Competition for materials and labor limits needed housing growth in South Dakota

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SIOUX FALLS, S.D. (KELO) –From Rapid City to Sioux Falls, much of South Dakota is experiencing a housing shortage, leading to a record number of new building permits for apartments and single-family homes. But developers say how fast they can meet the demand is limited.

“This project is 192 units, six buildings of 32 apartments each,” Joel Dykstra with Paradigm Construction said. 

The apartment units along North Career Avenue are some of the nearly 2,000 new apartment units Paradigm construction is currently working on across the state.

“We have about 1500 units that we’re under construction on in various stages throughout the state,” Jake Quasney, Lloyd Companies’ Vice President of Development said. “That’s substantially higher than normal.”

Both Paradigm Construction and Llyod Companies have recently expanded to the Rapid City area, working to help keep up with the growing need for more apartment housing in South Dakota.

“Really across the state we’re seeing a high demand for housing; there’s a ton of people that are moving to the state… And we’re also seeing businesses relocate,” Quasney said. 

“There will be that demand there,” Dykstra said. “I think the question will be whether we can all get them built with the conditions that we have right now.”

One limitation has been an issue in growing South Dakota for years.

“Labor is a tight market,” Quasney said. “We’re in a place that has for a long time had employment below three percent, that’s a tough thing to do to find the people when we all of a sudden start increasing our building permits.”

“The company here is just doing the framing, someone else comes in and puts the roof on… Another comes in and does the electrical work, and another does the plumbing work and then HVAC and then somebody comes in and does the sheetrock, so it’s a whole system of companies and of employers who work here in Sioux Falls and build this community,” Dykstra said. 

But now in addition to the shortage of skilled workers, the pandemic has also led to a competition for materials.

“The availability of lumber especially, various things that need to be imported from outside the United States,” Quasney said. “There’s a supply chain issue that exists there.”

“Things like appliances and refrigerators and washing machines, things that are harder to get than they used to be and take a lot longer,” Dykstra said. “Its going to be interesting to see if everything that people want to do in 2021 can actually get done.”

Both developers expect to see the increase in construction of more apartments and single-family homes continue over the next 12-18 moths. They say the housing crunch is critical across the state, but it’s worse in the Rapid City market where construction of single-family homes may be scheduling years down the road.

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