An environmentally impacted downtown property owned by a railroad promises to be a complex redevelopment. But Iowa-based Hubbell Realty Co. had a vision for the 75-acre property in downtown Des Moines, persevered, partnered, and today is beginning to see the results of it. Gray’s Station, which sits along prominent Martin Luther King Jr. Parkway, serves as a connection between downtown Des Moines and the nearby 1,000-acre Gray’s Lake.

“It was an abandoned rail yard and a piece that many developers had looked at and passed because of environmental concerns,” said Kris Saddoris, vice president of development for Hubbell Development Services, who estimates the company began working on the property more than five years ago. “We had a good team in place and believed we were not dealing with huge, significant environmental issues but rather something that would take a lot of work. But we had done a site similar downtown, and we knew we could get it done, and we wanted to do something different than we had in the past.” Today, the first phase of Gray’s Station includes multiple apartments, single-family homes, retail and plans for more residential development. It’s also helped spark adjacent redevelopment, including a mixed-use project centered around a new soccer stadium. “We’re a long-term player in this market. We’re a 165-year-old organization and deeply entrenched in this,” Saddoris said. “Like many communities, we need population growth, and how you do that is creating things that bring people together. Especially post-COVID, where people can literally live anywhere, you have to create an environment that is unique.” The vision for Gray’s Station and the track record of Hubbell Development made it an appealing investment for Sioux Falls-based Ernst Capital Group, which has raised capital for multiple projects within it. “We knew the capability of Hubbell combined with the strength of the Des Moines market would make this an opportune partnership,” partner Chris Daugaard said. “It’s been exciting to watch Gray’s Station capitalize on that opportunity and deliver truly a unique product to the market.” Gray’s Station, which is primarily residential, offers an intentional design focused on making it incredibly easy to walk or ride a bike. All homes face into a green area. And Hubbell even built a bridge to make it as accessible as possible for residents to get to Gray’s Lake. “We wanted to take that 75 acres with this beautiful natural resource and create a neighborhood we haven’t seen before,” Saddoris said. “We have a multitude of pocket parks, unique lighting and great places to sit and listen to live music. And we wanted to make sure the neighborhood could get to the beach and swimming.”

The first phase of the development centered around the prominent corner of SW 11th Street and MLK Jr. Parkway, and became Linc at Gray’s Station, a 14,000-square-foot, five-story building with a pizza shop and brewery on the first floor and 85 apartments above. “That’s how we introduced the neighborhood, with very unique architecture and retail on the first floor,” Saddoris said.

A second adjacent building, LINC II, brought another five-story project, this one with 142 apartments. Ernst invested more than more than $11.7 million combined in the projects in 2019 and residents began moving in during 2020 and through 2021. “They’ve been a great partner,” Saddoris said. “They understand our story. We focus on creating something super unique each time, and they’ve been supportive of that. Anyone can build an apartment, but do you understand what creates value for the tenant? Why live with us as opposed to someone else? And Ernst understands it’s all these unique touches. They’re very good to work with. We spent a lot of time together early on, so they understand where we’re coming from.”

Additionally, 45 town homes opened in 2021, which also included a $2.68 million investment from Ernst. “The townhomes were leased before we completed them,” Saddoris said. “People want to live in the neighborhood, they want the lifestyle, but they don’t necessarily want to buy.” Residents at LINC enjoy a pool, two large fitness centers, including a two-story facility, a game room and several distinctive amenities. “We have a big work-from-home area, which has been a big driver, four different outdoor large decks and a test kitchen, which is an extremely popular feature,” Saddoris said. “Residents like to have chefs in and host cooking classes.” The intentional approach is reflected in the project’s success.“ Leasing was extremely successful here,” Daugaard said. “They whole project leased up very quickly. It’s obvious the care Hubbell took in designing and executing this project was recognized by the community.”

With multifamily success creating momentum at Gray’s Station, Hubbell then introduced 75 single-family homes, ranging from $400,000 to just under $1 million. The second phase will bring 79 homes along with 85 condos starting this fall. “We wanted as many housing options as possible,” Saddoris said. “People love the location. Their rooftop patios offer great downtown views, we have a minor league ballpark that shoots off fireworks nearby and one of the best farmers markets in the country.” At the same time, adjacent to the west end of the Gray’s Station development, the Des Moines community is leveraging a public-private partnership to build a 6,300-seat soccer stadium for a USL Championship league team, part of a broader 60-acre, mixed-use stadium district. It’s scheduled to open in 2025. “It’s primarily soccer, but there’s a big plaza, and the goal is to use it for multiple events, including downtown events that currently require shutting down streets,” Saddoris said. “Part of what we love is that it brings vibrancy to the area. Soccer is the biggest sport in the world, and it is going to further enhance the neighborhood and attract additional retail and restaurants, and fill in the whole corridor for us.” The broader development is a good example for other communities of how to blend residential, commercial and public facilities in an urban area, Daugaard said. “This checks all the boxes,” he said. “It optimizes underutilized land, takes advantage of natural resources, creates a destination for visitors and provides a huge range of housing opportunities to attract and keep people in the community.” Hubbell still has land to develop at Gray’s Station, even after phase two. It has some flexibility but likely will include more variety of residential options. “We’re super proud of this so far, we’ve had very good results and are thrilled Ernst has been a partner through it all,” Saddoris said. “They want to be part of something that’s successful long term, and that’s what we want to create.”

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DaaBin has opened a location on the east side of Sioux Falls. The store offers bins of overstock items for deeply discounted prices. The store is closed for re-stocking on Thursdays and Fridays and re-opened on Saturdays with new merchandise.  According to the article, Brock Huchinson, who owns the store with his wife, brother, and sister in-law, says “The first day on Saturday is $7 for any item, Sunday, we drop the price to $5 an item. Monday, we drop the price again to $3. Whatever’s in the bins on Tuesday goes to $1 an item. On Wednesday, for $10 you can fill a big plastic bag.” The new store offers bargain shoppers a unique opportunity to find deals on a wide array of merchandise.  

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Chef April Ausitn is relocating her business to a location on the east side of Sioux Falls.  This new location allows for a smaller venue that seats around 50 people. According to the article, Chef April said, “We’re hoping to do birthday parties, rehearsal dinners, anniversaries, baby showers, pretty much anything. The east side is struggling for a little small event area. People are like, ‘Where can we go?’” The space will seat up to about 50 guests, and the look will be “a little modern, very black and white and wood tones. Very pretty and elegant, but not too much where people feel uncomfortable.” The color scheme will make it easy for people to incorporate their own pops of color.”

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Starbucks is opening a location on the southeast side of Sioux Falls.  According to Raquel Blount in the the article, “…the density of housing out there and the growth to the east, the new apartment project and all the growth down 57th,” she said. “I think this will help them position themselves strategically to serve all the emerging neighborhoods and growing population areas.” Stadium Commons apartments are owned by Signature Real Estate Income Fund IV, LLC, the close proximity of a coffee shop will be another added value to future tenants of the property which is currently under construction. 

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A multifaceted development in south-central Sioux Falls, major investments in booming Harrisburg and an expansion of a popular southwest Sioux Falls apartment community. They’re all projects being funded with support from equity raised by Ernst Capital Group, which partnered with developer Clint Ackerman, owner of Signature Cos., to support several of his current projects. “They didn’t have much time to raise the funds we needed, and it went very well,” said Ackerman, who previously has worked with Ernst in financing his developments. “As always, they are the most professional equity group out there. We have a great long-lasting relationship, and I look forward to continuing it.” The projects within Signature Fund IV represent what was, until just recently, Ernst’s largest fund, with just under $22 million in capital raised. “It was committed very quickly,” partner Chris Daugaard said. “The momentum of the region is continuing to propel interest in being part of these projects. And with our model, we can plan the fund, structure and size it around what the developer is looking to do and create a unified team and plan.” Here’s a closer look at the projects under construction thanks to this partnership.

Stadium Commons

It’s rare – and soon nearly unheard of – to find nearly 20 undeveloped acres in the heart of south Sioux Falls, but that’s what Signature was able to acquire on the northeast corner of 69th Street and Cliff Avenue. “Our plan is to put 10 acres of multifamily in the back and use the remaining portion for commercial,” Ackerman said. “We held off on foundations until spring, but now we’re going full force.” The first 258-unit apartment building will include an attached two-story clubhouse and full slate of amenities, including a swimming pool, extensive indoor-outdoor community space and a fitness center. The plan is to open the first apartments in 2023. On the commercial side, “we have half of the eight lots under contract and are working on the fifth,” Ackerman said. “It’s a combination of retail centers and stand-alone users, and we’ve been happy with the level of interest we’ve received.” From Ernst’s perspective, “this is a valuable opportunity for development,” Daugaard said. “It’s such a prominent intersection; it’s appealing for multiple uses. That’s one of the strengths of the Signature team is the ability to acquire these larger tracts of land and do a multitude of uses, including residential and commercial. And bringing more residents to the immediate area supports and attracts additional retail and services.”

Creekside Commons, Creekside Plaza 2

The community of Harrisburg is showing every day that it can support more residential and commercial activity – so Signature is building on the success of its Creekside development with more retail and living opportunities. Creekside Commons, a 168-unit town home community, is about one-third constructed and is expected to take about 18 more months to complete. “Everything in that area is complementary,” Daugaard said. “There’s commercial across the street, which brings more traffic, a new day care, and the adjacency to the main commuter traffic in and out of town and around the school just continues to be where people want to locate.”

Creekside Plaza 2, a new 9,200-square-foot retail center, also is included in Signature Fund IV and will mirror its predecessor, which was part of a previous fund. “The original retail center has been fully leased since the day we got it completed, and we’ve started to sign up the first tenants at Plaza 2,” Ackerman said. “We expect it will be 50 percent full in the next two weeks to 30 days.” He anticipates the retail building will be done with its exterior and shell in 60 days, so tenants can begin opening by fall. “When we funded Creekside 1, it was a bit unique for us as a spec retail and office building, but it filled so quickly and ahead of expectations it gave us confidence there would be more demand,” Daugaard said. “All the housing next door is going to support that – and you can’t beat being right next to a B&G Milkyway.”

85 Commons

The success of Signature Cos.’ West Pointe Commons development in southwest Sioux Falls has led to a second phase. This one is called 85 Commons for its location at 85th Street and Townsley Avenue. The 55-unit building is about 60 percent complete and should be ready in the next six months, Ackerman said. “West Point Commons was essentially full for the last four years, so we know we need additional capacity in that area,” he said. 85 Commons will offer a mix of one-, two- and three-bedroom units with attached garages and a choice of floor plans and unit features. “Southwest Sioux Falls is  in high demand as a place to live, so we’re excited to help offer more options,” Daugaard said. “This is just blocks from Harrisburg Explorer Elementary and Platinum Valley Park, and we know it will appeal to a broad range of residents.”

Prairie Village Commons

Signature Cos. also is expanding in the Des Moines market, and the latest fund with Ernst supports that growth as well. The company’s Prairie Village Commons will be 127 town home-style units in the western suburb of Waukee. A groundbreaking is scheduled soon and construction is expected to last two years. “The Des Moines market is a larger metro than Sioux Falls, but the two operate similarly,” Ackerman said. “Waukee was ranked one of the fastest-growing communities in the nation, and we’re fortunate we got there a few years ago.” The market also is one Ernst views favorably. “The fundamentals of Des Moines and Sioux Falls are very similar,” Daugaard said. “So when we can invest in a known market with a known developer, we consider that a favorable opportunity.”

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Every deal Ernst Capital Group makes passes across his desk. And in the near decade Nick Gates has been with the firm, that’s a lot of deals. “The first opportunity I had was Ernst Capital,” said Gates, who joined the team in 2012. “I started here, and I’m still working to help us and our investors find the next good investment.” Gates was one of the firm’s first employees, and his career has grown with Ernst Capital. A native of Mitchell, he went to Dakota Wesleyan University with majors in mathematics and business. The latter led him to earn his MBA at USD immediately after graduation. “I graduated from DWU in 2010 when it was a tough time for business coming out of the Great Recession,” Gates said. “So I went and finished my MBA and applied for a host of jobs after that.”

One of them was at Ernst Capital, where he was hired as a financial analyst – but in reality became a jack-of-many-trades as one of a few employees. “I did anything from helping in HR, taking care of the trash and running financial models,” he said. “At the time, like in many small businesses, I filled in anywhere that was needed. When I started, I didn’t really know much about real estate. They don’t teach about it in college.” As Gates and the firm grew, he came to focus more on the due diligence review process, assisting with regulatory compliance, deal structuring and management of investment partnerships. “Some days I might look at three or four hours of financials; other days I might work with legal counsel to finalize operating agreements or a prospectus for investments,” he said. “I may have a closing coming up. So it’s a broad range of things related to real estate.”

He became a partner at the firm in 2015 and has spent the past 18 months helping Ernst navigate through the current low interest rate environment and strong interest from investors. “Our real estate investment opportunities have been pretty steady, and we’ve had the benefit of selling a couple assets, which has kept us busy and investors happy,” Gates said. “We’ve grown significantly over the last couple years, but we’re always looking to grow more while maintaining a responsible strategy and effective controls.” Ernst Capital has “a broad growth track” ahead, he predicted. “We’re in five or six markets within a 400-mile radius of Sioux Falls, and I see us expanding to 15 to 20 markets within 800 miles over the next 10 years,” he said. “Our goal is really to meet investor expectations. There’s a lot of capital  looking for a place to invest, and we’re fortunate to work with some great development partners who help us create those opportunities.”

When he’s not at work or on a golf course, you’ll most likely find Gates keeping busy with his wife, Jennifer, and 3-year-old Remington. “To be honest, Ernst Capital has just been a great opportunity,” he said. “I’ve had the opportunity to learn and grow, and I really enjoy what I do putting deals together. Some of our longest deals have taken over a year to put together, and the feeling when it falls in place is just fun. Of course, not every deal comes together, but even when they don’t, it makes the next deal that much better.”

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Queen City Balloon Bar is opening a storefront location on the east side of Sioux Falls.  Ryan Egan and his wife, Christine, have been running the balloon bouquet business for years out of their home. “We do upscale balloon decorations and gifts,” he said. “It’s more of a boutique than going into a party store and doing something quick”, according to Ryan. The store’s hours will vary Tuesday through Saturday.  

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