Will Downtown Sioux Falls see another grocer soon?

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SIOUX FALLS, S.D. (KSFY) - With the surprise closing of Keller's Grocery Store over the weekend, many are wondering how soon downtown Sioux Falls could see another grocery store.

"It's certainly sad to see Keller's close but I think the interest is still there," Joe Batcheller, President of Downtown Sioux Falls Inc. said.

Keller's Green Grocer on Phillips Ave. closed its doors Friday after just a year in business. A surprise to many in the area, without warning, in a part of downtown where many residents clamored for a grocery store for years.

"I know they were really hoping that they could give the downtown community something a lot of people had asked for, for a long time," Jodi Schwan of SiouxFalls.Biz said. "But I think maybe the market just wasn't quite there yet."

But that market is about to grow exponentially. With several planned developments in downtown Sioux Falls including the railyard redevelopment project, a mixed-use parking ramp and the Lloyd Companies Cascade project, there are going to be more people living there than ever before.

"I'm confident that we can get a specialty grocer in downtown Sioux Falls again," Batcheller said. "I don't know exactly when that will be, but we do have a lot of development happening downtown and that certainly helps."

And there is already a grocery store in the area -- it's just not quite in the heart of downtown.

"Sunshine Foods has been around for years and I think sometimes people don't even think of them as a downtown grocery store right away because they're on the south edge of downtown," Schwan said. "There's not a ton of development around them, but that's getting there."

Schwan said there are new residential housing developments in the area of Sunshine Foods and that she believes the Washington Square project with really change the entire south end of downtown.

One store where a lot of downtown shoppers flock to? Hy-Vee. But the two closest locations aren't walkable.

Hy-Vee wouldn't confirm any plans for another Sioux Falls store, but spokesperson Tina Potthoff, issued this statement:

"We are always looking for potential locations for new stores in our eight-state area."

While a traditional Hy-Vee store wouldn't fit right in with the downtown area, the grocer did open its first "urban concept" store in downtown Des Moines this past February called Fourth + Court.

But that might not be in the cards for downtown Sioux Falls just yet.

"We're not downtown Des Moines, or downtown Omaha or Minneapolis yet," Schwan said. "I think they'll have to see how those perform before they would take a leap and come somewhere here.

"I think what a more realistic option is, is more of a public market and what that is like, is if people are familiar with Pike's [sic] Place Market in Seattle," Batcheller said.

Batcheller said that concept would require vendors to have access to fresh produce year-round, they'd likely offer some processed foods, and artisans could also sell in the space, similar to the 605 Made Market.

"Something like that can create that same effect like a Whole Foods will have," Batcheller said. "It's actually known as the 'Whole Foods effect' where a neighborhood that has a Whole Foods tends to have property values that are 10-12 percent higher than if there was not a Whole Foods and these public markets tend to provide that sort of catalyst."

Schwan said she could see something similar in downtown Sioux Falls, but not for several more years.

"I think that could become a niche," Schwan said. "We see the Farmer's Market continues to be extremely popular, so something that could be a year-round approach to fresh food, combined with the way people downtown tend to like to eat anyway and the kind of lifestyle they like to lead, I could see that being a fit down the road."

But Batcheller said he expects several proposals for market-like concepts with all of the recently announced downtown development projects.

"[A public market is] an experience and that's why people like it," Batcheller said. "You have independent vendors operating under one roof, sort of as this, anchor institution for a neighborhood."

While Batcheller acknowledges Sunshine Food's role on the south edge of downtown, he said they don't necessarily have all of the things someone living and working downtown needs, such as extensive grab and go items, or prepared foods they can take home to their families.

"One of the values [of a specialty grocer] is that people don't have to leave downtown to get everything that they need, it becomes a 24-7 type of neighborhood where you have everything that you need," Batcheller said.

Schwan said Lewis Drug's downtown store opening in Spring 2018 may also provide a lot of the convenience people downtown are looking for.

"If you think about going to Lewis today, you really could do most, if not all of your grocery shopping at Lewis," Schwan said. "And Lewis is planning to have a great selection of items for people who live and work downtown, so that's going to include those grocery and staple type of items and I think it's good to fill what a lot of people perceive as a void in the grocery market downtown."

KSFY News reporter Erika Leigh also reached out to Trader Joe's and Whole Foods to see if either national grocery store chain has any interest in the Sioux Falls area.

A spokesperson from Trader Joe's issued this statement:

"While currently there are no confirmed plans to bring a Trader Joe’s to the state, we are always exploring new, potential locations that would be a great fit."

KSFY News has not heard back from Whole Foods just yet.