SAN MARCOS — After seven years of the ground-floor retail space sitting empty at the Marc development along Armorlite Drive, the developer has decided to convert the unused space into new housing units in response to changing market conditions.
Last week, the San Marcos City Council unanimously approved a specific plan amendment and conditional use permit to convert over 15,000 square feet of commercial space at the Marc into 10 rental housing units. These will add to the 416 existing residential units in the development.
The permit is for a 10-year period, and can be renewed if market conditions continue to support residential use, city staff said.
The Marc project was originally approved in 2014 and constructed in 2017. Jason Greminger, a representative for developer MG Properties, said they have struggled to rent out the retail space and have even offered incentives, such as six months of free rent, to attract a tenant.
“I will say, they have had a very difficult time trying to lease these retail spaces,” Greminger said. “After years of trying, I think they felt that maybe this could work in an interim kind of condition, and so we’re here tonight to ask for approval.”
San Marcos has found itself with an excess of commercial area, both in mixed-use developments and in larger commercial zones, and has been working to address this shift for several years. Back in 2018, the city had to drastically amend its Creek District plan, reducing the planned commercial space from 1.2 million square feet to 20,000 square feet to focus more on housing.
Developments like the Capalina Apartments, approved in 2024, have also come forward on sites that were originally zoned commercial but ended up sitting vacant.
City staff said that in the area around the Marc, next to the Palomar Sprinter station, there is a lack of sustained tenant interest in commercial uses and low vehicle traffic. Neighboring projects such as the Palomar Station apartments on Armorlite Drive have also converted some commercial space to housing units.
“The project responds to demands resulting from city and statewide housing shortages, activates vacant storefronts, revitalizing Armorite Drive, and provides additional workforce housing in a transit-oriented location,” said City Planner Corina Flores.
Nine of the units will be one-bedroom lofts, and one will be a two-bedroom unit. Each new unit will feature an outdoor fenced-in patio. They will be rented at market rate.
Forty-six parking spaces designated for the commercial area will be reassigned, with 14 converted to residential parking for the 10 new units. The remaining spaces will serve other residential units and commercial areas.
During the conversion, most updates will be inside the building, and the exterior will remain largely unchanged.
City Council members said while they would have liked to see storefronts succeed in this development, pivoting to housing is a good idea.
“While I would love to have, you know, commercial activity taking place in these, I think over the last nine years, the market just has proven that it’s not ready for it,” said Councilmember Mike Sannella.
Mayor Rebecca Jones said empty storefronts also carry the risk of drawing squatters.
“We certainly don’t want to see vacant storefronts,” Jones said. “It’s an attractive nuisance, because if it’s just sitting there, people could come in and try to live there.”
There will be no commercial tenants evicted when the commercial space is converted, Greminger said.
