Oct. 15, 2020

Amazon.com Services Inc. has purchased 80 acres in northwest Sioux Falls for a future project.

The property at Foundation Court and Marion Road sold today, but few details were immediately available about a use for it.

“Amazon is a dynamic business, and we are constantly exploring new locations and weighing a variety of factors when deciding where to develop future sites to best serve customers. However, we have a policy of not commenting on our future road map,” Amazon spokesperson Kirsten Wenker said.

“This land purchase in Sioux Falls provides us with the flexibility to quickly respond to our future network needs, and we look forward to becoming a member of the South Dakota community in the future.”

Bob Mundt, president and CEO of the Sioux Falls Development Foundation, said further information about plans for the property will come from Amazon.

“The Sioux Falls Development Foundation is excited to have Amazon.com as our latest tenant in Foundation Park,” he said in a statement.

“Their 80-acre purchase is the largest single purchase to date for Foundation Park, and we look forward to watching the parcel develop as Amazon implements their strategy in South Dakota. This is the type of project city and civic leaders envisioned in 2016 when Foundation Park was started, and we look forward to similar developments in the future.”

The most likely use for a property of that size in that location would be for warehousing and distribution – where Amazon would join other logistics operations located at Foundation Park.

The next closest Amazon fulfillment center appears to be in Bondurant, Iowa, a Des Moines suburb, where the company announced a project in February that’s scheduled to open next year.

That 645,000-square-foot center will create 1,000 full-time jobs.

According to a federal grant application submitted by Amazon to assist with infrastructure in Sioux Falls, there would be at least 1,000 jobs created here with a minimum $200 million investment.

The $1.9 million CARES Act Recovery Assistance Grant from the U.S. Department of Commerce Economic Development Administration was awarded recently and will support water, wastewater and roadway infrastructure to support the development.

“This investment comes at a crucial time for Sioux Falls’ and South Dakota’s economies to come roaring back and provide hardworking Americans with new opportunities,” said Dana Gartzke, who is performing the delegated duties of the assistant secretary of commerce for economic development.

“EDA is pleased to invest this CARES Act funding to improve infrastructure to create an industrial megasite to aid the region’s recovery. The project’s location near a Tax Cuts and Jobs Act Opportunity Zone will drive additional investment to the state.”

Employees at Amazon fulfillment centers typically work alongside Amazon robotics. In the case of the Iowa center, they will be packing and shipping “small items to customers such as books, electronics and toys,” the company said in announcing that project.

Amazon is well-positioned to make such investments, reporting a 40 percent increase in net sales year over year in its most recent earnings, which were released July 30, and $5.2 billion in net income, compared with $2.6 billion at the same time last year.

The company said it injected $9 billion in capital in the previous quarter, including for fulfillment, transportation and web services.

“As we move toward peak in the second half of the year, we will ramp up our space needs even further, and we’ll be adding significant fulfillment center and transportation capacity in the second half of the year,” Amazon CFO Brian Olsavsky said in a late-July call with analysts.

Amazon fulfillment centers typically open in the third quarter, he said.

There was no time line shared for construction in Sioux Falls, though the land is construction-ready now.

Amazon runs 175 fulfillment centers worldwide. In 26 of them, robots and people work together to pick, sort, transport and stow packages, according to information on the company’s website.

“While it’s true robotic automation has taken over certain duties, such as carrying pods of inventory and transporting pallets through buildings, it’s making the lives of associates easier by performing the less desirable, more tedious tasks,” it said on its website.

“Amazon fulfillment centers are busy places, with packages and people moving around constantly. In centers equipped with robotics, employees now lift and walk less. Robots pick up heavy items to prep them for shipping or for stowage. Employees who help pick customer order are able to easily identify items rather than looking for them on shelves.”

Sioux Falls appears to be among the smallest metro areas where Amazon would have a fulfillment center.

“We’re excited to finally announce that Amazon has selected Sioux Falls and Foundation Park as the site for a future facility,” Mayor Paul TenHaken said in a statement.

“This announcement that an innovative Fortune 5 company plans to open a site in Sioux Falls speaks to how our business environment and economic climate continue to be a great place for companies to do business. We look forward to working with them to ensure their operation in Sioux Falls is a success story for all.”

Amazon’s minimum wage starts at $15 an hour, and the company offers full-time employees comprehensive benefits, including full medical, vision and dental insurance as well as a 401(k) retirement plan with a 50 percent match starting on day one. The company also offers up to 20 weeks of maternal and parental paid leave and other benefits that give new parents flexibility.

The expected development from Amazon is part of a 540-acre parcel that the Development Foundation is hoping to use as a tax increment financing district.

That would allow the foundation to leverage any development from Amazon and any other improvements within the district to fund needed infrastructure for 450 acres to the north.

The land for Amazon already has infrastructure, but if other businesses show interest in the park, preparing hundreds of additional acres for building could be advantageous.

Foundation Park was announced five years ago as a partnership among the Development Foundation, the city and the state.

“South Dakota is open for business, and we’re excited that Amazon is joining our South Dakota community,” Gov. Kristi Noem said in a statement.

With the Amazon sale, about 180 acres have been sold so far, with tenants that include Win Chill LLC, Nordica Warehouses, Dakota Carriers and New Century Partners.

There are more than 200 acres remaining south of the railroad tracks, although some lots have active options on them, Mundt said.

There are roughly 450 acres available north of the railroad tracks – the land that would become shovel-ready if the TIF is approved to allow for infrastructure build-out there. The boundaries been established, but the TIF plan still needs to be approved.