San Diego has a housing shortage and it happens to have some areas with vacant storefronts. Many of the vacant storefronts are in buildings with ground-floor commercial space never occupied. These spaces are often below stories of residential properties and labeled as mixed-use.
The many building falling into the category of mixed-use and with ground-floor retail not occupied by a tenant has caused the city officials to consider softening requirements. Typically, the ground floor space of these properties has to be commercial, but changes could allow for mixed-use properties to put housing on the ground floor.
Not only would this help to fill the empty retail space and help eliminate some of the ugliness rom empty storefronts, but it would add many new housing units to buildings very quickly. In addition, developers believe they could gain financing for future projects much easier if they didn’t have to reserve the entire ground floor for commercial space.
The city is considering softening these regulations and allowing developers to pay a fee in order to put in ground-floor housing instead of commercial space. This fee would be placed into a fund to help financing more subsidized affordable housing throughout the city. Currently, the suggested fee is $15 per square foot, but could change before legislation reaches the City Council.
Ground-Floor Retail is Common
San Diego’s regulations for ground-floor retail in mixed-used projects is very common across the country. The goal of this type of project is to liven up the neighborhood with new restaurants, coffee shops and retail shops. This approach has been great for Little Italy, some areas of downtown San Diego and for La Jolla.
However, in some neighborhoods, mixed-use properties are not thriving the way they are in other neighborhoods. With so many vacancies, the demand for retail space has become much lower, as well. This has also been aided by the many shoppers turning to online options. In addition, developers have made the decision to leave the ground floor vacant due to high costs of tenant improvements for some businesses.
The proposal for softer regulations is one of more than 12 city officials are looking into this year to help address the shortage of affordable housing. In addition, the city is looking into softening the rules for granny flats, lowering parking requirements in transit areas, bonuses for densely-built projects and lowering the fees developers pay for providing parkland.
With studies showing that about 70% of the population in San Diego not being able to afford the high median home price of close to $550K, these proposals are very important. Right now, the requirements for ground-floor commercial space are not working out near the Coronado Bridge, in Mercado del Barrio or in other areas, such as Commercial and 22nd Streets.
While the actual regulations have not been announced and nothing is official, the city is considering a few options. They may allow for residential space for the first five or ten years with it switching to commercial as the neighborhood evolves and gains more foot traffic. However, this could lead to evicting tenants when the time is up.
Softer regulations for commercial space on the ground floor is supported by many. However, many also believe the city has to be careful about how they soften the regulations and where they allow for ground-floor housing.