Dec. 29, 2025
Call them 2025’s big three: the three driving reasons Sioux Falls will finish the year with its second-best building activity on record.
There’s the massive CJ Schwan’s Asian food production facility at Foundation Park, which will move in some employees next year with the goal of being fully operational in 2027.
There’s the expanded tower for women and children’s services at Avera McKennan, which recently hit its halfway mark and will see its first patients in early 2027.
And there’s much of the work for Founders Crossing, a multifaceted development for the Good Samaritan Society at 57th Street and Veterans Parkway, which will open over the course of several years beginning in 2026.
After that, though, the balance of 2025 came in the form of public sector work such as the Sioux Falls Regional Airport’s concourse expansion; a new building for the city’s light, power and traffic departments; and the Butterfly House’s expansion at the Great Plains Zoo.
“We’ve only got three over $100 million … and then it drops to $44 million with the airport expansion, so it was really a year of more midsized projects,” said Jeff Eckhoff, the city’s director of planning and development services.
“What I hope to see in the beginning of the year is finishing projects hanging out there in development.”
Look for the city to recommend a redevelopment project on the south end of downtown in early 2026 on a city parking lot at 113 E. 13th St.
Eckhoff also is optimistic that plans will come together on some of the city’s remaining downtown rail yard land, which has been proposed as a redevelopment from Iowa-based Christensen Development.
“We believe we’re back to having an opportunity to put the full proposal together,” he said. “We hope to see things move forward again.”
While the pipeline of projects awaiting approval is slim to start the year, “it sounds like there’s a lot planned for next year,” Eckhoff said.
“It’s just there’s still those uncertain headwinds with the economy to actually get good data around what’s going on.”
From the perspective of Bob Mundt at the Sioux Falls Development Foundation, “I think most people are having an average year,” the president and CEO said. “They’re nowhere near where they were a couple years ago during the boom period. I think it’s tempered for a number of reasons, and there are some industries probably more impacted than others.”
Those who deal with government contracts or had received stimulus money are seeing some slowing, for example, he said.
Anecdotally, “the people I work with have all been very pleased,” said Jim Wiederrich, business attorney and shareholder at Woods Fuller.
Activity has been “very busy, very steady,” he said. “I haven’t seen a downturn at all in our work, and with what I’ve got going for 2026, there’s plenty coming in the form of construction projects. There’s a lot of people who bought bare land in the last couple years, and now they’ve just been waiting to do building.”
At Lloyd Cos., 2025 marked the completion of The Steel District, with its first full year for the Canopy by Hilton hotel, stabilized apartment occupancy, minimal office vacancy and five full-service restaurants open at the downtown site.
For this year, unknowns at a federal level and continued volatility have “not created the best environment for development projects to move forward,” CEO Chris Thorkelson said. “There’s too much uncertainty. You don’t see many new small retailers going into strip malls. We have our challenges on some of our mixed-use product, and I don’t think we’re the only ones.”
Construction costs and the interest rate environment are challenging for small businesses, Lloyd chief operating officer Jake Quasney added.
“Which is really something that drives commercial growth, because the big swings from major national retailers are … maybe a couple a year, and it’s not enough to drive the activity market-wide,” he said. “Class A office downtown is a very good place to be. We need people to support our small retailers. I do think that’s important when there are opportunities to support those shops and restaurants that are local. They’re feeling the pinch of people being uncertain about the economy.”
‘Turning a new page’
One way to take the pulse of the Sioux Falls business community is by its response to the five-year Forward Sioux Falls campaign supporting economic and workforce development in addition to other broad community priorities.
“We’ve had incredible response from our Forward Sioux Falls businesses,” said Laura Mitchell, a campaign co-chair and the president and chief operating officer of Lawrence & Schiller.
“We have a large number that increased their investment compared to five years ago, which is incredibly encouraging, and … we have quite a few brand-new investors and bigger companies coming on board as well that are saying, ‘Yes, Forward Sioux Falls is important to me as a business and important to the workforce I employ.’”
In her marketing role, she also sees businesses willing to invest in reaching prospective customers.
“2026 feels a little more stable for our clients. There’s definitely optimism,” she said. “I think 2025 was a year to pause and evaluate what they’re doing, do they have the first product mix, the right focus on certain areas and how should that evolve. It feels like in 2026 people are turning a new page.”
While the Forward Sioux Falls campaign hasn’t been finalized yet, so far the average pledge has increased 13 percent, and nearly 50 new investors have been added, said cabinet member Dave Rozenboom, president of First Premier Bank.
“I could not have walked away from the conversations that I’ve had with the business community or investors in Forward Sioux Falls and feel any better,” he said. “I’m thrilled with the next set of initiatives and the support we’ve gotten. I’m also thrilled we did the broader community strategic plan Sioux Falls Tomorrow IV … a much broader plan that really highlights the school district, the city, the (Sioux Falls Area) Community Foundation and social services. We have a road map to where we’re going.”
From his perspective in bank leadership, “we’ve had a really, really terrific 2025,” he said, adding that the bank’s agriculture, commercial and commercial real estate portfolio combined is up 7 percent in loan growth year over year.
“We’ve benefited from population growth, we’ve benefited from a strong economy with very high levels of unemployment, and that’s really buoyed the consumer,” he said. “And we have emerging, exciting employment sectors that have developed over the last decade and continued to fuel wages.”
While inflationary pressures exist, the consumer overall appears “pretty resilient,” he continued. “I feel like the consumer has found a new normal, and they’re in a position of stability.”
Sites to watch
Mega-project CJ Schwan’s isn’t the only building under construction at Foundation Park.
In July, the city issued a permit to Amazon for a $23.4 million project in the northwest Sioux Falls development park that’s expected to complement its larger fulfillment center at the property.
“We’re probably half built out at Foundation Park, and if we have another decent year in 2026, we’re going to be down to that critical mass of what property we have left, so we need to start looking,” Mundt said.
“We get a lot of tire kickers. Recently, a lot of them are either data centers or people looking to control ground for data centers. We’ve developed our own criteria for that and are being pretty selective about who we talk to. We want to make sure there’s a legitimate end user on the line already and we’re not speculating for a couple years.”
The only active hyperscale data center proposal is in northeast Sioux Falls on 160 acres about 1 mile south of the Veterans Parkway exit for Interstate 90, near the intersection with Rice Street. It’s pending city approval.
Eckhoff also is watching the area north of Menards in northeast Sioux Falls for a potential next wave of retail development.
“We’ll have the intersection done, and Veterans Parkway will be open and functional, and with Dawley (Farm Village) filing up, that should really be its time now,” he said.
First Premier Bank will break ground in early 2026 on its new branch at Arrowhead and Veterans parkways.
“It’s just a tangible expression of how as the community continues to grow and expand we’re making sure we’re positioned for the future,” Rozenboom said.
Lloyd Cos. believes “we’re maybe at the bottom of the cycle” in multifamily development, Thorkelson said, adding that the market appears to be recovering from an influx of new apartments in recent years.
“There’s intentional areas we’re developing, both northwest and southwest, where you’ll see projects going,” Quasney added.
Lloyd also was able to put together enough tax credits to move ahead with a mixed-use project to bring apartments for low-income residents and a new headquarters for Southeastern Behavioral HealthCare to the former Mercato site in central Sioux Falls in the 600 block of West 11th Street.
“The Mercato will kick off in the spring, so that’s huge,” Quasney said.
Wiederrich expects to see multiple projects downtown as well as new housing in the areas of North Marion Road, Veterans Parkway and toward Harrisburg.
“It’s mostly owner-occupied,” he said. “Not so much on the apartments, although I do think there will be a project coming. … The contractors are all a little skittish right now. But when you talk to the architects, they seem to be pretty optimistic. I think the first quarter will be a little slow, but I think by the time we get to summer, everybody is going to be real happy with the progress going on in Sioux Falls.”
