A sparsely developed, mostly commercial area in San Diego’s South Bay is about to become a new housing hub thanks to city incentives, state infrastructure grants and the region’s strong demand for more housing.
More than 1,000 units of new housing in four separate developments are planned for land surrounding the Palm Avenue trolley station in San Diego’s previously low-profile neighborhood of Palm City.
A 380-unit apartment complex on a former go-kart site approved Thursday by the San Diego Planning Commission joins a 408-unit complex approved for the trolley station parking lot and a 198-unit project next to that.
A fourth housing project on an abandoned nearby driving range is also working its way through the approval pipeline. All the projects are just east of Interstate 5, near the intersection of Palm Avenue and Hollister Street.
City and state incentives for dense housing projects near transit likely played a key role in making the projects profitable enough for developers to pursue them, said Albert Velasquez, chair of the Otay Mesa-Nestor Community Planning Group.
Velasquez said Thursday that residents in the area are divided about so many new projects all at once, with some worried about parking scarcity and others upbeat about new housing opportunities in the area.
Local developer Andrew Malick, part of the team handling the 408-unit project at the trolley station, said the developer incentives aren’t the only reason the projects are happening.
The state awarded the area two grants totaling more than $25 million for new sewer and water lines and infrastructure to make dense development possible there.
“We needed a catalyst,” Malick said.
The money came from the state’s Infill Infrastructure Grant Program and the Regional Early Action Plan program.
Malick said another factor was that developers have already built projects on most of the less challenging available sites.
“We’ve run out of easier land to develop,” he said.
Malick noted that in addition to the trolley, the area is served by a high-frequency bus line on Palm Avenue and is close to the BayShore Bikeway. Protected bike lanes connecting the area to the bikeway are expected in coming years, he said.
The projects planned for the area also offer a variety of housing options with different price points.
The 198 units next to the trolley station are mostly market rate, with only eight subsidized units with rent restrictions.
The 408 units planned for the trolley station parking lot are all subsidized and rent-restricted; some are reserved for moderate-income residents, some for low-income and some for very low-income.
The development approved Thursday, just north of the trolley station, includes 280 market-rate units and 100 subsidized units with rent restrictions.
The projects’ density will also differ. The 198-unit project will be built on six acres, the 408 units on just three and a half acres and the 380 units approved Thursday on 14 acres.
The project approved Thursday, dubbed Bella Mar, will be built on an empty site that hosted an arcade and a go-kart track from 1989 to 2006.
Velasquez, the planning group leader, said scarcity of street parking has been the No. 1 concern from neighbors about the new projects. The nearby La Palma Mobile Estates already takes up much of the area’s street parking, he said.
All of the projects includes resident parking, but the 408-unit project on the trolley parking lot uses some “shared parking” strategies, where some of the homes don’t get an assigned spot. That’s relatively common with developments along trolley lines.
Velasquez said the projects have highlighted recent changes to how the city includes neighborhood planning groups in the approval process for development projects.
Many projects are allowed to bypass planning groups completely. When they do go to the groups for feedback, Velasquez said it has less impact these days.
“Some of the older members feel that the power of the planning group has been really watered down,” he said.
Originally Published: August 14, 2025 at 4:16 PM PDT