[As written in SiouxFalls.Business]
A nearly $200 million plan to turn part of the Sioux Steel site downtown into a destination hotel, retail, office and living space is getting back on track.
The plan from Lloyd Cos. for what’s now called The Steel District had been scheduled to start work last year.
The pandemic’s impact on the hotel and office sectors held that up, and now the company is asking the city to revisit the tax increment financing plan it approved in early 2020 – keeping the plan the same but essentially hitting a restart button on the timing.
“At the beginning of the pandemic, we stepped back and took a look at the overall design to see if we would do anything different, and as we went through different iterations of design, we felt it’s what Sioux Falls needs and what we’re confident in building in the market,” said Luke Jessen, Lloyd’s senior director of development.
The plan reintroduced to the City Council late today has some changes, though, beginning with the order of construction.
At one point, the plan had been to start the Canopy by Hilton hotel first; it’s now likely going to be built last, and a mixed-use parking ramp will be built first.
The 900+ stall ramp will include 30,000 square feet of office and retail on the main floor.
It will be surrounded by 95 apartments and 20 condominiums, including five two-story condos.
The addition of condominiums is a new component of the project.
“We think there’s a market for condos. We wouldn’t do it if we didn’t think we could sell them,” said Jessen, adding the company’s apartments in the area are nearly at capacity and many people ask if they can buy their loft.
“Every time we do a loft tour, people ask, ‘When can I buy something downtown?’ so we think it’s a good opportunity, and the site on the falls is awesome. There’s never going to be a site like this again. It’s a once-in-a-lifetime opportunity for us to develop and for someone to live there.”
Some condos will face the falls of the Big Sioux River, and others will have direct views of the Levitt Shell. Square footage will go from 1,100 to 2,100 square feet, and pricing “will be a wide range,” Jessen said.
Building that part of the development first also helps with construction staging. Originally, the plan was to use Falls Park West, but with the Jacobson Family Plaza starting construction, “we won’t have that, so we’ll have the ramp done for subcontractors and staging, and we anticipate contractors working on the Jacobson Plaza will be able to use it too,” Jessen said.
Next to start will be a nine-story building with 175,000 square feet of office space and three restaurants on the main floor.
“We’re getting to a point where we should be able to go public soon with some big tenants,” said Jake Quasney, Lloyd’s executive vice president.
“We’re excited about getting that space leased. We’re seeing people feel like they can make decisions again, and that’s been fortunate. Everyone is excited to see the project actually coming together.”
Tenants will have a shared fitness center, and build-outs are expected to start in 2022 with businesses able to move in during 2023.
Lloyd is working with restaurants that will be new to the Sioux Falls market and represent some types of cuisine that are unique to downtown, Jessen said.
The 216-room Canopy by Hilton will break ground later this year or in early 2022 depending on how financing is finalized.
“The brand has stayed committed to us the whole time, and they’re really waiting for us,” Quasney said. “There are banks really excited about the project. We should have proposals in the next couple weeks, and the reality is we are going to be able to get it financed. The timing of when they want to do that hotel is probably the thing that varies widely depending on the bank.”
From the time construction starts, it’s about 24 months until opening.
The hotel will include a bar overlooking Falls Park, a coffee shop, a restaurant connected to a pedestrian alley, a ballroom that will seat 500 to 800 people depending on the configuration and multiple smaller meeting spaces to host conventions or corporate events.
“This is a project that is going to benefit from the full recovery,” Quasney said. “When you look at that, our housing is going to be successful – we know that with what we’ve seen in the area – and when we project forward two years, that’s really where the industry is seeing full recovery of hospitality and banquet revenues, and we want to be there at the front of that, not catching it too late.”
The reason the previous TIF has to be dissolved and approved again is so that it continues to have a 20-year expiration date, which is needed for the financial model to work.
“I really have to give them credit,” said Jeff Eckhoff, the city’s director of planning and development services.
“I know they went through a process, they looked at their plan, and they came back and said: ‘This is the plan. This is what we need to do.’ To hang with that through the last year and stay committed to that vision is commendable.”
The City Council recently approved funding for design of the section of the River Greenway development that will run alongside The Steel District development. The soonest construction would start there is spring or summer of next year.
“We’re trying to time it the same, and with them starting the way they’re starting with parking instead of the hotel and given the ice ribbon going in, it’s helpful,” Eckhoff said.
A final City Council vote likely will occur in July. After that, Lloyd hopes to demolish some structures on the site and break ground in August.
“We really do believe in the project,” Quasney said. “Sioux Falls and downtown Sioux Falls continue to be an amazing place to live and work and do business. All the things we were concerned about a year ago have really come back around.”