What a huge hospital and new interchange will mean for this pocket of southwestern Sioux Falls

Patrick Anderson
Argus Leader

Parts of 69th Street were still gravel when the Avera Heart Hospital opened in southwest Sioux Falls.

Avera picked the site because of its access to the interstate for visiting patients, not necessarily because of the massive potential for growth the area is buzzing with so many years later.

“It was farmland, quite frankly,” said David Flicek, president and CEO of Avera McKennan. “There was not much out there when we went out there.”

The intersection of West 69th Street and South Louise Avenue is shown in Sioux Falls, S.D., Friday, Nov. 23, 2018.

This corner of the city, near the elbow of Interstates 29 and 229, is poised for transformation as developers and investors who own much of the remaining countryside continue to build out between Louise and the interstate.

Avera is in the middle of one of the biggest construction projects in South Dakota, a new health care campus at 69th and Louise. Meanwhile, blocks to the southwest, a group of landowners and developers have joined forces to push forward a new I-29 interchange at 85th Street.

Some of the parcels along the interstate are still a blank canvas, with gravel roads and land free from annexation and City Hall’s land-use rules.

But there has been some development since Avera first arrived.

Single family homes moved into the area years ago, along with Explorer Elementary School, built in 2005 as Harrisburg School District’s first foray in Sioux Falls city limits.

Non-residential projects have continued to pop up along Louise, creating a fledgling retail corridor south of 69th Street.

There was a Sanford Health clinic in 2013, Culver’s in 2016 and Cody’s Smokehouse came along a year later.

North Dakota-based Cornerstone Bank announced in May it was moving to the area. Construction on the two-story office building is expected to finish next month. It is expected to open Dec. 17 on the northwest corner of 69th and Louise, Market President Evan Ingebrigtson said.

“We looked at a lot of sites,” Ingebrigtson said. “We just kept coming back.”

But the amount of development there today is nothing compared to what developers have in mind for tomorrow.

Their vision for the parcels to the west, between Louise and I-229, is even more ambitious.

The intersection of South Tallgrass Avenue and West 69th Street is shown in Sioux Falls, S.D., Friday, Nov. 23, 2018.

A new interchange would create high visibility and high traffic counts. Joel Dykstra, who represents one of the firms that owns land in the area, said it could even rival one of South Dakota's busiest blocks: 41st Street near I-29

“You’ll have the potential there for large hotels, for large retail,” said Dykstra, CEO of RMB Associates. “And then as you branch out or get further away from the interstate, you have all the support services or the smaller stores.”

City officials are already investing in road improvements near the interchange as they prepare for increased traffic. Crews have added lanes and street lights at the intersection of 69th and Tallgrass, and made similar improvements to 85th Street between Louise and Hughes avenues.

In 2019, city crews will finish widening 69th between Louise and Tallgrass in a $5.2 million overhaul, transforming the road from a rural two-lane road to what Sioux Falls’ City Engineer Chad Huwe described as an urban segment.

Eventually, Tallgrass will have to be paved.

"We know what we have to get done," Huwe said.

Zoning maps show City Hall is expecting most of the future development in the area to follow a similar trend: larger scale, commercial projects. Parcels closer to the interstate are designated for businesses, institutions or multi-family housing.

In February, Sioux Falls Lutheran announced it was building a new elementary-middle school on 30 acres near the intersection of 69th Street and Tallgrass Avenue. The land was donated by Sanford.

The intersection of South Tallgrass Avenue and West 69th Street is shown in Sioux Falls, S.D., Friday, Nov. 23, 2018.

The draw for developers isn’t limited to the existing commuter traffic.

It’s drive-over territory for the most part, with the only access points being the Tea exit on I-29 and the Louise exit on I-229.

Instead, there’s a growing appreciation among builders for the what the future may bring.

It was no mistake that Cornerstone leadership opted for a location on a corner opposite Avera’s new hospital

“We looked at traffic counts, we looked at rooftops, we looked at other banks in the area,” Ingebrigtson “We just see it as a high-traffic area that continues to grow and continues to prosper. Obviously with Avera right kiddie corner, (it) assures a natural draw.”

Having already established a foothold in the area, Avera bought 88 acres at 69th and Louise in 2013. Construction on some of the early phases of the project, including the inpatient orthopedic hospital is well underway.

But the combined scope of the project is huge, with multiple facilities including a sports training performance center and an addiction treatment program. In total, there will be more than a quarter-million square feet of health care space, with an estimated construction cost of $172 million.

The economic ripple effects are already clear to Avera executive Flicek, as the system continues attracting physicians and other providers to Sioux Falls. He also sees potential for medical office buildings as well as more restaurants and shops to serve patients and their families.

"I think it will be an economic engine in that side of town,” Flicek said. “Businesses will see all the traffic on Louise and the new interchange. It will be a great place to set up a business.”

Avera’s massive campus will create a major draw to the area, along with Citi’s new Sioux Falls office building coming just to the north. And with that draw comes the potential for increased access.

The construction of the Cornerstone Bank is shown at intersection of West 69th Street and South Louise Avenue in Sioux Falls, S.D., Friday, Nov. 23, 2018.

The proposed interchange connecting I-29 and 85th Street achieved a victory earlier this month with the Federal Highway Administration approving the project pending an environmental assessment.

A group of Sioux Falls’ most active developers and landowners helped get the ball rolling on the Administration’s approval. Dykstra represents RMB Associates LLC, which owns 70 acres near Tallgrass and 85th. Investors with RMB have teamed up with the Lloyd, Benson, Lemme, Cutler and Hegg families to help fast-track the interchange.

The group committed nearly $4 million to the project in 2017 and they’ll do much of the legwork with the environmental assessment, too, Dykstra said.

“It’s quicker and we can work with the engineers,” Dykstra said. “We have a different time frame than the government does.”

He estimated the assessment could take about 18 months, which means the interchange won’t be finished until 2024.

The financial costs to developers has been complimented with enthusiastic support from local governments, including the cities of Sioux Falls and Tea and Lincoln County.

Lincoln officials agreed to spend $16 million and Tea agreed to chip in $4.3 million. Sioux Falls will spend an estimated $30 million on road upgrades to Tallgrass, 69th and 85th.

“The thing that makes this go is the cooperation,” Dykstra said. “The privates are taking the risk on the front end and spending the money, but it wouldn’t work without the support of Sioux Falls.”