Logistics Companies in Expansion Mode Find Fast Success at Foundation Park

Nordica Warehouses & Lineage Logistics are in expansion mode

It started with 200,000 square feet.

Then an additional 105,000 square feet.

And Nordica Warehouses wasn’t done yet.

In the past year, it has added another 200,000 square feet of warehouse space at its Foundation Park location in northwest Sioux Falls.

“So we’ve grown a little bit,” president Dan Afdahl said.

“And it’s not full. But it’s getting there.”

Nordica has space for another 105,000-square-foot building, “and I would say within the next year or two at the most we’ll probably add that,” Afdahl said.

The success of Nordica highlights multiple advantages enjoyed by the logistics industry in Sioux Falls as a whole and at Foundation Park specifically.

It offers rare access to rail transportation, sits near the intersection of two interstates and has established infrastructure to accelerate building.

“The early success of this industry at Foundation Park has been fantastic,” said Dean Dziedzic, vice president at the Sioux Falls Development Foundation.

“It’s very expensive to get into this business, and so many businesses want to use a third-party provider, that companies making the investment in warehousing and logistics are seeing demand for their services.”

If you want to build a big building, there just aren’t any building sites around. There’s dirt, but you have to have the infrastructure – roads and utilities – and that’s what’s out there (Foundation Park).

Dan Afdahl, President, Nordica Warehouses

In addition to Nordica, Lineage Logistics is in expansion mode.

The Michigan-based logistics company is a global industry leader that earlier this year acquired Win Chill, which was the inaugural business at Foundation Park when it opened in 2018.

Lineage Logistics is made up of newer cold chain industry players as well as local and regional family businesses.

Its current expansion will add about 130,000 square feet, bringing the facility to more than 450,000 square feet of freezer storage.

 

“Their master plan was to get to as much as 800,000 square feet, so they can still put more out there, plus we have additional land to the west, so there would be opportunity to add on to meet demand,” Dziedzic said.

For Nordic, the 500,000 square feet at the Foundation Park operation represents about half of its total warehousing in Sioux Falls. Adding more will require more land.

“If you want to build a big building, there just aren’t any building sites around. There’s dirt, but you have to have the infrastructure – roads and utilities – and that’s what’s out there,” Afdahl said of Foundation Park.

The company’s growth is being driven primarily by new clients, with about 25 percent coming as current customers expand. Nordica specializes in storing cardboard boxes and other raw materials going to manufacturing plants.

What we’re seeing in terms of our development pipeline is interest from bigger users looking for larger parcels and planning more square footage than we’ve historically seen in Sioux Falls.

Dean Dziedzic, Vice President of Economic Development, Sioux Falls Development Foundation

 

“We’re kind of the only show of that kind for warehousing in the region,“ Afdahl said.

Foundation Park has land available, but it’s being spoken for quickly.

Amazon has its new fulfillment center under construction, and CJ Foods plans to break ground later this year on its food processing facility on the north end of the development park.

There are four sites remaining that have rail access, and more property will be opened up as the north end of the park is developed with infrastructure this year.

“What we’re seeing in terms of our development pipeline is interest from bigger users looking for larger parcels and planning more square footage than we’ve historically seen in Sioux Falls,” Dziedzic said.

“And we are getting thin on nonrail sites, so we do need to expand north of the tracks. We probably can’t get there soon enough. Back in 2015, we were standing on a gravel road looking across the landscape at a lot of cornfields.”

The success of the park likely means additional opportunities for existing businesses that support industry, such as Nordica.

“They’re selling land and developing more land, and they’re bringing in people who all could be customers for me,” Afdahl said. “So I’m glad they’re doing it.”

Builders Bringing 70 New Home Lots to Valley Springs

A (17 residential lot) development that hadn’t seen action in seven years, and we filled that up.

The plan was that builders Ron and Lori Kuipers would move to Valley Springs, build a house as part of a larger development and call it home.

“That was the intention,” Ron Kuipers acknowledged. “But everything we’ve built has sold.”

So for now, the owners of Homestead Construction are living in what he calls a “shous” – a shed converted into a house – while helping their new community take shape around them.

“When we came five years ago, there was nobody building here,” he said. “That’s either a good thing or a bad thing.”

They quickly found out it was an opportunity waiting to be seized.

They purchased 17 residential lots on the southwest side of town from “a development that hadn’t seen action in seven years, and we filled that up,” Kuipers said. “It was either leave town or keep going.”

They decided to keep going.

Their new 30-acre development, Homestead at Valley View, is just to the south of where they were building, and they hope to build on their success.

“We’ll have about 70 homes,” Kuipers said.

“We decided to start one over the winter, and we’re close to having it done, but that’s the only inventory available, so there’s definitely a need.”

You read that right: It’s the only available home in Valley Springs.

The community of about 760 people as of the 2010 census has grown steadily in recent years, with demand from residents looking to take advantage of more affordable living and a small-town feel within the Brandon Valley School District.

Valley Springs is absolutely a community on the rise

Jesse Fonkert, SMGA Executive Director

“Valley Springs is absolutely a community on the rise,” said Jesse Fonkert, executive director of the Sioux Metro Growth Alliance.

“The investment that Homestead Construction is making to bring much-needed homes to this area is such a win – for them, for residents looking to move in or move up and for overall economic growth of the community.”

Valley Springs “is just a tight-knit, close, friendly community,” Kuipers agreed. “You’re five minutes from Brandon, 15 minutes from the east side of Sioux Falls and about 20 minutes from the west side. It takes you longer to get across Sioux Falls.”

The Kuipers also are setting aside 6 acres of their development for commercial use.

“The intention is to draw a convenience store or Dollar General or something like that,” he said. “And the property is along the highway, so as even more people move in, we think it will be an attractive commercial location.”

Homestead Construction has finished water and sewer infrastructure, and the plan is to build streets and be ready for curb and gutter this spring.

There are 25 lots ready to sell now, ranging from $40,000 to $48,000. There are options for twin homes as well as single family.

“We have one sold, and we’re starting construction in April, so we’ll probably see three houses going up in April because we’re planning a spec house and working on plans with another client to start.”

Buyers can work with any builder, he said. Homes likely will range from $300,000 to $600,000.

“We’ve specialized in the move-up or second home,” Kuipers said.

As for their own home? That’s still in the plan too.

“Builders are always the last ones to get their house. But we do have intentions on building our house this year,” he said. “We’re just enjoying being part of the community and going about it having fun.”

A New Season for Economic Development

SMGA Director’s Report

Our work has always been collaborative, and it will continue to be so under the leadership of our board and our investors.

The temperatures have us thinking spring around the office, and nothing says ‘spring’ in South Dakota quite like a flurry of building permits and the advent of the construction season! Business inquiries to expand or to relocate, including those fielded by our office and by others in the four-county radius, continue to climb, and that’s certainly reflected in the tally of building permits in the Sioux Falls MSA; per a March report in SiouxFalls.Business, new commercial activity in and around the metro area amounts to nearly triple ($39.6 million) the amount just one year ago ($14 million). In other words, the spring season is a great time to embark upon new journeys and start new projects here in the greater Sioux Falls region.

We’re also experiencing feelings of renewed energy and dedication as we embark on a new season for the Sioux Metro Growth Alliance. While we continue to be proud of our legacy and our work in the communities that comprise Lincoln and Minnehaha counties, it’s my honor to lead our former organizations, LCEDA and MCEDA, as we merge our efforts to develop and improve the economy in and around the greater Sioux Falls region. Our work has always been collaborative, and it will continue to be so under the leadership of our board and our investors.

I’d be remiss not to thank former executive directors Jeff Eckhoff and Nick Fosheim, as well as the work of all of our board members as well as our respective LCEDA and MCEDA board presidents, Eric Pauli (Xcel Energy) and Mike Wendland (Grant Park Capital). Thank you all for your support and excitement, which has bolstered our efforts to continue to serve our communities as we merge.

And while we eagerly welcome this new season in our work, what remains the same is our commitment to economic development across the metro area. Please do think of us as you look forward and plant seeds of growth for your business; we’re excited to help you to accomplish your goals.

Jesse Fonkert
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Jesse Fonkert

Executive Director, Sioux Metro Growth Alliance