San Marcos council approves temporary conversion of ground-floor retail to up to 10 housing units at Armorlite Drive

San Marcos — The City Council on March 10 adopted an addendum to a mitigated negative declaration and approved a specific plan amendment and conditional use permit to allow the temporary conversion of ground-floor commercial space into up to 10 residential units at 1045 Armorlite Drive.

Planning staff, represented by Karina Flores, told the council the mixed-use complex was built with 416 residential units and roughly 15,229 square feet of retail spread across six buildings. The amendment (SPA 24-0002) and the conditional use permit (CUP 24-0001) would allow the owner to convert about 15,000 sq. ft. of ground-floor commercial space to residential use on a 10-year term, after which the permit would be eligible for renewal following a market review. Flores said a market analysis supplied by the applicant showed persistent vacancies in ground-floor retail and that the proposed addendum concluded the changes would not result in new environmental impacts under CEQA.

“The conditional use permit contains provisions establishing a 10-year term for the residential units,” Flores said during the presentation. She added that conditions would require lease agreements to reflect the permit term and require tenant disclosure about the temporary nature of the conversion.

Applicant representative Jason Grama told the council the owner had tried multiple strategies to attract retailers, including incentives. “At one point, they even offered a space for, you know, a period, I think, maybe six months of free rent to try and attract a user, and that didn't work,” Grama said, arguing the interim housing option would activate vacant storefronts and provide workforce housing in a transit‑oriented location near the Palomar Station Sprinter station.

Staff provided details on parking and reversibility: 46 existing parking spaces currently serve the commercial area; 14 parking spaces would be required for the proposed residential units, leaving 32 spaces to be reallocated to serve remaining commercial areas and residential units. Flores said the conversion focuses on interior tenant improvements so that the ground floor could be converted back to retail if market conditions warranted.

Council members asked about outdoor patios and potential uses, management of fronting spaces, and the rationale for the 10-year review term. Deputy Mayor Sunnella praised the design and supported the concept as a response to housing shortages, while others noted the city had previously allowed similar conversions at other developments when retail remained vacant.

The planning commission reviewed the proposal and voted 6–1 to recommend approval. On the council dais, a council member moved to adopt the addendum to the mitigated negative declaration and approve SPA 24-0002 and CUP 24-0001 as recommended; the motion was seconded and passed by unanimous voice vote with no recorded noes.

The permit includes a 10‑year term and requires market analysis at renewal; staff said the city would require tenant disclosures and standard lease terms to align with the CUP timeframe. The council did not attach additional conditions beyond those proposed by staff. The decisions now clear the way for the property owner to begin interior conversions under the approved permits and compliance conditions.

What happens next: the CUP will be subject to monitoring and a future renewal process in 10 years that will require a market review to determine whether reconversion to commercial use is appropriate.