- Real Estate
- Food & Drink
July 15, 2020
Lloyd Cos. will begin its Sioux Steel redevelopment in downtown Sioux Falls later than originally planned, pointing to pandemic-related market conditions the company said have “created a time of unprecedented challenge in multiple industries.”
The nearly $200 million development is still planned to include a Canopy by Hilton — a seven-story hotel and conference center — a nine-story mixed-use building and a parking ramp surrounded by 100 apartments, Lloyd said in a statement.
The project received approval earlier this year from the Sioux Falls City Council and had been moving toward an August groundbreaking.
“We’re anticipating this is a short-term delay, but we also can’t put a specific time line to it yet. We’re constantly re-evaluating what the landscape looks like and where we believe conditions are heading,” said Jake Quasney, Lloyd’s executive vice president.
Earlier this spring, Lloyd said it performed a review of the project, evaluating concepts in product types with more stability – such as additional multifamily density.
After reviewing pre-COVID-19 data and industry projections across many sectors, Lloyd said it determined that the original concept remained the highest and best use for the site.
The company said it has cleared several hurdles that impact downtown development, and the state of South Dakota has reviewed and confirmed that Sioux Steel has ownership of the property known as Seney Island, which is part of the redevelopment area.
“We still believe in the project. The Rysdon family and Sioux Steel still believe in the project,” Quasney said. “And we will see it through.”
The project will be driven by the hotel and adjacent office tenants – both markets that have been significantly affected by the COVID-19 pandemic and subsequent economic shutdown, he said.
“We’re not putting the project on a shelf and forgetting about it,” Quasney said. “The team is balancing the significant value that can be created by contracting for the materials and services involved in the project during the pandemic against the timing of when banks will have confidence in the various components of the project.”
The office component of the project also could look different in a post-COVID-19 world, he added.
“The approach and the need for office space may change,” he said. “We believe this building will represent a blank slate for modern systems, first-class office space and an opportunity for businesses to build space at the size and layout they need.”
Canopy by Hilton continues to be fully supportive of the project, Gary Steffen, vice president and global head of Canopy by Hilton, said in a statement.
“While there continues to be uncertainty in the current environment, we are committed to working with our visionary local partners, the Lloyd Cos., in creating something truly unique in Sioux Falls with the Sioux Steel project,” he said.
Construction will take at least two years from groundbreaking to opening. In the case of the hotel, that could be a good opportunity to time the market appropriately, Quasney said.
“We believe when you look at past recessions and other events that had a significant impact on travel that domestic and regional travel is the first to recover,” he said.
“We’re social by nature, and we want to do things. So travel will recover, and we want to be part of the recovery. We’re working through that now to understand how to make this happen on a time line even closely resembling what we had before and will continue to work with the city proactively until we can guarantee our time line.”
Lloyd Cos. said it “appreciates the clarity from the state, support of the city and other partners,” and emphasizes the Sioux Steel project “is not in jeopardy of going away.”
“We need to get a full commitment from tenants, though, and understandably everybody is waiting to see what the impact is on them. Our perspective is the timing to do it is pretty soon, and you can get significant value,” Quasney said. “We fully believe in time we will see this once-in-a-generation redevelopment become a reality and want to make sure we maximize the potential of this incredible opportunity.”
“We’re not putting the project on a shelf and forgetting about it.” But the project that would transform downtown’s Sioux Steel site has been delayed.