San Diego Doesn't Have a Zoning Problem — It Has a Feasibility Problem

San Diego Doesn’t Have a Zoning Problem — It Has a Feasibility Problem

Introduction

For years, the housing conversation in California has centered on zoning.

Increase density. Expand capacity. Remove barriers.

And to a large extent, that work has been done.

The Capacity Is Already There

Based on current planning frameworks:

• San Diego has significant baseline zoning capacity
• CCHS overlays increase that capacity even further
• In many cases, allowable density already exceeds what state mandates require

This means the issue is not theoretical buildout.

It is actual delivery.

The Real Constraint: Feasibility

Development is not driven by zoning alone.

And today, several factors are making that difficult:

Each of these introduces friction.

Policy Has Focused on the Wrong Problem

Recent legislation has made meaningful progress:

• SB 79 improves entitlement pathways
• SB 330 provides timing and certainty
• The 2026 Land Development Code Update adjusts regulations

But these changes primarily address process.

The Shift We Need

If the goal is to increase housing production, the focus must shift from capacity to feasibility.

This means addressing:

• cost of construction
• insurance structures
• fee burdens
• financing gaps

Without these changes, increased zoning capacity alone will not translate into delivered units.

The Missing Middle Challenge

One of the clearest examples of this issue is the “missing middle.”

Today’s housing market resembles an hourglass:

This is where policy can have the greatest impact moving forward.

San Diego’s Opportunity

San Diego is well positioned to lead this next phase.

The City has already:

• expanded zoning capacity
• introduced density programs
• begun updating its development code

Strategic Takeaway

The question is no longer:

“Can we build here?rdquo;

It is:

“Can we make it work financially?rdquo;

Conclusion

Zoning reform was the first step.

Final Thought

If projects don’t pencil, they don’t get built.

That is the reality shaping housing delivery today.

Closing

What are you seeing in your projects—are they being limited by zoning, or by feasibility?