Businesses confident 2017 will bring growth

The Carsforsale.com headquarters at Lake Lorraine. (Jay Pickthorn/Argus Leader)
The Carsforsale.com headquarters at Lake Lorraine. (Jay Pickthorn/Argus Leader)

There are plenty of reasons Sioux Falls shouldn’t have had a record building year in 2016.

Uncertainty surrounded the presidential election for much of the year.

The state’s largest industry, agriculture, continued to lag.

The cost of construction, largely hit by labor shortages, went up.

Despite those headwinds, the city will still finish the year with close to $700 million in building activity. It marks the fourth consecutive record total.

As 2017 approaches, the mood among businesses is more confident, but the pipeline of new activity is not as full – at least for now.

“There’s a lot of optimism right now from businesses,” said Great Western Bank CEO Ken Karels. “That’s all based on the fact that they do expect growth to take off substantially next year.”

Barring an unexpected mega-project, however, the city is unlikely to break another record, said Mike Cooper, planning and building services director.

“We’re still expecting a solid year with a variety of projects in several sectors,” he said. “And the main activity area will be Lake Lorraine.”

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Retailers in downtown incubator show success

Monica Cross, of Lennox, S.D., shops Friday, Dec. 9, 2016, at Unglued in downtown Sioux Falls.
Monica Cross, of Lennox, S.D., shops Friday, Dec. 9, 2016, at Unglued in downtown Sioux Falls.

For business owner Ashley Morken, one program made the difference between running a temporary pop-up shop and opening a retail space downtown.

Morken, the owner of handmade store Unglued, started her business in Fargo, N.D., and opened a seasonal shop in  Sioux Falls two years ago.

It did well, but before she made the leap into a permanent second space, she was referred to the retail incubator program offered by Downtown Sioux Falls Inc.

“It was hugely instrumental in getting us there,” said Morken, who was accepted into the program in June 2015. “Feeling that support and encouragement to get more retail in downtown Sioux Falls was huge for us. We weren’t just another business opening.”

The incubator program was started in 2014 in response to a growing number of vacant storefronts on Phillips Avenue. The businesses that were moving in were mostly restaurants, and the downtown community was looking for a way to attract more retailers.

The resulting program offered subsidized rent for up to 18 months and $10,000 along with training and mentoring from the downtown organization.

It has accepted six businesses, and retail vacancy has dropped from about 11 percent to 3 percent in the last two years, according to Joe Batcheller, executive director of Downtown Sioux Falls Inc.

“So it’s been successful in that regard,” he said. “When you are able to fill those voids, it just adds to the vibrancy of downtown and keeps people interested in downtown and adds to that sense of discovery.”

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Sanford poised for international expansion

The Sanford Health international board of directors.
The Sanford Health international board of directors.

Sanford Health’s international reach is growing.

Into Ireland.

And New Zealand.

To Costa Rica.

And into Canada.

If current conversations end up resulting in new clinics or research bases, Sanford’s footprint will include eight countries and the territory of Puerto Rico potentially by this time next year.

In 2017, it will be one decade since Denny Sanford’s $400 million donation helped create Sanford International Clinics.

“The momentum behind that day continues to reverberate,” Sanford Health CEO Kelby Krabbenhoft said. “It’s been a really great thing.”

Recently, the system announced a new international board to help guide its international efforts. It is led by retired professional golfer Andy North and includes CEOs, medical leaders and professional athletes.

“The relationships we’ve built overseas are amazing,” said North, who has had a relationship with Sanford through its children’s international board for about a decade. “I’d be shocked if they didn’t turn into unbelievable home runs before we’re done.”

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Family bound together by art opening handmade store

Stacy Wengler, co-owner of Knotty Gnome.
Stacy Wengler, co-owner of Knotty Gnome.

It’s well into the evening, and Stacy Wengler is directing traffic in what started as an empty parking garage.

There are tables to assemble, signs to hang and lights to string.

Wengler and her crew of helpers will return in t

he early morning hours and start setting up merchandise as the Sioux Falls Made Market pop-up shop begins to take shape.

There is locally made clothing and jewelry. There are wooden signs and metal stakes. Repurposed furniture and handcrafted tea.

Dozens of area entrepreneurs will sell their work in this one-day, semiannual event created by the Sioux Falls Business Journal and organized by Wengler. For some, it will be the first time selling what they have made.

“I am so proud of the market,” Wengler said. “I’m so proud of all the makers. It’s been really exciting to see the community’s support and response to it.”

The success of the market, and the broader maker movement, have inspired her to create a permanent spot to sell her own work.

Next week, she and her husband, Kyle, will open Knotty Gnome Variety & Salvage in Hartford. Given her family history and generations of talent, it feels like the natural next step.

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Shriver Square welcomes new generation

Shriver Square in downtown Sioux Falls
Shriver Square in downtown Sioux Falls

Some people still think of it as a department store.

Others remember back to when it held a food court.

For others, the name is synonymous with the late developer Don Dunham Jr. or holiday memories of seeing Santa Claus.

Shriver Square is writing its next chapter, though, and it’s shaping up to be a story of small businesses.

The second floor office level that used to hold multiple office suites for The Dunham Company now is becoming home to an eclectic group of small businesses, and other entrepreneurs have moved into third floor spaces.

“I wanted to diversify the tenants to give it a good mix of people that could come in here and work together, because you are so close to each other and see each other a lot,” building co-owner Tim Karels said. “That’s what we’re hoping for and that’s what we’ve got so far.”

The six-story building, which was built as a department store in 1918, was purchased by the investor group Falls Real Estate in 2014.

First floor tenants include Cookie Jar Eatery, Chef Dominique’s Catering & Banquet Facility and Downtown Sioux Falls Inc.

The upper three floors are fully occupied loft apartments with a waiting list of residents. Karels, who lived in the building in 2012, said its appeal as an investment was its location.

“We just want to clean it up, slowly modernize it and basically take advantage of the location,” he said. “We want to do more with the open area that’s out there.”

Office space on second and third floors has taken some time to fill, but it’s down to one vacancy on the third floor.

“When office tenants are interested in a downtown space, this is a building they certainly consider,” said Reggie Kuipers, a partner in Bender Commercial Real Estate Services, who handles leasing for Shriver Square.

“Because it’s at the epicenter of the energy downtown, the core of downtown, and I think there’s a reason the second floor has evolved into the hipster floor.”

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Twin Cities restaurants finding foothold in Sioux Falls

Crooked Pint Ale House in Minnesota
Crooked Pint Ale House in Minnesota

Everyone involved in the deal recalls it wasn’t the easiest one to sell – at least on the front end.

But after a string of calls, emails and attempts to spark an interest in Sioux Falls, Hegg Companies convinced Twin Cities restauranteur Kam Talebi to make a visit west.

“Once I sort of saw what Sioux Falls was, I think they had me at, ‘Hello.’ ” said Talebi, the CEO of Minneapolis-based Kaskaid Hospitality, which owns Crave American Kitchen & Sushi Bar as well as several other restaurant brands.

“We decided to pursue a very aggressive conversation on how quickly we can do this and bring Crave to market, which has been incredibly successful for all of us.”

Crave opened in the Hilton Garden Inn Downtown six months ago and has been enough of a success that Talebi is working on more partnerships with Hegg and considering bringing another Kaskaid brand to Sioux Falls.

And he’s not the only Twin Cities restaurant owner sold on the market.

Crooked Pint Ale House, which is part of the new Holiday Inn Hotel & Suites at Elmwood Golf Course, also is based in Minneapolis.

Other restaurants based in the Twin Cities area have looked, too.

“I’ve been working with a Twin Cities restaurant group for the last seven years,” said Scott Blount, a commercial broker with Lloyd Cos.

“They’re a well-known group trying to find a location in Sioux Falls. We’ve been close a couple different times, but for one reason or another the deals have fallen apart. But they like the Sioux Falls market and want to enter the Sioux Falls market. It would be a very popular restaurant here.”

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Smaller grocers fill neighborhood roles

Domenik Winstead stocks the shelves at Andy's Affiliated Foods recently. (Jay Pickthorn/Argus Leader Media)
Domenik Winstead stocks the shelves at Andy’s Affiliated Foods recently. (Jay Pickthorn/Argus Leader Media)

If the family grocery industry had a face, it would belong to someone like Sharon Maltwitz.

A petite woman with seemingly endless energy, she can name the exact moment she started work at Andy’s Affiliated Foods – “It was 40 years ago Aug. 24 at 9 a.m.” – while struggling to say what her title actually is.

“I do a little bit of everything,” she said. “We go the extra mile for our customer. We’ll jump in and do it.”

She stops midthought.

“Come here, you’ve got to meet Mike.”

At the front of the store – where there are two checkout lanes – is Mike Scheerhorn, who lives, as he puts it, “a scooter ride away.”

He estimates he has been shopping at the store at 1025 S. Cleveland Ave. for more than a decade, attracted by its convenience and friendly staff. He said he’s there about four times a week.

“I’d say you come more than four times a week,” Maltwitz said. “I’d say you’re here at least six.”

She clearly is, too.

That sort of loyalty is critical to a small business trying to compete in a big-box world.

The past year has brought another Walmart to Sioux Falls, a new Fareway grocery and two Aldi locations. But the city’s longstanding grocers have persevered, finding new ways to attract customers in spite of mammoth competition.

“I think that one common component of all of us is that we’re survivors,” said RF Buche, whose family marks 111 years in the grocery business next month. “We’ve had to find our own niches. We’ve had to find a different way to do things.”

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Ratings return for local radio stations

Crash and Taylor with KBAD 94.5 broadcast their morning show from the studio at Badlands Pawn. (Joe Ahlquist/Argus Leader Media)
Crash and Taylor with KBAD 94.5 broadcast their morning show from the studio at Badlands Pawn. (Joe Ahlquist/Argus Leader Media)

Somewhere in Evansville, Ind., an old map hangs in a radio station manager’s office.

It shows ratings for the nation’s radio markets. Peter Tanz, senior vice president of Midwest Communications Inc., looked at it whenever he visited the station.

“And there’s this great big hole in the middle of the country,” he said. “That hole was where Sioux Falls is. And there’s nothing there.”

For years – decades, even – listener ratings have not been compiled for Sioux Falls radio stations.

That changed earlier this year, when Midwest, which owns seven radio stations in Sioux Falls including KELO-AM and KTWB-FM, and Chuck Brennan, who owns KBAD-FM, subscribed to Nielsen Radio Ratings.

“There weren’t any ratings for over a dozen years,” Brennan said. “People just tell you, ‘My station is great. It’s No. 1. It has all the listeners.’ And none of it is true.”

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Airport’s retention efforts pay off

The Sioux Falls Regional Airport (Jay Pickthorn/Argus Leader Media)
The Sioux Falls Regional Airport (Jay Pickthorn/Argus Leader Media)

The days of driving out of town to catch a flight appear to be over for many air travelers.

In 2009, the Sioux Falls Regional Airport estimated it captured 55.5 percent of market share. At that time, 29 percent of potential passengers flew out of Omaha. Eight percent went to Minneapolis.

Fast-forward to 2015, and there’s a significant shift.

An updated leakage study recently released found Sioux Falls capturing 86 percent of market share. Minneapolis draws more passengers – 7.6 percent of the Sioux Falls market – than Omaha, which has dropped to 5.5 percent.

“We’ve made pretty stark improvements in trying to keep our local passengers,” said Dan Letellier, the airport’s executive director.

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Events fill up new barn venues

The Meadow Barn in Harrisburg (Jay Pickthorn/Argus Leader Media)
The Meadow Barn in Harrisburg (Jay Pickthorn/Argus Leader Media)

Event planner Addie Graham-Kramer had a request from a bride last summer she couldn’t fulfill.

The woman wanted to get married in a barn.

“And we didn’t have anything,” said Graham-Kramer, founder of The Event Company. “So she reached out to someone in Wisconsin, and they were considering having their whole wedding in Wisconsin just to be in that setting. People have wanted it, and it’s happening all over the country.”

Barn venues reached the Sioux Falls market in a big way this year, with three new sites opening within a 30-minute drive of the city and another not far away in the Okoboji area of northwest Iowa.

 

“It’s a big thing the market has wanted,” Graham-Kramer said. “It’s really unique, though, that they’re all happening at once. I’ve never seen where you’ve got three venues all popping up at once.”

Equally striking, however, is the demand. Each new venue reports limited to no options for weekend events this year and into next fall.

“I anticipate some of our current clients are going to want to shift venues, especially repeat events, and just want to be out there because it’s unique,” Graham-Kramer said. “Once you step into these venues and these spaces, you almost feel like you’re in a different city.”

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