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Sept. 14, 2020
A potential apartment resident reaches out, a video tour is sent, and a lease is signed.
That has become an increasingly common process during a year that has brought record apartment interest for multiple months for Sioux Falls-based Lloyd Cos., which set a leasing record in July.
“We’ve just continued to see the trend throughout the spring and summer months,” said Ashley Lipp, Lloyd’s vice president of residential property management.
“From June to July, our occupancy overall increased another 1.2 percent, which is amazing.”
With a portfolio tightening, the company is investing.
“In the next 12 months across the Sioux Falls area, we will have broken ground on between 900 and 1,000 units,” executive vice president Jake Quasney projected.
The year that forced countless people to stay at home nationwide also appears to be prompting people to look for a new home.
Newcomers are renting based on virtual tours with plans to move from out of state, while others within the Sioux Falls area are looking for new apartments too.
It has kept overall vacancy nearly the same as the start of the year — about 7 percent — despite adding hundreds of new units to the market, and it’s creating conditions for much more development.
“We like multifamily because it provides a life essential, which is shelter, and historically multifamily outperforms others classes of commercial real estate during periods of economic decline like we’ve seen,” said Norm Drake, CEO of Legacy Developments, which has multiple apartment projects under development.
“We see considerable growth in Sioux Falls in terms of new residents coming to town.”
Through August, the city issued permits for 578 multifamily units, which is 160 more than the same time last year. But a lot more are coming.
Legacy’s latest project, Westview Heights, is the largest building permit taken out in the city so far this year at $27 million.
It’s a 253-unit project at 32nd Street and Ellis Road and represents Legacy’s largest apartment project to date and its first one on the west side.
“We like it because it’s kind of an infill site already,” Drake said. “Most of the stuff has been developed around there, and with the new Fareway just a few blocks away and Sanford and Lewis across the street, churches, schools, it kind of checks all the boxes.”
Westview Heights will be “distinct from other properties on the west side, with 9-foot ceilings and higher-quality finishes and amenities,” he added.
There will be a large community room, theater room, game room, fitness center, dog park, dog wash stations, two guest suites, a community garden and an outdoor pool.
“I think our rents are going to be very competitive,” Drake said. “One-bedrooms will start at $850 and the twos around $1,050.”
The project will be built as eight 32-unit buildings starting this year with the plan to open the first units next summer along with the shared amenities.
Just south of there, another major apartment development is about to get started on the northwest corner of Ellis and 41st Street. This one is even bigger – a 357-unit project from Lloyd Cos. that will start with 144 units and is attempting to get in the ground this fall.
“We’ve got a number of apartment buildings that will go in there,” Quasney said, comparing the concept to what Lloyd has done on the east side with its Dublin Square apartments, which offer a mix of floor plans, rents and styles.
“It will be a multiphase project with some commercial along Ellis,” he continued.
“From our perspective, we view apartments in the community we’re working in as a very stable investment. That’s been the case going back the last decade and continues to be the case.”
The west side appears to be showing it can support this level of multifamily activity, though.
Not far from the Ellis Road projects, Hillcrest Heights opened its first 30-unit building in May and its second in July at 1001 S. Sertoma Ave. Both are fully leased.
“It’s certainly ahead of our pro forma absorption projections,” said Joel Dykstra, CEO of developer RMB Associates.
“It’s very attractive, and it’s working out very well.”
He also is seeing tenants come in from out of state.
“We’ve had some people who have shopped online, never set foot on the property until the day they moved in, and they drove in from the East Coast,” Dykstra said. “They’re coming for jobs. And I think that’s going to continue.”
Hillcrest has one more 30-unit building scheduled to be ready next month.
“The project is leasing up as fast as we can get it built,” Dykstra said, adding rents for the one- and two-bedroom units range from $825 to $1,000.
“We always kind of anticipated that would appeal to people with kids at Memorial Middle School, so it’s a different market. We’re very pleased because we think it’s a nice-looking property and those three buildings fit well in that lot and it’s a really nice addition for a different market that hasn’t seen a lot of apartments.”
His company also is working on a new project he expects to be able to announce later this month.
“There are more tenants than vacant units,” Dykstra said, adding that within his portfolio today “we have days when we don’t have a vacant apartment to show people” in certain areas or floor plans.
On the northwest side, Lloyd also has a big project planned in The Flats at Prairie Point, a 216-unit community at Career Avenue and 35th Street North that will include a swimming pool and clubhouse, with the first apartments scheduled to open next spring or summer.
Lloyd’s multifamily plans span the city of Sioux Falls and area towns, in addition to developments in Rapid City, Des Moines and the Sioux City area.
“We’re still seeing growth in jobs in Sioux Falls. There’s good things happening on that front, and the housing demand we don’t believe is going away,” Quasney said.
“We’re looking for locations with good access to service, grocery stores, shopping, job centers and schools. We want to be in the middle of things as opposed to on the outskirts.”
The company has multiple east-side projects in various stages of development, including the Lacey Townhomes 46-unit tax credit project at Sixth Street and Bahnson Avenue.
“That project is just flying right now,” Quasney said. “It looks like it should be delivered well ahead of schedule. It’s going to be a really nice project and look good on that corner.”
Lloyd also is planning to start construction at 57th Street and Bahnson on The Row at 57th, a four-phase project that will start with 140 apartment units and a clubhouse. Construction of the first units will begin soon with a planned spring opening.
“We’ve got a mix, so it’s a 36-unit building and some walk-up apartments where everyone has their own front door,” Quasney said.
The company also is under construction in Harrisburg with the next phase of its Sawyer Pointe project, which will be 144 units in addition to the current 60, plus a clubhouse.
“With the completion of Minnesota Avenue, the access to that project is going to get much better by next summer,” Quasney said.
With current and expected projects, Lloyd could be under construction with 1,500 units this time next year, he added.
“We’re going to cover the gamut,” Quasney said.
“A lot of that is workforce housing where we’re trying to meet a need in the middle with really good units that are affordable to live in for people who don’t qualify for subsidized housing and don’t want to pay $1,300 for a town home. We do have higher-end stuff coming, but we’re trying to reach that group in the middle.”
Get ready for an apartment boom — with tightening vacancy, hundreds of new options are on the way.