Sioux Falls

Sioux Falls Boom: What's the Secret?

Hi,  

We’re back with another insightful dive into one of our key markets. This time, we’re unpacking the dynamics of Sioux Falls—a city that has long been one of our key focus markets and is deeply established as a major industrial center serving not just the Upper Rockies, but the broader Midwest. Over the last five years, Sioux Falls’ performance places it in the #2 spot in our internal scoring methodology.

From 2018 to 2023, Sioux Falls exhibited a robust population growth of approximately 1.8% annually, cumulating in a total growth of about 9%. This growth isn't just numbers; it reflects in the city's high occupancy rates which have peaked at 98.3% recently—about 50 bps higher than its 10-year average of 97.8%.

The city has managed these numbers through limited construction, contributing significantly to a sustained income growth of about 5.3% annually over the past five years. A glance at the NAICS codes highlights a significant presence of the medical and finance industries, driven by top employers in these sectors.

Moreover, the Great Plains location of Sioux Falls supports a thriving agricultural scene, alongside strong sectors in biomedical, finance, and business. This diverse industrial base is supported by solid banking services from giants like Citi and Wells Fargo, further bolstering the city's economic stability.

Among the markets we track, Sioux Falls stands as the second best job market, trailing only behind Huntsville, Alabama, thanks to its low unemployment rates and healthy median household income.

Interestingly, Sioux Falls is also the third strongest in Polycom’s economic strength rankings, showcasing its consistent growth and attraction, especially among younger demographics.

As we look at investment opportunities, particularly industrial spaces over 10,000 square feet, we see a (not surprising) amount of rent growth in urban industrial, while newer developments push towards the outskirts along the I-29 and 90 corridors. This area is now seeing significant development, with large entities like Amazon already establishing a 600,000 square foot facility.

The areas ongoing supply creation, particularly at the Foundation Park, highlights an exciting future with over 800 acres of industrial park fully shovel-ready. This space is not only attracting giants like FedEx and Nordica but also spec-built properties that are changing the landscape.

Our examination also delves into housing affordability. Despite a significant rise in home prices by approximately 55% over the past five years, the increase in median income has lagged at 26%, underscoring some challenges in maintaining affordable housing

In wrapping up, the consistent growth in square footage of new constructions and the trend towards larger buildings reflect a robust industrial market that's prepared to meet future demands.

Let us know your thoughts on these insights. Should we continue sharing such detailed market analyses? Your feedback is invaluable.