Grand Avenue 17-Unit Development: What Pacific Beach's Commercial-to-Residential Conversion Means for Property Owners

On August 7, 2026, architect Tim Golba submitted plans that could reshape how Pacific Beach property owners view their commercial holdings. The proposed three-story, 17-unit housing development at 866-872 Grand Avenue represents more than just another infill project—it's a roadmap for converting aging commercial properties into higher-density residential developments in one of San Diego's most sought-after coastal neighborhoods.

For builders, developers, and property owners along Pacific Beach's commercial corridors, this project demonstrates a viable pathway through San Diego's complex permitting landscape while addressing the city's affordable housing requirements. Here's what you need to know about this development and what it means for your own property conversion opportunities.

Project Overview: 866-872 Grand Avenue Development

Golba Architecture, a San Diego-based firm in its 33rd year of operation, submitted plans for an 11,231-square-foot residential development that will demolish three small commercial buildings and one former residence currently operating as a business. The project, located near the intersection of Grand and Mission Avenues, includes 17 residential units with two designated as affordable housing.

The three-story structure will feature a three-space carport on the ground floor, addressing parking requirements in a constrained urban lot while maximizing residential density on the upper floors. According to Times of San Diego, architect Tim Golba noted that the existing structures "appear to have been intended for housing and will not return to that use," signaling a permanent shift from commercial to residential use for these Grand Avenue parcels.

This development sits adjacent to the former IHOP property at Grand and Mission Avenues, which was recently sold and is expected to undergo similar transformation, though Golba stated that "there is nothing definitive that is designed yet, and it will be some time before any design direction is finalized" for that neighboring site.

Why Grand Avenue? Understanding Pacific Beach's Commercial Corridor Transformation

Grand Avenue has been a commercial corridor in Pacific Beach since the community's earliest days. Historical records show that Grand Avenue was intentionally built wider than other streets to accommodate a railway that once ran down its center. The Pacific Beach Company, formed in 1887 by wealthy San Diego businessmen, designed the area with rectangular blocks separated by north-south streets and east-west avenues, with Grand Avenue serving as a major commercial artery.

By the 1920s, commercial development had taken root along Grand Avenue, with a grocery operating at the southwest corner of Lamont and Grand Avenue since 1913. In 1925, Crystal Pier was constructed, and in April 1927, E. Paul Ford was awarded a contract to pave the streets and alleys extending from the beach, solidifying the area's infrastructure.

Today, however, many of these aging commercial buildings face declining viability. Strip malls with limited parking, outdated retail spaces, and properties that don't meet modern commercial standards are increasingly attractive candidates for residential conversion—particularly as Pacific Beach's housing demand continues to outpace supply.

Affordable Housing Requirements: The 10% Rule

One of the most significant aspects of the Grand Avenue project is its inclusion of two affordable units out of 17 total—representing approximately 11.8% of the development. This exceeds San Diego's minimum inclusionary housing requirement but positions the developer to potentially access density bonus incentives.

Under San Diego's Inclusionary Housing Ordinance, which became fully effective July 1, 2024, new residential developments must include 10% of on-site rental units as affordable housing for individuals earning up to 60% of Area Median Income (AMI). For San Diego County, the AMI for a family of four is $130,800, meaning 60% AMI thresholds are $69,480 for one person, $79,380 for two people, $89,340 for three people, and $99,240 for a four-person household.

These affordable units must remain deed-restricted for at least 55 years, ensuring long-term affordability. For developers, this requirement is non-negotiable, but it opens the door to valuable density bonus incentives that can make projects more financially viable.

Density Bonus Opportunities for Pacific Beach Developers

California's Density Bonus Law, recently updated and aligned with San Diego's 2026 Land Development Code amendments, offers significant incentives for developers who include affordable housing. According to the City of San Diego, developers building five or more dwelling units may be eligible for an increase in development density in exchange for setting aside a percentage of units as affordable housing.

The percentage of affordable units provided correlates to a specific density bonus and up to five incentives, which can include:

• Reduced parking requirements (one space for 0-1 bedroom units, two spaces for 2-3 bedroom units)
• Height and setback modifications
• Expedited permit processing
• Reduced development impact fees

Assemblymember David Alvarez's Assembly Bill 2433, introduced March 10, 2026, creates additional density bonus incentives specifically for builders who include deed-restricted for-sale homes in their projects. This legislation addresses a critical gap in California's housing policy by granting additional density bonuses, streamlined ministerial approvals, and automatic eligibility for projects that include affordable for-sale condos or townhomes.

For the Grand Avenue project, these density bonuses likely enabled the 17-unit count on a relatively modest 11,231-square-foot footprint—demonstrating how affordable housing integration can unlock higher yields for Pacific Beach infill developers.

Navigating Coastal Development Permits in Pacific Beach

While the Grand Avenue project doesn't appear to fall within the Coastal Height Limit Overlay Zone (which restricts buildings to 30 feet in defined coastal areas), all Pacific Beach developments must navigate complex permitting requirements. Standard coastal development permits typically take 6-12 months, though timelines vary based on project complexity.

New construction projects typically need 8-14 months for permitting, while complex bluff-edge new construction may require 12-18 months. Coastal Development Permits add 2-6 months to standard permit timelines, with completeness review taking up to four weeks before substantive review begins.

For property owners considering commercial-to-residential conversions in Pacific Beach, the permitting timeline should factor into financial projections. However, recent legislative changes have streamlined some processes:

• AB 462's streamlined process (effective October 15, 2025) reduced coastal ADU timelines from 5-8 months to 60 days concurrent review
• San Diego's Complete Communities program offers 30-day processing for qualifying projects with 40% affordable units near transit corridors
• 2026 Land Development Code updates removed the ability to appeal certain permits to the Coastal Commission, lowering entitlement risk in coastal submarkets

San Diego permits currently take 4-6 weeks for plan check, though overall permit processing averages 176 days citywide. Multi-unit residential buildings can expect 6 months to 1 year from submittal to permit issuance for standard projects.

Height Limits and Neighborhood Character Considerations

The Grand Avenue project's three-story design aligns with Pacific Beach's established development patterns while respecting the community's 30-foot coastal height limit in designated zones. San Diego voters approved Proposition D in 1972, creating the Coastal Height Limit Overlay Zone that caps buildings at 30 feet in defined coastal areas, including much of Pacific Beach.

Recent Coastal Development Permits in Pacific Beach demonstrate the three-story model's prevalence:

• A permit to demolish an existing one-story single dwelling unit and construct two three-story, 984-square-foot multi-family residential units
• Another permit to demolish two existing one-story single dwelling units and construct two three-story single dwelling units
• A permit to demolish two existing single-family residences and build two three-story, 2,343-square-foot single-family residences

The Pacific Beach Community Plan, created in 1983 and updated in 1995, emphasizes that "new development in residential areas [should complement] the established scale to foster neighborhood harmony." For commercial corridor conversions like the Grand Avenue project, this means designing developments that transition appropriately between commercial areas and surrounding residential neighborhoods.

Community concerns about development remain significant in Pacific Beach. A proposed 120-unit ADU project became a high-profile example that drove policy changes, with community pressure over infrastructure strain and neighborhood character leading to amended ordinances that eliminate unlimited ADU stacking and implement tiered unit caps based on lot size.

What This Means for Grand Avenue and Mission Avenue Property Owners

The Grand Avenue development creates a precedent that should interest property owners along similar commercial corridors in Pacific Beach, particularly those holding:

• Aging strip mall properties with limited parking and outdated retail configurations
• Small commercial buildings on residential-sized lots that underperform financially
• Mixed-use properties where commercial tenants struggle to compete with Garnet Avenue's retail core
• Former residential properties converted to commercial use that could return to housing

According to Scott Peters' congressional office, "development and affordability" remain top issues impacting Pacific Beach in 2026. For property owners evaluating conversion opportunities, several market factors support residential redevelopment:

1. Strong residential demand: Despite an 11% year-over-year decline to a $1.25 million median home price in Pacific Beach, demand for rental housing remains robust, particularly for smaller, more affordable units.
2. Rental market strength: The expansion of AVA Pacific Beach from 564 to 702 apartments (approved unanimously by San Diego City Council in January 2026) demonstrates institutional investor confidence in Pacific Beach's rental market.
3. Affordable housing incentives: The city's Complete Communities program, density bonus provisions, and reduced parking requirements make affordable housing integration financially attractive.
4. Commercial market challenges: Retail and small commercial tenants continue to face pressure from e-commerce and changing consumer patterns, reducing income potential for commercial properties.

Tim Golba's Track Record: Working with Experienced Coastal Architects

Tim Golba's selection as architect for this project brings significant coastal development experience to the Grand Avenue site. Golba Architecture specializes in residential, commercial, rehabilitation, and reconstruction architectural design, with particular expertise along the San Diego coastal region.

The firm's website notes an "impeccable track record of completing projects on time and on budget" while "providing imaginative design solutions" that incorporate sustainability, cost control, and quality aesthetic solutions. Tim Golba served on San Diego's Planning Commission from 2008 through 2015, an appointed body that approves certain developments in the city, giving him insider knowledge of the city's permitting processes and development standards.

For property owners considering commercial-to-residential conversions, working with architects who have demonstrated coastal permitting expertise can significantly reduce timeline risks and improve project outcomes. Golba Architecture's 33-year history in San Diego provides the institutional knowledge necessary to navigate Coastal Commission requirements, local community plan standards, and affordable housing integration.

Financial Considerations for Similar Conversions

While the Grand Avenue project's financial details haven't been disclosed, property owners can estimate conversion feasibility using current market data:

Development costs for San Diego residential construction have risen 3.5% in 2026, with labor costs increasing 6-8% and material costs affected by tariffs. For Pacific Beach specifically, coastal construction premiums add 10-15% to baseline costs due to Coastal Commission requirements, specialized inspections, and environmental compliance.

Revenue potential for 17 units in Pacific Beach depends on unit mix and finishes, but recent rental comps suggest:

• Studio apartments: $1,800-$2,200/month
• One-bedroom units: $2,400-$2,800/month
• Two-bedroom units: $3,200-$3,800/month

With two units restricted to affordable rates (30% of 60% AMI income), the financial model must account for below-market rents on those units while maximizing returns on market-rate units.

Density bonus incentives can significantly improve project economics by allowing additional units beyond base zoning, reducing parking construction costs (which can run $40,000-$60,000 per space for structured parking), and providing expedited permitting that reduces carrying costs.

Permit Pathway: Step-by-Step Process for Commercial-to-Residential Conversion

Based on the Grand Avenue project and current San Diego regulations, property owners pursuing commercial-to-residential conversions in Pacific Beach should follow this pathway:

Phase 1: Due Diligence (2-3 months)

• Confirm zoning allows residential use or identify rezone requirements
• Determine if property falls within Coastal Height Limit Overlay Zone
• Assess density bonus eligibility and calculate maximum unit count
• Conduct preliminary environmental review (Phase I ESA for commercial properties)
• Evaluate parking requirements and reduction opportunities
• Meet with City of San Diego Development Services for pre-application consultation

Phase 2: Design and Engineering (3-4 months)

• Retain experienced coastal architect (like Golba Architecture)
• Develop preliminary site plan with unit mix and affordable housing integration
• Conduct geotechnical investigation and prepare reports
• Design parking solution (surface, carport, or structured)
• Prepare landscape and drainage plans
• Develop three-story massing that respects neighborhood scale

Phase 3: Entitlements and Permitting (8-14 months)

• Submit Coastal Development Permit application (if required)
• Submit density bonus application with affordable housing documentation
• Complete environmental review (CEQA/NEPA)
• Obtain site development permits
• Coordinate with California Coastal Commission (if applicable)
• Obtain building permits

Phase 4: Construction (12-18 months)

• Demolish existing commercial structures
• Complete foundation and three-story wood-frame construction
• Install MEP systems and finishes
• Coordinate coastal construction inspections
• Obtain certificate of occupancy
• Lease market-rate and affordable units

Total timeline from acquisition to occupancy: 25-39 months, depending on project complexity and permitting challenges.

Long-Term Impact on Pacific Beach's Character

The Grand Avenue development is one piece of a broader transformation occurring throughout Pacific Beach. In addition to the 17-unit Grand Avenue project and the adjacent former IHOP site, Pacific Beach has seen:

• AVA Pacific Beach expansion to 702 apartments at 3883 Ingraham Street
• Rose Creek Village with 59 affordable units at 2662 Garnet Avenue (30-60% AMI)
• Chalcifica ADU project with redesigned plans for 125 units
• Multiple three-story Coastal Development Permits replacing single-family homes

Research on infill housing impacts shows mixed results for surrounding property values. Some studies have identified small but consistent negative effects from townhouse infill projects, typically less than a 0.5% decline. However, Pacific Beach's strong coastal location and housing demand may insulate the neighborhood from these effects.

The Pacific Beach Community Plan emphasizes maintaining neighborhood identity while accommodating growth. For the Grand Avenue corridor specifically, the transition from underperforming commercial uses to residential development may ultimately enhance neighborhood character by:

• Removing blighted or vacant commercial structures
• Increasing pedestrian activity and "eyes on the street"
• Bringing new residents who support local businesses on Garnet Avenue
• Creating modern, well-maintained buildings that improve streetscape aesthetics

Builder Opportunities: Is This Model Replicable?

The Grand Avenue project demonstrates that commercial-to-residential conversions are viable in Pacific Beach when developers:

1. Target underperforming commercial properties with willing sellers
2. Integrate affordable housing to access density bonuses and incentives
3. Design three-story projects that respect neighborhood scale and height limits
4. Work with experienced coastal architects who understand permitting complexities
5. Plan realistic timelines that account for 2-3 year development cycles
6. Structure parking efficiently using ground-floor carports or reduced-space models

For builders and developers, the most promising opportunities likely exist along secondary commercial corridors like Grand Avenue, Mission Avenue, and Ingraham Street—areas with aging commercial stock that lack the visibility and traffic of Garnet Avenue's retail core. These corridors serve Pacific Beach neighborhoods from the coastal areas near Tourmaline Surfing Park to the commercial district near Grand and Mission Avenues.

Properties meeting these criteria may offer conversion potential:

• Small strip malls with 3-8 outdated retail bays
• Former auto service facilities on residential-sized lots
• Underutilized office buildings in commercial zones
• Mixed-use properties where ground-floor commercial struggles to lease

The San Diego Mid-City Communities Plan, which proposes 30,000 new homes over 30 years, demonstrates the city's commitment to infill development. While Mid-City is outside Pacific Beach, the regulatory framework and political will for infill housing creates a supportive environment for projects like Grand Avenue across all San Diego neighborhoods.

What's Next: Monitoring the Grand Avenue Project

As of August 21, 2026, the Grand Avenue project remains in the permitting phase following its August 7 submission. Property owners interested in similar conversions should monitor this project's progress through:

• City of San Diego OpenDSD portal (search project address: 866-872 Grand Avenue)
• Pacific Beach Planning Committee meetings where major developments are discussed
• California Coastal Commission agenda if the project requires coastal review
• Times of San Diego coverage of Pacific Beach development news

The project's timeline, approvals, and any modifications required by the city or Coastal Commission will provide valuable intelligence for developers planning similar conversions.

Conclusion: A Roadmap for Pacific Beach Property Owners

Tim Golba's 17-unit development at 866-872 Grand Avenue represents more than just another housing project—it's a case study in how Pacific Beach property owners can navigate the complex path from commercial to residential use while meeting the city's affordable housing requirements and accessing valuable density bonus incentives.

For property owners sitting on aging commercial assets in Pacific Beach, this project demonstrates that conversion opportunities exist despite the neighborhood's coastal permitting complexities, community plan restrictions, and height limitations. The key is working with experienced professionals, integrating affordable housing strategically, and designing projects that respect Pacific Beach's established character while contributing to the community's housing needs.

As San Diego continues to grapple with a housing affordability crisis—with only 31.4% of Pacific Beach residents owning their homes—commercial-to-residential conversions like the Grand Avenue project will play an increasingly important role in adding housing supply in established coastal neighborhoods.

The transformation of Grand Avenue from commercial corridor to residential neighborhood is just beginning. Property owners who understand the regulatory pathway, financial incentives, and community expectations will be best positioned to capitalize on this opportunity while contributing to Pacific Beach's evolution into a denser, more housing-rich coastal community.