Oct. 18, 2020

Maybe the deal finally closed because of all the sales I generated for them this week on Amazon Prime Day.

Seriously, though, it has been an interesting and winding road leading up to this week’s confirmation that Amazon had bought land at Foundation Park for a future project.

“It’s not been a standard run-of-the-mill deal, to say the least,” said Rob Fagnan, a partner at Bender Commercial Real Estate Services who specializes in the industrial market and is one of multiple brokers representing Foundation Park.

In some ways, this reminds me of when Costco Wholesale Corp. came to town and  pushed the retail market in terms of wages and benefits. I think Amazon will do the same in its sector. Costco also showed other retailers the benefits of locating in Sioux Falls, as our store quickly became the top performer in the region. Amazon could have a similar effect if it sees success with its operation here.

“This is a huge win for Sioux Falls, and it’s going to have a much larger long-term impact on South Dakota than a lot of people realize or think about,” Fagnan said.

Even at the closing last week, those involved were talking about another deal now in play in northwest Sioux Falls “because Amazon is moving forward with acquiring the property,” he added.

Fagnan told me a story about how when he and his colleagues go to industry events in manufacturing, warehousing and distribution, they still get asked by “big-city brokers” how the oil boom is going in our area.

“They don’t realize we’re 10 hours away and closer to the majority of them than the Bakken basin,” he said. “They still think South Dakota and North Dakota are flyover states. So this is going to breed more activity by national players and establish Sioux Falls as a credible city and South Dakota as a credible state to do business.”

But here’s the reality check, I think. Don’t automatically put Amazon in the same category as Citibank in terms of a catalyst to economic growth. Amazon is building huge fulfillment centers all over the country, including in Fargo, the Des Moines area and Omaha. I bet it’s going to get to a point where if your community doesn’t have one you appear to be behind.

The only way Amazon will become the same game-changer as Citibank was to this community is if we leverage it to draw more companies and continue to draw the workforce needed to support it and all the other businesses considering expanding here.

So the fact that the Sioux Falls Development Foundation, the city and county are open to taking part of the property tax generated by Amazon to ready Foundation Park for more development is important. Having large, ready-to-go pieces of land like this are key to landing these deals.

But don’t overlook two other actions by the city we reported on last week that could be critical too. One moved forward a mural ordinance that would encourage more art on private properties. The other called for proposals to aesthetically improve the newest downtown parking ramp.

Lots of cities have Amazon locations. No city will ever have the exact same collection of public art. People don’t choose to live or visit Sioux Falls because we have a Costco or fill-in-the-blank other national retailer. It’s the local storefronts, the chef-driven restaurants, the unique outdoor attractions and the arts scene that distinguish a city and will continue to lure people, including in a post-pandemic world.

Richard Florida, the professor and author who famously identified “the creative class” as key to cities’ workforce development, has been writing about “the forces that will reshape American cities” following the pandemic. And many of them set up places like Sioux Falls to capitalize.

“One set of forces, enabled mainly by newly acquired fears of crowded buses, trains, stores and parks — a kind of collective enochlophobia — will act to pull some people, mainly families with children, out of urban centers and into their suburban and rural peripheries. This is nothing new: Families have been gravitating away from the most expensive cities for some time now,” he wrote in this piece for Bloomberg CityLab. 

“The crisis will also activate another set of forces that will push other groups of people and businesses toward the urban center. Cities will get even younger as urban centers become more affordable.”

This sets the Sioux Falls area up well, if we can continue to deliver on our value proposition and let people know what’s waiting here. Real estate here is still affordable enough that many residents can have the backyard and the home office many have sought during the pandemic while avoiding mass transit and high-density housing. Downtown still provides an urban feel without the high cost and crowding many have started to resist in larger cities.

“The carnage to restaurants, cafes, local shops, art galleries and music venues will be tragic, but there will be a window of time when cities can reset their local economies and re-energize their creative scenes,” Florida wrote.

“With no big-ticket concerts — no Taylor Swift or Rolling Stones shows, no Bonnaroos or Lollapaloozas, and no professional sports events with fans in the stands for a while — there will be increased demand for smaller-scale, locally-sourced arts and culture.”

So as that massive Amazon building and potentially others like it go up, the murals need to go up too. New sculptures need to go up again in the spring. The curtain needs to go up on performances featuring local artists. Something artistic and uniquely Sioux Falls needs to go up on the parking ramp.

The more businesses invest in us, the more we need to invest in the unique attributes of our community if we want more people to follow.

If we’re to take the appropriate inspiration from Amazon, it might come in the form of this quote I found attributed to founder Jeff Bezos:

“What we need to do is always lean into the future; when the world changes around you and when it changes against you – what used to be a tail wind is now a head wind – you have to lean into that and figure out what to do because complaining isn’t a strategy.”

With that in mind, I’m going to try not to complain as I share one more message about this deal and others in various stages of completion. You won’t see me report on them until a lease is signed, a property sale is closed or someone directly involved in it confirms for me that it’s a done deal or speaks about it on the record. Too many economic development deals fall apart, even up to the day before closing, for me to justify risking that for this community by publishing something prematurely.

As news of Amazon considering the market began to leak out months before, I received multiple messages from readers saying essentially the same thing:

“I saw something about Amazon coming, but then I looked at your site and didn’t see it, so I figured it wasn’t real yet.”

In an environment where accusations of “fake news” abound, that was the validation I needed that the approach I’ve always taken is the right one.

So it is real news now. But I think the bigger story is yet to be written.

Amazon buys 80 acres for Sioux Falls project