SIOUX FALLS, S.D. (KELO) — After a record-setting year in 2022 for building permits issued in Sioux Falls, 2023 is off to a much slower start.

2022 saw $1.93 billion in building permits issued which was the result of “a perfect storm,” chief building official Butch Warrington said Monday.

“We had $170 million worth of work out at the water treatment center, you know, so that was a big project. So, I don’t know that the city’s going to have any big projects this year for us. Last year was kind of the perfect storm,” Warrington said.

Commercial builds drove growth in 2022 but residential permits contributed to the record setting numbers. Especially multi-family housing units. Last year, the city added more than 3,000 multi-family units with the outskirts of Sioux Falls seeing the brunt of the growth.

Compared to the first quarter of 2022, though, there is a noticeable decrease in residential permits being issued.

“I think the biggest thing right now is interest rates,” Warrington said. “It seems like we’re really short is on the single-family units, townhome units, that’s where we’re really shy right now, because we’re still pretty good on the new commercial… But right now, the new single family and townhome units are significantly lower than last year at the same time.”

Demand could be impacting the requests for residential permits as could workforce challenges, Warrington explained.

“There’s still a workforce shortage out there from what I’m hearing,” Warrington continued. “They pulled a lot of permits for the single-family units the last couple of years, but they aren’t all completed yet. So, they’re trying to get those done before they build anymore, I think.”

Additionally, the weather could be impacting the requests for new residential builds. This winter, a barrage of snow storms has been plaguing Sioux Falls and beyond, making it difficult to consistently work on projects.

“We’re not getting a lot of frost, but you dig a hole, and the next day it’s full of snow,” Warrington said. “So yes, I think having an actual winter here has made a huge difference.”

Despite the slower start to the year, Warrington believes that 2023 will be a positive year although it may not break any records like the city did in 2022.

“Right now, we’re staying about where 2021 was, but that was a record-breaking year in 2021. So, if we could stay close to that I’d be happy,” Warrington said.