SIOUX FALLS, S.D. (KELO) — More than a dozen restaurants or breweries closed in Sioux Falls in 2024 but the restaurant forecast for 2025 is not bleak, according to a market outlook presentation by Bender Commercial.
“We get bummed when we find out our favorite restaurant might be closing…,” Rob Kurtenbach of Bender said in an interview before Tuesday’s presentation. But national trends indicate that restaurants are recovering from the slump during the pandemic, Kurtenbach said.
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Although Sioux Falls has had some closures, there are new restaurants opening including what are called Quick Service Restaurants, or QSRs. And it’s not just Sioux Falls that is getting restaurant attention.
QSRs are moving to the neighboring communities. Kurtenbach cited Starbuck’s in Tea, Dairy Queen and Scooters in Harrisburg and Jimmy John’s in Brandon.
Restaurants were under the retail market umbrella during Tuesday’s presentation.
Retail vacancy rates in Sioux Falls are below the national average, Kurtenbach said during the presentation.
“Overall our vacancy rate is in a pretty good spot at 9%,” Kurtenbach said. The national rate is 10.3%.
Rates are expected to go down in 2025, he said.
While retail property sales were not at the 2021 or 2022 levels, more than 20 transactions happened in Sioux Falls in 2024 which is an increase from 2023. Transactions totaled more than $50 million.
Retail transactions in the Sioux Falls metro area were the top category for improved land transactions. Improved land is land with utilities such as water and sewer and streets. Bradyn Neises of Bender said during Tuesday’s presentations said retail transactions on improved land topped all transactions followed by industrial, office and multi-family.
Although the Sioux Falls Metropolitan Area (MSA) includes Minnehaha, Lincoln, McCook and Turner counties and Rock County, Minnesota, the cities of Brandon, Tea and Harrisburg had a big impact on the retail landscape.
Neises said the number of improved land acres sold in those neighboring communities made up 49.7% of all improved land transactions in the Sioux Falls area in 2024.
The southern edge of Sioux Falls and beyond is poised for more retail development, which includes restaurants, Kurtenbach said.
Population growth is helping to drive restaurant and retail interest, Kurtenbach said in his interview. The metro area’s population is about 303,000, according to the U.S. Census Bureau.
Traffic counts and other data are also used to help determine locations for retailers and restaurants, he said.
The 85th Street and I-29 corridor is an example how population and traffic counts are spurring growth in that area including a Starbucks in Tea, Kurtenbach said.
That area has the potential for more retail and restaurant development, Kurtenbach said. So does the Veterans Parkway expansion on the south side of Sioux Falls.
“There’s a lot of potential on the south side of Sioux Falls,” Kurtenbach said in the presentation.
Eventually, as growth and investment continue, Harrisburg, Tea and Sioux Falls “will come together as one big market,” Kurtenbach said in the presentation.
