2023 has been a year of change both locally and nationally but that continues to remind us how blessed we are to live and do business in the state of South Dakota. Our team has been extremely busy despite the changes as we continue to see an influx of people moving here to expand their current business or open in a new market. However, you’ll see in our stats that interest rates, construction costs and labor force struggles are impacting the market. If our level of activity is any indication, we expect this slowdown to be short-lived in Western South Dakota as Ellsworth continues their expansion and companies seek the business-friendly climate of South Dakota.
In the sales stats through July, you will notice total transactions are down just over 30% compared to 2022 and transaction volume is down just over 10%. This has been the consistent trend month over month as we have moved through the year, and while there are a few large transactions in the pipeline, we don’t see that trend changing until mid-2024. Office and land sales have been the hardest hit, the land sales primarily driven by the inability to get construction costs in line with budgeted expectations. Retail has seen a rebound with many of our vacant ‘big box’ buildings being acquired for redevelopment, and while multifamily trends look to be significantly higher, this was largely attributed to the sale of Harmony Heights apartments, a 255-unit Class A property in Northwest Rapid City.
Leasing inventory continues to remain low across all asset types, particularly under 3,000 square feet with most spaces leasing within 60 days of going on the market. Spaces over 3,000 square feet still have strong demand but tend to stay on market longer as companies have more options in the market and are limited by construction costs on any improvements that are required. Questions about the market or have a space that may be available in the next few months? Contact our leasing agent, Gina Plooster – Gina@RapidCityCommercial.com or 605-519-0749 – to discuss.
Significant closings in the last quarter include:
• 855 Omaha St – Former Albertson’s sold to a local developer. Stay tuned for redevelopment plans.
• 1450 Concourse – 40,000 SF former call center to be converted to climate-controlled storage.
• Harmony Heights Apartments – Off-market sale of 255-unit Class A multifamily property.
New listings of note:
• 3104 West St Louis – 5,238sf warehouse with retail and office space. Great for a fitness/training facility on Rapid’s west side. 1 loading dock. Leases for $10.00/SF/YR NNN.
• 226 W Illinois, Spearfish – 2,520sf 2 blocks from Main St/Jackson Blvd in Spearfish. Open layout great for any open concept use – retail or office. Leases for $12.00/SF/NNN
• 2310 N Maple – 10,000sf office building to the northeast of the Rushmore Mall. Easy access from I-90 and just west of the new South Dakota state services building. $1,350,000
• 2136 Marlin Dr & 4624 Creek Drive – Fully leased flex properties. Marlin Drive and Catron Blvd. Can be sold separately or together. $4,000,000 ($1,850,000 and $2,150,000)
• 1795 Sedivy Lane – 11,658sf distribution warehouse with 5 docks, 10 grade level overhead doors on 2.14 acres. $1,399,000
If you are looking for a property not on our list, we would love to help. Contact me at (605) 939-4489.
Chris Long, SIOR, CCIM
Keller Williams Realty Black Hills
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