South Dakota Site Fight: Wal-Mart Calls it Quits

Wal-Mart kills plans for city’s third store [Argus Leader (S.D.)]

Retailer was to build on northwest side

Wal-Mart has canceled plans for a third store in Sioux Falls, a decision that ends a key role for the retail giant in developing the city’s northwest corner.

“We regret we can’t come here after we said we would,” Ryan Horn, senior manager of public affairs for Wal-Mart, said Thursday. “We told Sioux Falls we would come, and now we’ve got to go back on our word.”

The company, which has about 4,000 stores across the country, is scaling back nationwide expansion to save money. The Arkansas corporation had planned to build or make major upgrades on 280 stores next year. It cut the list to 170 to 190 properties, and Sioux Falls didn’t make the cut.

“It probably does set us back a year or two,” Mayor Dave Munson said. “It is unfortunate, but they have to make business decisions like everybody else does. The store was pretty much a go. We’ll just have to go out and get something else.”

The store was to have opened in 2009 as the centerpiece in a new retail zone near what will be the intersection of Career Avenue and 60th Street North, a mile from the junction of Interstates 29 and 90. The area is farmland with few houses nearby, but officials hoped Wal-Mart would spark growth.

Others had their doubts.

“I was surprised from the beginning that they were going up there,” said Dennis Breske, broker and owner of NAI Sioux Falls, a commercial real estate company.

“Go up there and drive around. How many houses do you see? A couple subdivisions, and that’s it,” he said. “Retailers like to go where there are lots of single-family homes and apartments. It was pretty scattered. It doesn’t surprise me it’s a site they took off the list.”

Ralph Brown, economics professor emeritus at the University of South Dakota, said the decision reflects more on Wal-Mart than Sioux Falls.

“I’m not surprised to see this happen,” Brown said from Vermillion. “Wal-Mart has been expanding the last year or two rather dramatically. They find they may be cannibalizing their existing stores.”

Wal-Mart was to have bought 30 acres. The land has been owned by the family of Jim Ekholm since 1914. The entire parcel is 80 acres and will be developed by R.H. Johnson Co. of Kansas City, Mo., which is purchasing the land from the Ekholm family.

Randy Brown, senior vice president and principal of R.H. Johnson, could not be reached for comment.

Horn did not rule out future expansion in Sioux Falls, but it won’t be at that site, he said.

“It’s dead. We’ve had to withdraw from our contract with Jim,” Horn said.

“We’re still going to develop the property,” Ekholm said.

Wal-Mart employs about 1,100 people at its two Sioux Falls stores and Sam’s Club outlet. It would have hired 250 to 400 for the new store, Horn said. He wouldn’t say what the store would have cost to build. Asked if it would have been $15 million, he said that was not an unreasonable estimate.

Thursday’s announcement was unusual for Sioux Falls, where the economy has shown nearly unbroken growth since the 1990s. But it’s not the first time a major business has scuttled plans for the city.

“We worked on one last year where we had a chance to relocate a Fortune 500 company’s headquarters here, but they decided not to come,” Breske said. “Sometimes you don’t make the final cut.”

Dan Scott, president of the Sioux Falls Development Foundation, said Wal-Mart’s decision evidently tied to money available for capital growth.

“When you hear companies are discontinuing plans that they had for well over a year, it comes as sort of a surprise,” Scott said. “At the same time, I don’t feel Sioux Falls is underserved by Wal-Mart. It’s not going to make a big difference in the overall income statement for Wal-Mart if they don’t have a store there.”

Reach reporter Jon Walker at 331-2206 or 800-530-6397.