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Why Land for Sale in Sioux Falls, SD Is a Profitable CRE Investment

Published: 10-19-21 Category: Investing

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

This article was updated on 10/30/23.

The pheasant hunting market in Sioux Falls is as active as ever thanks to improvements in habitat and weather, drawing investors to scoop up land for sale in Sioux Falls, South Dakota.

As well as the hunting market, land value and cash rents have increased in the state since 2020, leading to a more profitable commercial real estate market for landowners.

Additionally, South Dakota is known to support landowners and work with them to sustain viable habitats for wildlife, including pheasants: Nearly 80% of the whole state is privately owned and has been successful in its habitat programs.

That said, let's take a closer look at why land for sale in Sioux Falls, SD could be a profitable investment.

What's the Average Cost Per Acre of Land for Sale in South Dakota?

The average price of land for sale in South Dakota is $4,573 per acre. Regions across the state have varying costs.

Beadle County: $3,874 per acre;
Codington County: $4,195 per acre;
Deuel County: $4,289 per acre;
Minnehaha County (Sioux Falls): $6,329 per acre;
Spink County: $3,448 per acre;
Union County: $7,803 per acre; and
Yankton County: $4,882 per acre.

These prices reflect values that have been increasing in the last year.

South Dakota Land Values Are on the Rise

Land in South Dakota is increasing in value due to changes in several factors. One of those is government financial aid for disaster and virus relief. This help, coupled with rising crop prices, benefitted the working capital of South Dakota land.

Several types of land for sale in South Dakota have increased in value since 2020:

Farm Real Estate: 9% Increase;
Cropland: 12% Increase;
Dyland Cropland: $360 Increase per acre; and
Pastureland: $10 Increase per acre.

Cash rent increases contribute to the overall rise in value as well.

Cash Rents Have Increased 4.5% Since 2020

Cash rental rates are fixed amounts that tenants pay landlords. These rates are calculated by considering the soil production of the land.

South Dakota land has been productive in the last year, so landlords have seen a 4.5% cash rental increase in 2020.

The Annual Pheasant Hunt Draws Many Out-of-State Hunters to Sioux Falls

The middle of October marks the beginning of pheasant hunting season. Sioux Falls' large pheasant population attracts hunters from all around the country. This is how Sioux Falls earned the title "Pheasant Hunting Capital of the World."

Landowners and farmers have taken the area's popularity to set up lodging and other accommodations for out-of-state hunters. The $1.3 billion industry is proof of the state's hunting quality. This is where commercial real estate investors are looking to jump into next.

CRE investors can diversify their income in the area through multiple avenues:

Lodging;
Guns and Ammo;
Local Foods;
Guided Hunting; and
Private Hunting Lands.

Although pheasant hunting season is only through fall and winter, businesses use the rest of the year to market to hunters.

About a million public acres are designated for pheasant hunting in South Dakota. However, private land is where landowners have the freedom to make the most out of their acreage.

A few nights of lodging at a pheasant hunting site can cost around $1,000 to $2,000 per person. This includes amenities such as bathrooms, mudrooms, showers, and bird-cleaning shelters. Many sites give access to hundreds of private acres to hunt in.

Extra services such as guided hunting and providing hunting equipment will further attract hunters to your business.

The high costs and demand for pheasant hunting sites are lucrative for businesses and landowners. There are also groups that offer to consult new landowners looking to host pheasant hunters.

Your next CRE investment as a pheasant hunting site does not have to be empty in the off-season. Many vacationers seek to explore the rural parts of Sioux Falls and can use hunting lodging sites after the pheasant season.

Some hunting ranches even host weddings, retreats, and banquets.

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