Sioux City Experiences ‘Crane Craze’ Across Property Types
The skies are dotted with cranes — not the type you would find on route west to the Sandhills of Nebraska, but the type synonymous with a robust economy. It is safe to say there have never been so many cranes at work in the history of Sioux City.
Several large industrial projects are resulting in further development of retail and multifamily space that has been in demand for some time in Sioux City.
Retail, entertainment wave
Helping to draw residents and visitors alike out into the streets of Sioux City is the $130 million Hard Rock Hotel & Casino. The Hard Rock replaced the floating Argosy riverboat casino in a first-in-the-state competitive bidding war for a land-based casino.
Due to the popularity of the development since it opened in August 2014, the Hard Rock already has plans to add an $8 million casino expansion by the end of the year. Hard Rock has played a vital role in making Sioux City a regional, cultural and entertainment destination.
Dallas-based Anthony Properties is planning to deliver 350,000 square feet of retail space by the summer of 2018. The 64-acre site, located at the intersection of Sunnybrook Drive and Sergeant Road, is just down the hill from Lakeport Commons, a 456,690-square-foot lifestyle center that opened in 2005 and includes tenants such as Best Buy, Kohl’s and Old Navy. Anthony Properties’ new development is expected to bring more anchor stores, including a grocery store, to the market.
Apartments play catch-up
On the same site on top of the hill, Perry Reid Properties has 225 luxury apartment units under construction. The $20 million project will feature eight buildings, parking garages, a clubhouse and a pool. Including this project, the Sioux City metro area has well over 369 multifamily units under construction, with more on the drawing board, and some associated mini-storage to boot.
Along the Nebraska riverfront, Ho-Chunk Inc. is developing a 200-acre mixed-use village that will consist of 600 apartment units, 400 single-family homes, and a 67,000-square-foot village center with office and retail space. The project is part of Ho-Chunk’s $100 million commitment to the area and is being developed in succession with 97 new market-rate apartments that are being converted from former downtown factories.
Modular apartments in Dakota Dunes, S.D., are currently being stacked together like LEGOs to form yet another upscale apartment complex built by Ho-Chunk. The 47 apartment units were 70 percent finished in a Ho-Chunk-owned factory in Detroit Lakes, Minn., before being delivered on site, a new concept driven partly by labor shortages.
Ho-Chunk, an economic development arm of the Winnebago Tribe of Nebraska, is by far the most aggressive developer in the tri-state region (Iowa, Nebraska and South Dakota).
Several large industrial projects have had a major impact on the severe housing shortage we currently face. As an example, an unfurnished 1,000-square-foot, two-bedroom, one-bathroom downtown loft was recently leased for $2,200 per month. That’s a rate we have never experienced before.
However, despite the peak in demand, there have been virtually no new multifamily assets developed in the past 20 years until recently. Cap rates have compressed, and older properties that typically traded in the 9 to 10 percent range are now 7 percent and below. It will be interesting to see when the market reaches saturation.
Industrial roots strengthen
On the south side of Sioux City’s tri-state metropolitan area, CF Industries, a Deerfield, Ill.-based manufacturer and distributor of agricultural fertilizers, will soon see the delivery of a $2 billion plant expansion. The decision to expand was fueled by a significant decrease in the cost of natural gas.
The expansion of the fertilizer plant includes arguably the fifth largest building in North America. It is among the top 15 largest buildings in the world at approximately 28.3 million cubic feet.
Construction at the 350-acre site, led by Performance Contractors, began in the fall of 2013 and is expected to be complete by the end of this year. At its peak, the project brought 4,500 workers from all over the United States, taking a toll on the local housing inventory.
CF Industries isn’t the only company making waves in the industrial sector. Seaboard Triumph Foods will create nearly 1,100 new permanent jobs when it opens its $264 million pork processing facility next summer. The new facility, which will soon be processing 3 million hogs annually, has been underway since fall 2015.
North Sioux City in South Dakota is also seeing a boost in industrial development. Royal Canin, a division of Mars Inc., recently announced a $120 million pet food plant. The 145,000-square-foot project will replace the existing 130,000-square-foot facility directly west of the building site. The project is expected to be complete in 2019.
Along the Missouri River, a dozen more cranes can be found working on a project that will convert I-29 from a four-lane highway into a six-lane road going through the city. This has been a painful, decade-long project, but will be well worth the wait when completed in 2019.
Simultaneously, the last 40-mile stretch of U.S. 20 between Chicago and Sioux City is being converted to four lanes. This project is expected to shift a significant amount of truck traffic from I-80 to U.S. 20 when complete in 2018.
Although Sioux City has ex-
perienced ups and downs, it’s our
recession-proof, agricultural-based economy bolstered by local firms such as Blue Bunny Ice Cream, Jolly Time Popcorn and Sue Bee Honey that keeps our growth safe and steady.
The economists are predicting a national slowdown in 2019, but based on the Sioux City crane craze I don’t expect that to happen anytime soon.
— By Chris Bogenrief, SIOR, CCIM, president, NAI United. This article originally appeared in the August 2016 issue of Heartland Real Estate Business.