Hobby Lobby to anchor major new east-side retail development

Hobby Lobby will open its second Sioux Falls store on the east side next year, anchoring the first new major retail development there in nearly 20 years.

It will kick off a wave of retail activity in the Foss Fields development at Sixth Street and Veterans Parkway, north of Menards.

“We felt it was crucial to have Hobby Lobby anchor the site,” said Ryan Tysdal, founder of Tysdal Commercial. “It was very necessary to get the project kicked off.”

Hobby Lobby will build a 55,000-square-foot store on the southwest corner of Sixth and Veterans, kicking off a 118,000-square-foot project that is expected to include four other national retailers.

“Sioux Falls has always been a very high-performing market for Hobby Lobby,” Tysdal said, adding that the store’s move from 41st Street to Lake Lorraine in 2017 set a foundation for the retailer ultimately to have two stores in the market.

“If they were ever going to add an east-side store, they needed one further west,” he said.

At Foss Fields, the store will be slightly smaller than the one at Lake Lorraine but typical for a newly built Hobby Lobby, including a modernized look for the exterior.

A spokesperson for the retailer confirmed that the new location will open in the fall of 2027, bringing 30 to 50 full- and part-time jobs.

“They’re a significant traffic draw,” Tysdal added. “We expect them to perform very well on the east side. Even though they’re closed on Sundays, they are an extremely sought-after co-tenant by dozens of national retailers.”

Patience pays off

For Tysdal, brokering the lead-off deal at Foss Fields is personal.

The land is part of the family farmstead where Tysdal’s grandfather Cliff and his great-uncle Joe Foss, the World War II Marine fighter ace and former governor, used to fly airplanes — using a runway built through a cornfield.

His mother is the third of multiple generations to co-own the property.

“A development like this is special, but it’s even more special when it’s your family you’re doing the work for,” he said. “To see plans come to fruition that were a dream 20 years ago is pretty fun.”

Tysdal’s brother-in-law Joel Ingle of C-Lemme Cos. serves as developer for Foss Fields.

“I’m sure it wasn’t ever in their plans to have farmland turn into a shopping center, but here we are in a totally different world and different environment,” Ingle said.

The owners sold the first right of way in the development in 2006. Ingle remembers a meeting shortly before that with former city planning director Steve Metli to introduce the project.

“Everybody knew what was going to happen. It just took a long time to get there,” Ingle said. “You see housing growth and high-demographic neighborhoods (now), but it took a long time.”

Even in the earliest years, national developers showed interest in partnering on the site, but the ultimate answer always was the same, he added.

“They saw the vision, they loved the project, and the answer was always: ‘Come talk to us when the highway is finished. We see what you’re doing in a prime location and a perfect spot, but the time is when the highway is built.’”

In 2010, the Foss Fields team met with state and city leaders “to try and figure out a plan to get (Veterans Parkway) punched to I-90,” Ingle said.

That connection was completed in late 2019 and “was crucial in putting these deals together,” Tysdal said. “Also having the Veterans Parkway and Arrowhead Parkway (intersection) completed this year was a critical piece of it. Retailers don’t like opening in sites that are going to have a big road project in front of them the first year or two.”

The timeline aligned with the build-out of Dawley Farm Village, the initial major national retailer center that brought Target, Kohl’s and dozens of other national names to the east side.

“We wanted Dawley to get stabilized before we really put our foot on the gas,” Tysdal said. “We didn’t feel it benefited anyone for us and Dawley to compete for deals, so we waited for it to be our turn.”

The project “really validates the long-range thinking and planning the city had as they created the infrastructure on Veterans Parkway,” said Jeff Eckhoff, who recently retired as the city’s director of planning and development services.

“This is going to be good for Dawley Farms. This is going to be good for the east side, so to me it validates that vision. Look at the traffic that comes in on Arrowhead and off 90.”

It validates Sioux Falls as a regional trade center, he added.

“The mall has always been the favored area, but having a Hobby Lobby with a second location in Sioux Falls speaks to the market and speaks to the trade area being from all directions,” Eckhoff said. “And it really speaks to the strength of Sioux Falls because that’s not happening everywhere if you look at retail across the country.”

The diversity of housing on the east side, from major multifamily projects to 55-and-older communities, supports the growth of retail, he added.

“It’s really interesting and to me creates a great blend of demographics to diversify the retailers too.”

The difference between Foss Fields and Dawley Farm from a retail standpoint will be the layout, the scale and the pace of development, those involved said.

“Dawley is one big, long power center, and Foss Fields has a major intersection right in the middle of the development,” Tysdal said. “So we’re able to put the development together in quadrants rather than having to improve it all at one time.”

Those who will see the development begin to take shape likely won’t realize the backstory, Ingle added.

“Now that people see buildings going vertical and dust in the air, the comments will start coming — ‘Look how fast that happened,’” he said. “And every time I hear that, I just shake my head and think to myself, ‘You have no idea how long it took to get here.’”

Next steps

The Hobby Lobby announcement is the first of many retail deals Tysdal said he expects to announce yet this summer and into the fall. The other retail tenants will range from 10,000 to 25,000 square feet and also be open in time for holiday shopping next year, he added.

“We had roughly eight or nine junior-box tenants with interest, and then we narrowed it down to five,” he said, adding that most of those likely will be second locations in Sioux Falls, but there is potential for a new national retailer to commit to a first location on the east side.

Lloyd Construction has started work on the new building, but the overall site plan for the southwest corner of Sixth and Veterans calls for much more.

“We have out-lots for sale, we can do build-to-suits, if XYZ national restaurant wants to build a prototype and have us lease to them, we can do that,” Tysdal said.

Interest from national restaurants has been “excellent,” he added.

“We have more restaurants interested in being here than we can actually put in for competitive reasons,” Tysdal said. “One difference you will see between the makeup of Dawley tenants versus Foss is when Dawley launched in 2007-08, so many full-service restaurants were not ready to come to the east side yet. That’s a huge difference 20 years later.”

There will be multiple restaurants announced yet this year, he predicts. Most already have a presence in the Sioux Falls market.

“It’s just gotten to the point the east side has grown so much these restaurant groups cannot ignore the east side any longer,” Tysdal said. “They’re trying to serve the area but also take pressure off their west-side locations that are bursting at the seams with customers.”

A partnership with the city of Sioux Falls to build a new quarter-mile of Sixth Street from east of Washington High School to Veterans Parkway also was key in solidifying national names for the project, Ingle and Tysdal said.

“One of the restaurant groups was touring a month ago, and to sit at the corner of Sixth and Veterans and see Sixth done and dirt getting moved for Foss retailers (was key),” Tysdal said. “Restaurants like to see activity when they’re visiting a site.”

The new options for those who live in the area will be welcomed, Ingle predicts.

“It’s been cool to see the east side finally come into its own. The daytime population has gotten so much bigger, and you see more options for dining that haven’t been there,” Ingle said. “I think what people are going to be even more excited about are the secondary things.”

Maybe even more significantly: The southwest retail area at Foss Fields is just the beginning. The broader plan for the development calls for commercial in each quadrant, in addition to areas for office, institutional and residential development.

“I’m working on anchors for three of the four corners,” Tysdal said. “Activity leads to more activity. When you have Hobby Lobby and other sought-after national retailers, others will be following.”

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