August 9, 2022

If you’re looking for an apartment in Sioux Falls, your search probably doesn’t get much easier.

Sioux Falls reported 3.72 percent multifamily vacancy rates in July, according to a South Dakota Multi-Housing Association survey of nearly 18,000 residential units.

In January, the rate was 3.12 percent.

Hundreds of new apartments have now become available for rent – and the figures show that there is still continued demand and consequently rising rental prices.

“Sioux Falls continues to post record-breaking housing construction figures, as evidenced by the city’s multi-family building permit numbers in 2021 and 2022. We don’t see a slowdown anytime soon,” said Jill Madsen, chair of South Dakota Multi-residential Community.

The vacancy rate is similar to what Lloyd Cos. in its portfolio of approximately 6,500 homes in Sioux Falls, said Ashley Lipp, vice president of housing management.

“We just can’t build them fast enough,” she said. “We’re doing our best to stay on schedule, but as soon as we get confirmed dates we start leasing and they fill up immediately.”

Townhouses with attached garages are particularly scarce.

“My message is, if you find something you like, don’t wait. It probably won’t be there the next day.”

The data also shows “there is a shortage of housing and more needs to be built to meet future demand,” Madsen said.

According to a recent nationwide survey conducted by the National Apartment Association, the US needs to build 4.3 million homes by 2035 to meet future demand and address the current housing deficit.

Sioux Falls seems to be doing its part. Through July, permits had been issued for 2,400 housing units, compared with 1,181 a year ago.

Hundreds of those on display in July are for Sage Meadows, a 230-apartment, 36-townhouse complex on 85th Street and Tallgrass Avenue by developer RMB Associates.

His portfolio is 99 percent full on average, and 100 percent on some days, said CEO Joel Dykstra.

“A building that we open in Grand Prairie has 32 units, and we already have 30 signed leases,” he said. “Part of it is product. We do what people are looking for. We’re at the right end of the market for people looking for quality amenities.”

Sage Meadows, for example, will include a central courtyard with a swimming pool, lawn for dogs, putting green and possibly a sand volleyball court. The units are slated to open late next year and last through 2024, bringing the developer’s portfolio to more than 1,000 units.

However, at $56 million, the project also illustrates what developers encounter when building. This complex is priced at $160,000 per unit.

“A year ago it would have been $140,000,” Dykstra said. “And rents are not linked to costs. The rents are in line with the market. They don’t go up just because we spend more on construction. They’re going up because people are willing to pay for the product they’re getting.”

Sioux Falls “still isn’t where Omaha is in terms of rent per square foot,” he added. “And we’re not even close to Minneapolis. Rents have trended up in Sioux Falls over the last five years, but … the difference between our rent per square foot and Omaha or Des Moines, the margin has stayed the same, so we’re still under those places.”

Lloyd Cos. is bringing several new projects to the Sioux Falls market later this year.

The Carlton, a new mixed-use building in Dawley Farm Village, is due to move into its first residents in November and will offer an indoor pool and hot tub, a rooftop terrace and “really luxurious finishes,” Lipp said. “It’s going to be a beautiful community.”

On the southeast side of town, The Slate at Harvest Creek near 57th Street and Veterans Parkway will primarily offer two- and three-bedroom townhouses that will be “very spacious with nice finishes,” Lipp said.

And on the northwest side, near Jefferson High School, Aspen Heights residents are slated to move in in November.

“It has really nice finishes and will have a clubhouse with a fitness center and a pool,” says Lipp. “It’s a great location in an up-and-coming part of town, so we’re starting to see more activity up there.”

As the back-to-school season and end-of-year approaches, “the rental market usually slows down a bit,” she added. “There will likely be some new stock available as we approach fall and winter. If you want to move, you probably have more options than you do in spring and summer.”