Jan. 12, 2024

Sioux Falls added more than 5,000 people and produced its second-largest building year ever in 2023.

The city reported $1.1 billion of valuation in building permits, essentially on par with 2021 and behind the record-setting $1.9 billion in 2022.

“A really strong year once again” is how Mayor Paul TenHaken described it in announcing the numbers this morning.

“What was nice about ’23 is we saw a very diverse mix of building permits, and I think that’s an important metric that we look to to see the economic diversity of the community.”

New commercial activity totaled $618.6 million, about half of the $1.2 billion in permits issued in 2022 but ahead of $464.3 million in 2021.

The top 10 projects of the year were:

1. The OneTwo, an apartment complex from Lloyd Cos. at 205 E. 12th St. at $35 million.
2. Sanford Health’s Virtual Care Center at 3001 W. Opportunity Drive at $27.8 million.
3. BCP Sioux Falls, for a shell warehouse for Owens & Minor and Avera Health at 4001 W. Memory Circle at $25.6 million.
4. The new Maguire headquarters at 2001 E. Robur Drive at $22.6 million.
5. A northwest elementary school for the Sioux Falls School District at 2101 N. Valley View Road at nearly $22 million.
6. The Jacobson Plaza ice ribbon and playground at Falls Park West at $21.5 million.
7. Spring Creek Luxury Apartments from Samuelson Development, 1801 E. 77th Circle, at $21.3 million.
8. A renovation and addition for Xcel Energy, 1401 N. Minnesota Ave., at $20.4 million.
9. The Velthuis apartments from Veldhouse Construction, 5100 S. Rolling Green Ave., at $18.5 million.
10. The USD Discovery District’s first building, 4600 W. Nobel St., at $15.8 million.

There was one project in 2023 that exceeded $30 million; in contrast, there were 13 projects that large in 2022.

“We just had a very unique year in 2022 with some very large-ticket projects that came forward in the city of Sioux Falls,”  TenHaken said, calling 2023 “a more normal year.”

It’s a similar story with population, which increased 2.4 percent, or 5,007 people, versus the 3 percent increases of the immediate post-pandemic years. That gives the city an estimated population of 213,891, based on looking at factors such as residential permits and multifamily occupancy, said Jeff Eckhoff, director of planning and development services.

It was a “more normalized year but still over 5,000 new people in our community,” he said.

On the building side, new residential construction was the area that lagged the most compared with 2022. The city issued permits for 421 new single-family homes, “which is about 60 percent of what our last three- or five-year average has been,” Eckhoff said, pointing to higher interest rates as a factor in limiting construction.

“Hopefully as that turns down, we’ll see demand kick back up.”

Still, expect a softer year overall in 2024, TenHaken predicted.

“I think I’d be very happy if we hit north of $1 billion this year, but I always want to be realistic,” he said, noting the uncertainty of interest rates and the upcoming federal election.

“What we’re going to keep doing is balancing the very low tax climate that we’re in, which is great for the residents, but also delivering the services of a community that’s growing at a record pace.”

Here’s a map of notable permits issued in 2023:

Business leaders: Cautious optimism leads Sioux Falls into 2024