SIOUX FALLS, S.D. (KELO) — After breaking the record for building permit valuations in 2020, the City of Sioux Falls is already on track to set a new record in 2021.
January brought $57.8 million in building permits, up from $33.1M in January 2020 and $29.1M in January 2019. Nearly half of this year’s new projects are for apartments.
“In the last couple months, even with everything going on with COVID, we’ve seen a very strong apartment market with a lot of people moving here from out of state,” Jill Madsen, the president of Bender Midwest Properties said.
Right now Sioux Falls has a vacancy rate of just 6.6% for apartments in the city.
“That is the lowest our vacancy has been in the city since 2017. There is definitely a need,” Denise Hanzlik, the Executive Director of the South Dakota Multi-housing Association said.
Part of the increased demand on apartment housing stems from the shortage of single-family homes available in the Sioux Falls market.
“Those people that maybe can’t find a home in their price point, they are looking at apartments or some type of rental unit they can find suitable housing,” Hanzlik said.
The pressure for more housing in the city is only expected to grow with the recent announcement of several new businesses coming to town.
“It is time for developers to start looking at new projects in Sioux Falls,” Madsen said. “Especially with the announcement of Amazon and all of those people moving here.”
Apartment developers are starting to build now to get ready for Amazon’s planned distribution center and the new Schwan’s Asian food plant in Foundation Park.
“We’re looking in the northwest side of the city, just with Amazon coming in, that’s looking like an area that is going to need more housing,” Madsen said.
January brought $27.7 million in construction permits to add another 238 multi-family housing units in Sioux Falls. But it will take some time before those new units are ready to help ease the pressure on apartment vacancies.
“With that market being tight, you will see more of an increase across the board in the market prices,” Hanzlik said.
Right now the average price of a two-bedroom apartment ranges from $900 to $1,000 a month. Industry leaders say the new manufacturing jobs coming to town will put even more pressure on the availability of affordable housing in Sioux Falls.