9,240,800 (-60%)
6. Office, Institutional (31)
54
7. Entertainment, Recreation (8)
$88,012,755 (+28%)
$10,114,639 (231%)
8. Agricultural (1)
IV. Nonresidential Buildings
1. Additions (58)
$57,852,852 (+36%)
2. Repair (70)
$1,220,960 (-62%)
3. Remodel (444)
$69,808,722 (+89%)
4. Foundation (33)
$9,493,500 (-25%)
5. Roofing and Siding (90)
$2,624,913 (-10%)
6. Change in Use (25)
35
7. Accessory Buildings (13)
$8,328,500 (+124%)
$241,018 (+45%)
8. Accessory Buildings-Garages (3)
$58,732 (-99%)
9. Other (72)
$15,478,019 (+172%)
V. Demolition and Razing of Buildings
1. Main Buildings (71)
2. Accessory Buildings (18)
State Exempt Projects
Total Number of Permits in all Categories
Total Amount of All Categories
SOURCE: Planning and Building Services
Note: Percentages + or—relate to last year’s statistics
$16,800,000
6428 (+0.1%)
$523,125,775 (+18%)
2007 Building Permit Statistics
Permits Issued: The total number of building permits issued in 2007 totaled 6,428, only 0.1 percent above permits issued in
2006, which was 6,419. The number of permits issued in 2007 is significantly lower than the record number of permits,
which totaled 7,722 in 2002.
Residential: In addition to the 889 single-family units issued in 2007, there were 108 duplex units, 234 town home units,
and 516 apartment units for a total number of 1,747 permitted dwelling units. The total number of dwelling units permitted
increased from 1,568 in 2006 to 1,747 in 2007, an increase of 11.4 percent.
The cumulative number of dwelling units issued in 2007 is the third highest number of dwelling units issued in a single year.
Commercial: Leading the increase in construction valuation was the number of commercial projects that were submitted in
2007. There were 127 projects that were issued above the $500,0000 valuation; of those, 67 separate projects were submitted at $1,000,000 or more of construction valuation.
The ten largest projects submitted in 2007 are:
Sanford Children’s Hospital, 1600 West 22nd Street—$35 million
University Center, 4800 North Career Avenue—$16.8 million
Midland National Life Insurance, 5400 South Solberg Avenue—$15 million
Sioux Falls Surgical Addition, 910 East 20th Street—$11.55 million
Sanford Remodel and Additions, 1305 West 18th Street—$9.78 million
Avera McKennan 4th Floor Remodel/Emergency Addition, 800 East 21st Street—$9.74 million
Foxmoor at Steeplechase Apartments, 5005 Equestrian Place—$7.35 million
Journey Elementary School, 6801 South Grange Avenue—$7.24 million
Sanford Cancer Center Addition, 1309 West 18th Street—$6.60 million
Courtyard by Marriott, 4300 West Empire Place—$6.40 million
Legend and Sub-Market Boundaries
Property classification definitions
Class A = Building condition is above average
Class B = Building condition is average
Class C = Building condition is below average
Sioux Falls
Central Business
District (“CBD”)
NE
NW
CBD
Sioux Falls
Metropolitan
Area
SW
SE
2007
At A Glance
Retail Overview
Total Retail Market Size
Total Vacant Sq. Ft.
2007 Vacancy Rate
2006 Vacancy Rate
The Sioux Falls market had va10,982,735
488,381
4.45%
5.61%
cancies decrease in three of the
five quadrants we track. Our most significant retail quadrant in Southwest Sioux Falls saw vacancies decrease from 6.64% at end of year
2006 to 4.62% at end of year 2007. Very little new retail coupled with the usual steady flow of new tenants allowed some of the struggling
2006 projects to make good progress filling vacant spaces. The Northwest and Southeast Quadrants also saw vacancies decrease.
Look for 2008 to be a year of significant growth for the eastern end of the East 10th Street corridor given the strong likelihood that this will
be the year that Dawley Farm Village and Galleria at Rivers Bend start seeing significant construction. Uncertainty in the national economy
and a lack of prime development sites in the Southwest Quadrant will likely lead to very moderate growth for our main retail corridor.
Efforts for retail projects in Southwest Sioux Falls will be focused on leasing the 300,000 square feet of existing vacant retail space.
Northwest Sioux Falls has excellent long term potential for retail growth but significant construction of retail spaces will not start in earnest
until significantly more single family homes are completed and the new I-90 – Marion Road interchange is complete. Buying commercial
land in this area during 2008 before prices escalate may be a good move for the savvy investor/developer.
Office Overview
Total Office Market Size
Total Vacant Sq. Ft.
2007 Vacancy Rate
2006 Vacancy Rate
8,692,211
776,162
8.93%
9.09%
The Sioux Falls office market
continues to move in a positive
direction, fueled by the strength of the consistently stable local economy. The market saw a drop in the vacancy rates in each quadrant
we track with the exception of the Northeast Quadrant. The office market experienced 233,618 square feet of positive absorption which
means the total occupied square feet at end of year 2007 exceeded occupied square feet end of year 2006 by 233,618 square feet.
With the cost of new construction constantly increasing, developers continue to ask for higher rental rates. So far, the market seems willing to pay the higher rates which are reaching as high as $ 18.00 triple net, though most newly constructed space is available for
$ 14.00/sq.ft., triple net or less. Rental rates going forward will be largely dependent on absorption activity during 2008 as there is currently 776,162 square feet of vacant space available. With vacancy somewhat high at 8.93%, another year of positive absorption will put
the market back to a more normal vacancy rate of 5%.
We see the call center office market moving forward at a slower pace as national companies considering new locations are cautious about
entering the highly competitive Sioux Falls call center labor market. Loyal to Sioux Falls, local call center operators will be responsible for
the bulk of any growth in this market niche. The next big office market niche likely will be related to medical research facilities given the
Sanford Health and Avera Health initiatives.
Industrial Overview
Total Industrial Market Size
Total Vacant Sq. Ft.
2007 Vacancy Rate
2006 Vacancy Rate
13,582,130
458,396
3.37%
4.38%
The Sioux Falls industrial real
estate market maintained a below average vacancy rate and saw a nice amount of new construction during 2007. With a total market size of over 13,000,000 sq. ft., we
are tracking about 450,000 sq. ft. of vacant space which yields a 3.36% vacancy rate. This low vacancy rate forced several industrial users to build new which led to another outstanding year for industrial land sales. The new Sioux Falls Development Foundation Park east of
I-229, and the Jansmick Park located between I-29 and North Westport Avenue in the city’s northwest quadrant, were the main beneficiaries.
New construction activity was led by the following projects:
Krieser’s, Inc. (I-90 and Marion Road area); Cimarron Label and Baete Forseth HVAC, (North Westport Avenue area); Brower’s Moving and
Architectural Roofing & Sheetmetal (Sioux Falls Development Foundation Park VIII – East 60th Street area east of I-229)
The low vacancy rates and promising demand spurred a few speculative development projects. Flintwood Partners constructed a very
high quality 64,512 sq. ft. tilt-up concrete building that is well suited for manufacturing or warehouse uses. Midwestern Mechanical built a
new building for its own business and have 17,000 sq. ft. of speculative space for lease. The 17,500 sq. ft. Schmit Flex building has had
some early success and has only 5,000 sq. ft. for lease.
There are a number of projects out for bid moving into 2008. Industrial land prices should remain flat or experience very moderate upward
price movement as there are still quite a few good sites with excellent access and infrastructure available. Rental rates for existing properties should be increasing due to low vacancy and the significantly higher asking rents associated with newly constructed properties.
MultiFamily
Overview
PRESENTED BY
Jeff Brooks
Broker Associate
Multi-Family Specialist
Growing Demand
Vacancy Rates
Capitalization Rates
The Sioux Falls market, comprised of
Sioux Falls, Harrisburg, Hartford, Brandon and Tea, overall enjoyed a good
year.
The area’s steadily growing
population has helped fuel the demand
for apartments. According to the U.S.
Census Bureau Report released July 1,
2006, Harrisburg had the highest
growth rate from 2005 to 2006 for cities with a population of 1,000 or more.
It grew at a rate of 31.4%, followed by
Tea (10.9%), Brandon (6.4%) and
Crooks (4.9%). Sioux Falls experienced the largest numeric growth with
an increase of 2,902 persons, followed
by Rapid City (697), Harrisburg (599),
Brandon (463) and Brookings (442).
Sioux Falls continues to be the most
populous city in South Dakota with a
population of 142,396.
According to the July 2007 Vacancy
Survey, conducted by the South Dakota
Multi-Housing
Association
(SDMHA), the average vacancy rate for
the Sioux Falls market for all unit types
(Conventional/Tax Credit/HUD) was
6.53%, compared to 5.23% for the
same time last year.
Capitalization rates for 2007 multifamily product in the Sioux Falls market ranged from mid 7.00% to mid
9.00%.
Building Permits
In 2007, the City of Sioux Falls issued
$30,422,275 million (+31%) in apartment building permits that will result in
426 units (+19%). Building permits for
duplexes totaled $14,921,069 (+292%)
that will result in 108 units (+217%).
Townhouses totaled $15,368,067 (-2%)
that will add 234 units (234%) to the
Sioux Falls Market.
Out-of-state investors are expected to
play a considerable role again this
year, drawn by cap rates that are
higher than those available in major
coastal markets.
Investment Forecast
Ambitious projects, such as the Sanford Health Project and a pro-business
environment, are expected to add local
jobs and generate additional demand
for multi-family units in the Sioux Falls
market.
Largest 2007 Multi-Family Transactions:
Below is a breakdown of the five largest multi-family transactions for 2007 in the Sioux Falls market:
Property
Sale Price
Sale Date
Units
Price/Unit
Platinum Valley Apartments
Somerset Apartments
Hamlet Apartments
Charlotte's Place Apartments
Willow Wood Apartments
$19,537,800.00
$15,811,238.00
$9,669,722.00
$8,052,000.00
$6,550,000.00
May-07
August-07
August-07
May-07
September-07
264
360
210
248
168
$74,006
$43,920
$46,046
$32,467
$38,988
Somerset Apartments
Hamlet Apartments
If you are interested in either buying or selling a multi-family property, please call Jeff Brooks (605) 444-7122 or e-mail
[email protected]. Please visit our website at www.siouxfallscommercial.com for further information and a list of
our current multi-family property listings.
Mike Hauck
Broker
Office/Investment Specialist
OFFICE
Kathleen Hovland
Broker Associate
Office Specialist
MARKET REVIEW
Central Business District (CBD) Northwest Quadrant (NW)
CBD OFFICE VACANCY STATISTICS
NW OFFICE VACANCY STATISTICS
Northeast Quadrant (NE)
NE OFFICE VACANCY STATISTICS
CBD Total Sq. Ft.: 2,289,566
NW Total Sq. Ft.: 1,070,371
NE Total Sq. Ft.: 1,641,928
CBD Vacant Sq. Ft.: 144,676
NW Vacant Sq. Ft.: 77,722
NE Vacant Sq. Ft.: 90,139
CBD Overall Vacancy: EOY ‘06 6.61%
EOY ‘07 6.32%
NW Overall Vacancy: EOY ‘06 8.81%
EOY ‘07 7.26%
NE Overall Vacancy: EOY ‘06 2.28%
EOY ‘07 5.49%
CBD Class A Vacancy: 2.05%
NW Class A Vacancy: 0%
NE Class A Vacancy: 3.25%
CBD Class A Rental Rates/Sq. Ft.: $14 to $18
NW Class A Rental Rates:
CBD Class B Vacancy: 5.2%
NW Class B Vacancy: 6.36%
NE Class B Vacancy: 7.07%
CBD Class B Rental Rates/Sq. Ft.: $12 to $15
NW Class B Rental Rates/Sq. Ft.: $7.50 to $10
NE Class B Rental Rates/Sq. Ft.: $7 to $11
CBD Class C Vacancy: *
NW Class C Vacancy: *
NE Class C Vacancy:
CBD Class C Rental Rates/Sq. Ft.: $8 to $10
NW Class C Rental Rates/Sq. Ft.: $6.50 to $9
NE Class C Rental Rates/Sq. Ft.: $6.50 to $10
CBD NOTABLE OFFICE EVENTS
*
SECOG on North Western Ave.
NE Class A Rental Rates/Sq. Ft.: $12 to $14
*
NE NOTABLE OFFICE EVENTS
Security National Bank Building renovation
New Army Reserve Office Building
Cherapa Place new home to CorTrust Bank,
Howalt McDowell, Risk Administration Services and Sanford Health Plan
Completion of POET expansion
Northwestern vacates 27,000 sq. ft. in
Qwest Tower
Corporate Center Building
New four story office building-Minnesota
Centre at 9th and Minnesota
NW NOTABLE OFFICE EVENTS
The Credit Union Building at 500 North
Western Avenue sold to SECOG-$315,000
Cherapa Place
NW 2008 OFFICE PROJECTS TO WATCH
Additional growth in the office market near
e-Surance, Premier Bankcard and Midco
CBD 2008 OFFICE PROJECTS TO WATCH
Van Buskirk Companies new development at
the Northwest intersection of Benson &
Marion Road
Houwman Building renovation
Further development of Jansmick land
between Westport and I-29
Uptown At The Falls—The Arches
First Bank & Trust relocation to Minnesota
Centre
* Statistically not significant
NE 2008 OFFICE PROJECTS TO WATCH
Further development of Ashbury Condos on
South Sycamore Avenue
Corporate Center IV now under construction
"Should your company ever need an experienced and qualified commercial real estate
broker, I would encourage you to let Dennis and his staff at NAI Sioux Falls provide to you
the same he has for us - Complete Satisfaction!" - David W. King/Bankfirst
OFFICE
MARKET REVIEW
Southeast Quadrant (SE)
SE OFFICE VACANCY STATISTICS
Southwest Quadrant (SW)
SW OFFICE VACANCY STATISTICS
Noteworthy Listings
OFFICE FOR SALE
SE Total Sq. Ft.: 918,402
SW Total Sq. Ft. : 2,771,944
Former Midco Call Center: $3,175,000
SE Vacant Sq. Ft.: 78,572
SW Vacant Sq. Ft.: 385,737
Ashbury Plaza Buildings: $550,000—$1,064,075
SE Overall Vacancy: EOY ‘06 10.41%
EOY ‘07 8.75%
SW Total Vacancy: EOY ‘06 15.65%
EOY ‘07 13.83%
Independence Plaza Condo: $299,900
SE Class A Vacancy: 11.94%
SW Class A Vacancy: 14.91%
First Bank & Trust: $2,850,000
SE Class A Rental Rates/Sq. Ft.: $13.50 to $15
SW Class A Rental Rates/Sq. Ft.: $15 to $18
Howalt McDowell Building: $1,500,000
SE Class B Vacancy: 7.43%
SW Class B Vacancy: 11.59%
SE Class B Rental Rates/Sq. Ft.: $12.45 to $13
SW Class B Rental Rates/Sq. Ft.: $13 to $15
SE Class C Vacancy: 2.21%
SW Class C Vacancy: *
SE Class C Rental Rates/Sq. Ft.: $7.80 to $11
SW Class C Rental Rates/Sq. Ft.: $7.70 to $11.50
Ashbury Condos on Sycamore
First Dakota Branch on Louise
SE NOTABLE OFFICE EVENTS
Qwest Tower
Howalt McDowell moves from 225 South
Minnesota to Cherapa Place leaving their
building for sale-$1,500,000
Rural Metro Medical Building at 310 South
Cleveland sold as investment property$471,500
SW NOTABLE OFFICE EVENTS
River Boulevard Office Building at 515 South
Cliff sold—$575,000
Assam Companies purchases the Former
Boy Scouts Building at 3200 West 49th
River Boulevard Office Building
First Dakota National Bank new branch on
South Louise Avenue
Former HJN Team Real Estate Building at
2601 South Western Avenue sells to Rick
Gourley
Hutchinson Technology: 34,750 sq. ft.
SW 2008 OFFICE PROJECTS TO WATCH
Former Midco Call Center: 23,500 sq. ft.
Interstate Crossings Business Park new
home to Midland National Life
Minnesota School of Business to develop
30,000 sq. ft. building at 57th Street and I-29
“Given the opportunity for additional expansion, I would look forward to working with Kathleen again, and I
would recommend her professional and courteous services to any business person. I can describe my overall experience with Kathleen Hovland and NAI Sioux Falls Commercial with one word: Great! - Mike Mitchell/
Wireless Network Management, Inc.
* Statistically not significant
OFFICE FOR LEASE
Qwest Tower: 27,350 sq. ft.
MWM N. Lewis office/warehouse: 17,764 sq. ft.
Ashbury Plaza: Various up to 6,865 sq. ft.
Plains Commerce Bank: 8,496 sq. ft.
JDS Industries: 12,284 sq. ft.
Group II Architects Building: 4,500 sq. ft.
Kirkwood Plaza: 5,160 sq. ft.
PRESENTED BY
Dennis Breske
RETAIL
MARKET REVIEW
Broker / Owner
CCIM/SIOR
Central Business District (CBD) Northwest Quadrant (NW)
Northeast Quadrant (NE)
CBD RETAIL VACANCY STATISTICS
NW RETAIL VACANCY STATISTICS
NE RETAIL VACANCY STATISTICS
CBD Total Sq. Ft.: 593,521
NW Total Sq. Ft.: 1,175,761
NE Total Sq. Ft.: 1,482,381
CBD Vacant Sq. Ft.: 21,078
NW Vacant Sq. Ft.: 29,054
NE Vacant Sq. Ft.: 75,175
CBD Overall Vacancy: EOY ‘06 2.57%
EOY ‘07 3.55%
NW Overall Vacancy: EOY ‘06 3.74%
NE Overall Vacancy: EOY ‘06 2.13%
EOY ‘07 2.47%
EOY ‘07 5.07%
CBD Class A Vacancy: 0 %
NW Class A Vacancy: 7.39%
NE Class A Vacancy: 6.3%
CBD Class A Rental Rates/Sq. Ft.: $15 to $18
NW Class A Rental Rates/Sq. Ft.: $14 to $15
NE Class A Rental Rates/Sq. Ft.: $13 to $16
CBD Class B Vacancy: 3.56%
NW Class B Vacancy: 1.81%
NE Class B Vacancy: 4.41%
CBD Class B Rental Rates/Sq. Ft.: $12 to $15.50
NW Class B Rental Rates/Sq. Ft.: $8.95 to $13
NE Class B Rental Rates/Sq. Ft.: $5.50 to $13
CBD Class C Vacancy: 5.84%
NW Class C Vacancy: 1.14%
NE Class C Vacancy: 5.58%
CBD Class C Rental Rates: *
NW Class C Rental Rates/Sq. Ft.: $7.50 to $8
NE Class C Rental Rates: *
CBD NOTABLE RETAIL EVENTS
NW NOTABLE RETAIL EVENTS
Acme Drink Club demolished to create new
city-owned parking lot needed for Library
expansion
Walmart decides not to open new store near
I-29 & 60th Street North
Paramount Wine Studio opens next to
Minerva’s
Uptown Sioux Falls-The Arches
Hillcrest Plaza—Talecris Blood Bank opens
on North Minnesota Avenue
Maple Mall opens near I-29 & Maple Street—
First National Bank branch and Subway are
first tenants
Dollar General leases space from Ace Hardware at 12th & Kiwanis
Nutty’s North takes over former Homer’s Bar
NW 2008 RETAIL PROJECTS TO WATCH
Proposed Walmart site may develop with
other projects
CBD 2008 RETAIL PROJECTS TO WATCH
East Benson Plaza
Maple Mall
NE NOTABLE RETAIL EVENTS
Dewitt Designs nears opening at new location on East 8th Street
New Dollar General opens on East Rice St.
East Benson Plaza lands Chinese Restaurant
and Jimmy John’s as first tenants
Armstrong Plaza—East side Splash City
Arrowhead Ridge Mall—home to four new
tenants
Banquet opens on East 8th Street
Uptown Sioux Falls Developments
Monk’s Bar opens on East 8th Street
Events Center—Will it be built?
Where will it be?
Former Stockman’s Bar now home to
Latitude 44
“I work with brokers all across the nation. I have found Dennis Breske's professional efforts, creativity
and personal ethics to be of the highest caliber. We have worked together on leases, sales, listings
and site selection for some of the largest firms in the state and he has completed every transaction
with clarity, timeliness and resounding success for our clients. I recommend Dennis Breske to anyone
who wants to hire a commercial real estate broker no matter how large or challenging the assignment.” - Jim Owen/USA Income Properties
* Statistically not significant
NE 2008 RETAIL PROJECTS TO WATCH
Continued redevelopment of East Bank
Schoeneman Lumber site ripe for
redevelopment
RETAIL
MARKET REVIEW continued
Southeast Quadrant (SE)
SE RETAIL VACANCY STATISTICS
Southwest Quadrant (SW)
SW RETAIL VACANCY STATISTICS
Southwest Quadrant continued
SW 2008 RETAIL PROJECTS TO WATCH
SE Total Sq. Ft.: = 1,482,453
SW Total Sq. Ft.: = 6,248,619
SE Vacant Sq. Ft.: = 74,425
SW Vacant Sq. Ft.: = 288,649
SE Overall Vacancy Rate: EOY ‘06 9.53%
EOY ‘07 5.02%
SW Overall Vacancy: EOY ‘06 6.64%
EOY ‘07 4.62%
SE Class A Vacancy: 6.3%
SW Class A Vacancy: 9.79%
SE Class A Rental Rates/Sq. Ft.: $13 to $15
SW Class A Rental Rates/Sq. Ft.: $10 to $27.50
SE Class B Vacancy: 4.58%
SW Class B Vacancy: 2.74%
SE Class B Rental Rates/Sq. Ft.: $9 to $13
SW Class B Rental Rates/Sq. Ft.: $8 to $23.50
Ashbury Office/Retail Condos
on North Sycamore
SE Class C Vacancy: 3.40%
SW Class C Vacancy: 5.51%
Former Tractor Supply on North Cliff
SE Class C Rental Rates/Sq. Ft. : $5 to $6
SW Class C Rental Rates/Sq. Ft.: $7.69 to $7.69
Arrowhead Ridge Mall
Times Square
SE NOTABLE RETAIL EVENTS
Lorraine Town Center near Lowe’s
Noteworthy Listings
RETAIL FOR LEASE
Kum N Go on North Sycamore
New Hy-Vee opens at 39th & Minnesota
Former Dan Nelson Auto Showroom and car
lot available on West 12th Street
Hy-Vee at 33rd & Minnesota sold to Avera
Historic Loop Center near 12th and Grange
Former Lithia Dodge sold to
Tires, Tires, Tires
CarVantage Building and car lot near West
12th Street and I-29
Tryon Gym leases former Kreiser’s at 21st
and Minnesota
Former Fujifilm sold to Maxwell Hotel
Supply
SW NOTABLE RETAIL EVENTS
Beakon Centre lands Spezia, Home Décor,
Tokyo Restaurant, Sherwin Williams and
French Door Bridal Center
Big O Tires closes on East 10th Street
Plaza 41 leases to Pizza Ranch and
Holz Haus Furniture
New Goodwill Store built on East 41st Street
Hutterite Prairie Market closes
Big O Tires on East 10th Street
Jans proposed 19,750 sq. ft. retail center on
West 41st Street
Dacotah Mall near 57th and Cliff Avenue
Various sizes at Beakon Centre
Beakon Centre
Former Total Card space under contract—
buyer undisclosed
Former Fujifilm Building
Krispy Kreme site redeveloped As Times
Square—new home to Cellular Only, Eyemart Express, Jimmy’s Pizza
Walgreen’s and new Kum N Go open at 41st
Street and Sertoma
SE 2008 RETAIL PROJECTS TO WATCH
Dawley Farm Village—Several big box users
may be close to announcing plans
REALTrac™ Online is NAI Global’s Web-based transaction management software used by
NAI affiliates to coordinate projects and facilitate the transaction cycle. At NAI Sioux
Falls, we also use REALTrac™ to inform our clients of our efforts to sell or lease their
property. Call us to discuss this award winning client reporting tool.
PRESENTED BY
Troy Fawcett
INDUSTRIAL
Broker /co-owner
Industrial Specialist
MARKET REVIEW
Northwest Quadrant (NW)
Northwest Quadrant Trends
Vacancy
Absorption
Asking Rents
Northwest Quadrant
continued
NE NOTABLE INDUSTRIAL EVENTS
Kreiser’s property on 5208 N. Annika
ABC Supply leased 40,000 sq. ft. from
Guardian
TSF property at 3900 W. 34th Street North
Northeast Quadrant (NE)
NW Total Sq. Ft.: 5,094,518
NW Vacant Sq. Ft.: 175,178
Northeast Quadrant Trends
NW Overall Vacancy: EOY ‘06 6.88%
EOY ‘07 3.44%
Vacancy
NW Class A Vacancy:
continued
NW INDUSTRIAL NEW CONSTRUCTION
Dakota Digital at 4510 W. 61st Street North
NW INDUSTRIAL VACANCY STATISTICS
Northeast Quadrant
Absorption
Nordica Warehouse sold for $5.9 million
(212,000 sq. ft.)
The former Cimarron/Schwan’s property
sold for $1.5 million
Midwestern Mechanical
Asking Rents
*
NW Class A Rental Rates/Sq. Ft.: $5.50 to $6.50
NW Class B Vacancy: 3.1%
NW Class B Rental Rates/Sq. Ft.: $3.50 to $4.50
Brouwer Building
NE INDUSTRIAL VACANCY STATISTICS
NE Total Sq. Ft.: 7,409,435
NE INDUSTRIAL NEW CONSTRUCTION
NE Vacant Sq. Ft.: 217,322
Peska Construction property at 810 & 820
East Amidon
NE Overall Vacancy: EOY ‘06 2.18%
EOY ‘07 2.93%
NE Class A Vacancy: 8.61%
NW NOTABLE INDUSTRIAL EVENTS
Kreiser’s leased 4,000 sq. ft. at
523 North Kiwanis
Pro Cleanup leased the Former Fleetpride
Building (10,000 sq. ft.)
Lodgenet leased 15,000 sq. ft. in the US Oil/
Pam Oil Building
Former Phoenix Crystals Building sold for
$375,000 (5,896 sq. ft.)
US Oil leased 144,000 sq. ft. on
Petro Avenue
* Statistically not significant
NE Class A Rental Rates/Sq. Ft.: $5.50 to $6.50
Flintwood Partners
64,000 sq. ft. spec building
Midwestern Mechanical at 4101 N. Lewis
NE Class B Vacancy: 3.25%
NE Class B Rental Rates/Sq. Ft.: $3.50 to $4.50
Former
Schwan’s
Flintwood Partners
INDUSTRIAL
MARKET REVIEW continued
Southeast Quadrant (SE)
Southwest Quadrant (SW) Southwest Quadrant continued
Southeast Quadrant Trends
Southwest Quadrant Trends
Vacancy
Vacancy
Absorption
Asking Rents
Absorption
Peska Build-To-Suit
Asking Rents
SE INDUSTRIAL VACANCY STATISTICS
SE Total Sq. Ft.: 522,684
SE Vacant Sq. Ft.: 10,500
SE Overall Vacancy Rate: EOY ‘06 9.27%
EOY ‘07 2.01%
SE Class A Vacancy:
*
SW INDUSTRIAL VACANCY STATISTICS
SW Total Sq. Ft.: 555,493
SE Class B Rental Rates/Sq. Ft.: $3.50 to $4.50
SE NOTABLE INDUSTRIAL EVENTS
South Dakota Achieve leased 9,800 sq. ft.
on South Cliff Avenue
Tea Industrial Park
SW Vacant Sq. Ft.: 55,396
SW Overall Vacancy: EOY ‘06 9.16%
EOY ‘07 9.97%
SE Class A Rental Rates/Sq. Ft.: $5.50 to $6.50
SE Class B Vacancy: .96%
SW PROJECTS TO WATCH
SW Class A Vacancy:
*
SW Class A Rental Rates/Sq. Ft.: $5.50 to $6.50
SW Class B Vacancy: 10.06%
SW Class B Rental Rates/Sq. Ft.: $2.50 to $4
SW NOTABLE INDUSTRIAL EVENTS
South Dakota Achieve on Cliff
Eberts Construction purchased the former
Burkhart Building: $380,500 (12,000 sq. ft.)
Peska new construction
Walmart leased the former Rich Brothers
Building (15,000 sq. ft.)
Sioux Steel leased 67,000 sq. ft. of the
former WARE Manufacturing Building
Doug Kenzy purchased a 12,000 sq. ft.
building from Phil Pudenz: $675,000
Noteworthy Listings
INDUSTRIAL FOR SALE
Flintwood Partners Warehouse at 2001 East 60th
Street North
TJN Building (Former Midcontinent Building) at
5620 West 9th Street
Tipler Companies Warehouse at 1321 North
Cleveland Avenue
Former Stoakes Building at 1100 South
Stoakes Avenue
INDUSTRIAL FOR LEASE
Flintwood Partners Warehouse at 2001 East 60th
Street North
Sycamore Commerce Center at 400 South
Sycamore Avenue
JDS Industries at 2704 West 3rd Street
Midwestern Mechanical Building at 4101 North
Lewis Avenue
“Troy has a unique ability to recognize opportunities and make things happen. His outstanding market knowledge and positive attitude have delivered for me personally. I would recommend his commercial real estate services to anyone.”
- David R. Billion / Billion Automotive
* Statistically not significant
Commercial
Land
Overview
East Side Project
2007 was a strong year for land sales
in the Sioux Falls market. It also saw
the completion of the Eastside Sanitary
Sewer project, which is the largest expansion in Sioux Falls history of its service area. The area served will ultimately total around 23,000 acres and
will include commercial, multi family
and residential development.
The city of Sioux Falls approved 33
annexation requests for a total of 1,875
acres. This record total represents a
22% increase over 2006.
Unimproved Land Transactions
156 acres of future development
land near the intersection of Marion
Road and Benson Road for $36,500
per acre
132 acres of potential future development land in Delapre Township
PRESENTED BY
Tom Ode
Broker Associate
Land Specialist
in Lincoln County for $20,750 per acre
40 acres purchased by the Sioux
Falls School district on the west side of
Sioux Falls for $50,000 per acre
CBD Land Transactions
1.09 acres located at the NE intersection of Minnesota Ave. and 14th St.
sold for $22.02 per square foot.
1.03 acres located at 305 N. Dakota
Ave. sold for $30.00 per square foot.
Industrial Land Transactions
32 acres located near the intersection of Career Ave. and Tickman Street
sold for $1.59 per square foot.
37.34 acres sold by the Sioux Falls
Development Foundation for
$2,190,000
13 acres at the intersection of
Gulby Ave. and E. 60th St. N for $1.80
per square foot
Retail Land Transactions
6.23 acres at 4000 S. Grange Ave.
sold for $8.51 per square foot
1.70 acres at 4701 E. 41st St sold for
$7.00 per square foot
38,168 square feet at 2400 S.
Louise Ave. sold for $30.41 per square
foot
Overall, purchase prices for land in all
categories of zoning use remained
strong in 2007 and it appears that will
hold true in 2008.
About Tom Ode:
Tom has been involved in all aspects
of commercial real estate including the
sale and leasing of office, retail and
industrial buildings but specializes in
industrial, land and land development.
His work in land sales and development has resulted in sales exceeding
$5,00,000 in 2007 alone. Tom has the
ability to analyze commercial real estate opportunities quickly from both a
buyer’s and a seller’s perspective. He
can successfully help either party
efficiently reach their goals.
Tom joined the company in 2000 with a
broad base of experience not only as a
result of working with a competing real
estate firm, but also from his agricultural background. He owned and operated a family dairy and crop farm
near Sioux Falls prior to his work in
commercial real estate.
Agricultural
Land
Overview
PRESENTED BY
Jim Wilber
Broker Associate
Ag Land Specialist
Commodity Prices Soar
Comparable Sales
Pasture Land
While the United States economy may
be bracing for an upcoming recession,
the South Dakota agriculture industry
can only be described in one word Booming!!
Farm commodity grain prices reached
an unprecedented level last year and
are expected to rise even higher this
coming season. Corn prices have doubled to the $4.00 per bushel level during the past fall harvest and soybeans
(mired in a $5.00/bu. quagmire) have
recently crept toward $13.00/bu. Another long-time staple of our state,
spring and winter wheat, rose from the
customary $3.00 to $4.00/bu. range to
an astonishing $10.00/bu. mark. A
number of factors – ethanol demand,
past drought, crop shortages – have all
contributed to the sudden rise in farm
commodity prices. These price surges,
combined with near record 2007 har-
Here is a capsule summary of land
price increases in a few areas across
South Dakota:
Grasslands and pastures across the
state are not immune to the upswing in
prices, thanks to a mostly steady cattle
market. Today, good pasture is in
Hand County land was locked in a
$300 per acre mode for a couple of
decades. Suddenly, farm land east of
Miller surpassed the $1000/acre barrier
two years ago. Recently, 700 acres of
good farm ground brought $1850/acre
and a southeast Hand County half section was auctioned off for $1925/acre.
Aurora and west Davison County
farm ground could be purchased routinely in the $1400 per acre range.
Now, area farmers are wondering when
the first $3000/acre sale will occur.
During the past few months, tracts of
land near Mt. Vernon sold for $2600
and $2850/acre.
In Brown County, near Groton, an
excellent piece of farm ground was
sold for $4100/acre recently, outdistancing the customary $2000/acre
base price.
Last fall, east central farmers witnessed auctions of $2500 (Miner Co.)
and $2650 (Kingsbury Co.) on land
where $1400/acre was once considered the norm.
vest yields in most areas, have resulted in very healthy incomes for the
South Dakota farmer.
Land Prices Follow
The unexpected side effect of the grain
price surge has been the marked escalation of land prices across the state.
South Dakota crop land and pasture
prices have generally shown a steady
increase during the past few years. But
in the second half of 2007, auctions
and private sales resulted in a dramatic increase in per acre values.
“Buying land at $3000/acre and harvesting $3.00/bu. corn makes a lot
more sense than $2.00/bu. corn on
$1800/acre land,” said one veteran
landowner.
Landowners in Turner, Yankton and
Clay Counties saw land finally exceed
$4000/acre last year with most of the
land purchased in the $3200-$3500/
acre range.
In the “Garden Spots” of Moody, Lincoln and Minnehaha Counties, land
sales of $4000 to $4500/acre have become commonplace. Smaller tracts
(60-80 acres) of choice ground saw
record prices of $5920/acre near Baltic
and $6200/acre east of Lyons.
With agricultural land selling as high as
$8700/acre in northwest Iowa, pressure from out-of-state buyers in eastern South Dakota is understandable.
strong demand and will bring near
$1000/acre in most East River counties. Grassland near the Iowa/
Minnesota border commands over
$1500/acre.
“Go West Young Man” seems to be
the motto for local buyers as a number
of big grass ranches (and some farm
ground) have been purchased by East
River investors. Most West River sales,
pasture or tilled, have approached the
$400/acre mark with a few $500/acre
sales recorded.
About Jim Wilber:
Upon joining NAI Sioux Falls, Jim
Wilber has specialized in agriculture
land sales and purchases, spanning
the state of South Dakota.
Jim has closed transactions on over
16,000 acres of agriculture land since
2005 for a total of nearly $8,000,000.
Utilizing the experience from his agriculture business days in his hometown
of Miller, SD, Jim has contacts with
farmers and landowners in both East
River and West River counties.
Contact Jim Wilber for assistance in
purchasing, selling or leasing agriculture properties.
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Local Touch
101 North Main Avenue
Suite 213
Sioux Falls SD 57104
605.357.7100
www.siouxfallscommercial.com
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