With nearly 100 percent occupancy, apartment market enters historic territory

July 19, 2021

It might sound impossible, but it’s next to impossible to find an apartment in Sioux Falls right now.

One morning last week, Kelly Greer had four apartments out of a portfolio of 640 available to rent – and those weren’t available until September.

Days later, three of the four also were taken.

“It’s very hard right now,” said Greer, director of real estate operations for Cresten Properties.

“The whole city is like this.”

While semiannual vacancy numbers through the South Dakota Multi-Housing Association won’t be available until next month, odds are Greer is correct.

“We are also hearing 99 to 100 percent (occupancy),” said Denise Hanzlik, the association’s executive director.

Greer, who has been in the market since 2007, said he has never experienced such limited availability.

“I think it’s just the growth of the city, honestly,” he said. “We’ve had more units leased sight unseen from out-of-state residents than I’ve ever seen. It seems weekly. They’re not stopping to view. They’re seeing it online, and they fill out an application and show up.”

At Lloyd Cos., which manages about 5,000 apartments in the Sioux Falls area, there have been times recently when portfoliowide there have been fewer than 10 available to rent, said Ashley Lipp, vice president of residential property management.

“Occupancy has been incredible,” she said. “We track it going back to 2015, and we’ve been seeing numbers this year higher than we’ve ever seen in the past six years.”

Two new Lloyd properties opening this week and next were filled months before the initial apartments were available, she said. Both are on the west side – Luxe North west of Career Avenue and south of Benson Road and The Silos at Ellis Crossing at 41st Street and Ellis Road. They will be adding more apartments this year and next.

“We’re having record lease-ups,” Lipp said. “Both of those properties are 100 percent full and have been for quite some time. We’re leasing ahead 60 to 90 days, and they’re full.”

She also has seen “an influx of people moving here from all over the place,” she added. “When I look at applicants, I see a lot coming from California, the East Coast and the Minneapolis area. There’s just a lot of economic factors making people want to move here.”

Tenants have to show income to qualify for a lease. Lipp said she sees everything from those moving here for jobs to those working remotely to retirees.

“A lot of what I see are people moving here who have jobs lined up; they want to move their families and be part of the growth we’re experiencing,” she said.

The Bender Midwest Properties portfolio of about 1,300 units is 99 percent leased too, president Jill Madsen said.

“Anything that is coming vacant is almost already spoken for even before it becomes vacant,” she said. “It’s crazy. And it’s really hard when you get phone calls and people are looking and you’re like, ‘We just don’t have anything.’ We get that a lot.”

Navigating the market

The days of browsing multiple properties for an apartment largely are on hold, those in the industry agreed.

Madsen tells tenants that if they find something, take it.

“And if you’re selling your house, you need to make sure you have a place to go because the rental market isn’t good either.”

In other words, don’t assume you can sell your house and rent an apartment while you look for your next house.

There are new options coming, though, she said.

“There are a lot of new projects in the works. And we definitely need them.”

At Lloyd, construction “is not slowing down any time soon,” Lipp said, with projects in development on all sides of the city and in Harrisburg.

“We’re really focused on delivering products people want at a price point they can afford. It’s almost like a perfect storm because construction is more difficult and we’ve had delays bringing products online due to supply. But it could be so much work. Our construction team has done a fantastic job of delivering as fast as they can.”

Cresten has multiple apartments under construction, including more at Edgewater Villas near 85th Street and Cliff Avenue and its City’s Edge project near 69th Street and Southeastern Avenue.

“We’re very close (to pre-leasing), but we’re just not quite there yet,” Greer said. “We don’t want to start leasing for a specific date and then it gets kicked back.”

In the meantime, landlords are attempting to get creative to try to match people with places to live.

“More often than not, if they can be a little flexible, we can find something,” Lipp said. “We’ve been calling people asking if they can move out a little early. It’s kind of like putting a puzzle together.”

The most in-demand type of apartment is a town home-style with an attached garage, she added.

“If someone wants that, it’s trickier, but if they’re flexible, we can help them,” Lipp said. “Another thing that’s driving occupancy is it’s really hard to find a single home for a first-time homebuyer, so a lot of them are renting longer than anticipated, and the town home is a great option because … they still have the privacy and a house feel.”

And despite the market, landlords are mindful to still try to ensure the apartment leased fits the tenant’s needs, Greer said.

“When you find something, you’ve got to take it, but it’s where they’re going to call home, so you have to make sure it fits,” he said. “That’s the customer service we have to do. But unfortunately, you have to make a quick decision.”

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With nearly 100 percent occupancy, apartment market enters historic territory

It might sound impossible, but it’s next to impossible to find an apartment in Sioux Falls right now.

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