Bender Outlook: High vacancy raises questions for businesses on Sioux Falls' 41st Street

Patrick Anderson
Argus Leader
A space between ECig Crib and Mattress Firm is for lease at 2031 W 41st street Thursday, Feb. 21, in Sioux Falls.

Are there signs of trouble for the 41st Street commercial corridor, Sioux Falls’ retail mecca?

Is Harrisburg headed for an economic boom?

Is multi-family construction headed for a recession?

All were teased as possible trends for the Sioux Falls commercial real estate market in 2019 by the experts at Bender Commercial Real Estate. The firm hosted its yearly Sioux Falls Market Outlook presentation Thursday at the Washington Pavilion, sharing national and local market research with an auditorium packed with members of the city’s business community.

“We’ve had great support and great reception,” said Michael Bender, the company's founder and principal.

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Bender’s commercial agents predict strong growth to continue in Sioux Falls in 2019, especially in the outer areas of the city.

After a broad look at the local economy, including a persistent workforce shortage affecting Sioux Falls industries, Bender’s agents looked in their crystal ball for 2019 for trends in the industrial, retail and office sectors, as well as what the future holds for investment properties.

Problems on 41st Street?

Reggie Kuipers, a commercial broker for Bender, raised the question about 41st Street during his presentation on retail vacancies throughout the city.

Storefronts along the city’s busiest retail corridor had an 18.5 percent vacancy rate, a higher rate than shops on Minnesota Avenue, in the Lake Lorraine commercial district and the shopping centers near 57th Street and Louise Avenue.

“The cornerstone of opening a retail business in our community for years has been, ‘I have to look at 41st Street,’” Kuipers said. “I ask you, is that still true?”

Harrisburg heading for growth

As developers push south, some are hopping city boundaries to the community to the southeast of Sioux Falls, Kuipers said.

Harrisburg has annexed hundreds of acres into its city limits in recent years, and developers are already racing to stake their claim on an increasingly popular part of the metro area, which will now come with the utilities needed to build homes and retail centers, Kuipers said.

Apartment construction slowing down

Following years of record growth, multi-family housing construction has entered a recession and will likely remain there through the coming year, said Nick Gustafson, another commercial broker for Bender who spoke at the event.

The vacancy rates for apartments in Sioux Falls is 9.5 percent while the national average usually hovers well under 6 percent.

Bender pushes his staff to do more than collect and share economic data – he asks them to make a prediction. That’s part of the reason why the event has lasted for 22 years and why it’s still valued by the Sioux Falls community, Bender said.

“It’s accurate, and most importantly, it’s trusted,” Bender said. 

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