1. 14 • August 2016 • Heartland Real Estate Business www.REBusinessOnline.com
MARKET HIGHLIGHT: SIOUX CITY
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 visi-
tors alike out into the streets of Sioux
City is the $130 million Hard Rock Ho-
tel Casino. The Hard Rock replaced
the floating Argosy riverboat casino
in a first-in-the-state competitive bid-
ding war for a land-based casino.
Due to the popularity of the de-
velopment 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 entertain-
ment 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 ten-
ants such as Best Buy, Kohl’s and Old
Navy. Anthony Properties’ new de-
velopment 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 draw-
ing 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 vil-
lage 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 down-
town 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 develop-
ment arm of the Winnebago Tribe of
Nebraska, is by far the most aggres-
sive developer in the tri-state region
(Iowa, Nebraska and South Dakota).
Several large industrial projects
have had a major impact on the se-
vere housing shortage we currently
face. As an example, an unfurnished
1,000-square-foot, two-bedroom, one-
bathroom downtown loft was recent-
ly leased for $2,200 per month. That’s
a rate we have never experienced be-
fore.
However, despite the peak in de-
mand, 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 per-
cent and below. It will be interesting
to see when the market reaches satu-
ration.
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 fertil-
izers, 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 com-
pany 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 divi-
sion of Mars Inc., recently announced
a $120 million pet food plant. The
145,000-square-foot project will re-
place the existing 130,000-square-foot
facility directly west of the building
site. The project is expected to be com-
plete in 2019.
Highway infrastructure
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 com-
plete 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.
Chris Bogenrief
SIOR, CCIM,
president, NAI United
Seaboard Triumph Foods will open this $264 million pork processing facility by the
summer of 2017.
By the end of this year, the 28.3 million-cubic-foot fertilizer plant for CF Industries is expected to be complete. Performance
Contractors began construction on the facility, which is situated on 350 acres, in 2013.