May 18, 2021

The Cherapa Place development plans to add a $160 million expansion beginning this year, bringing three new multistory mixed-use buildings and a major corporate office downtown.

The Bancorp Inc. will anchor the next phase of the development, bringing its 175 employees downtown and serving as the catalyst for Cherapa’s envisioned mix of retail, luxury condominiums, additional office, parking and community gathering and event space.

“We believe this development will help execute the city’s master vision for downtown density and embrace the concept of work, live and play,” said Jeff Scherschligt, CEO of developer Pendar Properties, who pioneered riverfront development with the original Cherapa Place in the mid-2000s.

“We have tried to design what seems most appropriate for the community and what makes the most economic sense, and we are extremely excited to be looking at starting construction yet this year.”

The Bancorp building

The centerpiece for the next phase of Cherapa Place will be the nine-story, 185,000-square-foot Bancorp building, which will sit along the Big Sioux River at Sixth Street.

The Bancorp will occupy 50,000 square feet of office space, with 175 employees and plans to grow.

“What work is and how it operates and what the workspace needs to be has to evolve,” said Greg Garry, executive vice president and chief operating officer.

“We see this being the next evolution of workspace to retain people who have been with us from the beginning and also to attract that next level of talent to the organization.”

The Bancorp Inc., which is based in Delaware and trades on Nasdaq, serves non-bank financial service companies from startups to the Fortune 500. The Sioux Falls-based fintech solutions division was acquired from Bankfirst Corp. 14 years ago and has been located at 69th Street and Western Avenue since 2006.

“And we’ve had exponential growth ever since, supporting some of the nation and world’s largest payments funds, both prepaid and other fintech firms’ back-end banking needs,” said Ryan Harris, executive vice president and head of fintech solutions.

The fintech solutions division was recognized as the nation’s top issuer of prepaid cards, a top merchant sponsor bank and a top ACH originator in the most recent Nilson Report, a publication that covers the global card and mobile payment industry.

“A high degree of collaboration is important to us and will continue to be what makes us a successful company into the next decade,” Harris said. “Our current workspace is not incredibly conducive to that, and we’re at a point that we’re full. We’re not going to grow in Sioux Falls if we don’t look at a new facility.”

The Bancorp’s move will enhance the employee experience while also growing the brand within the Sioux Falls community, its leaders said.

While it does not offer retail banking services, it competes for talent. The hope is to grow to 225 employees, with options to grow bigger over time.

“We are also really focused on … degreed jobs at high compensation,” Garry said. “Meaningful jobs to the community that bring in top talent.”

The Cherapa Place location will be key to attracting that talent, they said, as well as projecting the right impression to clients.

“To be part of a project like this that is going to be so transformative for downtown, and our desire to be downtown and be part of the expanding vibrancy really solidified it for us,” Harris said. “The passion Anne and Jeff showed for the project was pretty contagious in terms of their vision and what they’ve done up to this point with the other projects they have.”

The two companies “share very similar values – a commitment to quality, how we treat our employees, and I think they are an excellent employer that values high design and is interested in creating a great work environment,” Anne Haber said.

“This is a forward-looking company that is really looking to grow. They just love Sioux Falls and are so excited to be here, and that really impressed us.”

The commitment from The Bancorp was key in launching the development, Scherschligt added.

“I’ve always been a promoter of downtown, and I believe to some degree we’ve seen an exodus in some sectors instead of an influx,” he said. “This is a cornerstone entity with very high-quality jobs and a commitment to the work-life-play philosophy, and they will serve as an example for others in our community of what a vision like that can accomplish.”

The Bancorp building also will include ground-floor retail facing both the Big Sioux River and a central courtyard for the development.

The top two floors will be luxury condos.

“We will base it on demand but expect we’ll have room for 10 to 12 condos, with a combined square footage of 20,000 to 30,000 square feet,” Scherschligt said. “We believe there’s a market based on the two successful projects downtown, Washington Square and Jones421, and from a timing standpoint given the demand for housing in Sioux Falls, we think it makes sense.”

The Bancorp office combined with other early commitments from office tenants likely will result in a significant percentage of the office space being spoken for soon, Scherschligt said.

“We’ll have more announcements shortly,” he said. “The interest really has surged in recent weeks, which we think speaks volumes about the vision for this project and the overall strength of downtown and the Sioux Falls market.”

The Bancorp building will be connected to the original Cherapa office building with a 5,000-square-foot, two-story community and event space that includes a deck overlooking the courtyard and riverfront amphitheater.

“This is in lieu of doing a big huge foyer or lobby, and we think it’s going to be a very dynamic space,” Scherschligt said. “It will be used by tenants during the day on a shared basis and become a community resource on weekends and evenings.”

Throughout the building, there will be more than 16,000 square feet of deck space between roof decks and balconies and public and private spaces.

The development also will be served by two new mixed-use buildings that primarily will include parking.

The first will be an eight-story building with 300 parking stalls and 50 apartments on top, plus 25,000 square feet of retail on the ground floor.

The second will be seven stories with 375 parking stalls, including underground parking, with 100 apartments on top and 3,000 square feet of retail on the ground floor envisioned as a restaurant.

Retailers for the development could include high-end boutiques, fitness studios, a medical spa, restaurants and entertainment uses, the developers said.

The center of the development will be open green and event space designed to activate the area and take advantage of the buildings that will block the winds.

“We want it to be an amenity for the development, downtown and the community,” Haber said. “We’re looking at things like a climbing facility, winter recreation, lawn games, a significant amount of public art, and we’re open to input and ideas.”

ISG is serving as the architect for the Cherapa Place expansion and Journey Construction is the general contractor.

“We feel so confident in our team,” Haber said. “From the financial team to development, construction and design, it’s very strong.”

Public-private partnership

The planned Cherapa development will require support from the city of Sioux Falls, including $25 million in tax increment financing for the construction of the parking and related infrastructure, such as the extension of Reid Street. The city also is assisting in helping create a quiet zone around the rail line.

A final City Council vote is planned for early July.

“This is a partnership, which has been my history,” Scherschligt said. “In order to do these big, grand visions, it takes a partnership.”

The city extended an option to Scherschligt to purchase the 4 acres of former rail yard needed for the development in 2019.

“The concept that they have put together is exciting,” said Jeff Eckhoff, the city’s director of planning and development services.

“It fulfills every part of the downtown development plan, the downtown vision for density, live-work-play, connectivity, design standards, all of it, and it’s just a great project.”

The plan is to construct the entire development concurrently beginning early this fall, which would allow for occupancy beginning around mid-2023, Scherschligt said.

“That takes a big commitment and confidence in this community but also shows a sensitivity to our tenants,” he said.

Timing can be critical, he added. One year ago, he committed to building Railyard Flats on East Eighth Street as the pandemic was just ramping up.

“It was a symbol of how strongly we believe in Sioux Falls, and now it is 100 percent full for commercial and is leasing very effectively from a residential standpoint,” he said.

While he acknowledges the next phase of Cherapa is a little daunting, he said he’s ready to make it happen.

“There have been so many hurdles that it really did seem at times this was an insurmountable mountain to overcome, but we’ve continued to knock down barriers, and with the announcement by The Bancorp, this is going to become reality,” he said. “This is full steam ahead.”