REAL ESTATE: City Pulls Back On Parking, Density Bonus for ADUs

BY RAY HUARD

MARCH 31, 2025

Via San Diego Business Journal

Atlas West Group specializes in converting single-family homes to apartment buildings.

SAN DIEGO – A San Diego developer who specializes in turning run-down, single-family homes into small apartment complexes said that changes in city zoning regulations will limit his options but haven’t dimmed the outlook for his company’s growth.

“They’re pretty drastic changes, but our DNA as a developer is to be innovative and creative,” said Daniel Shkolnik, CEO and founder of Atlas West Development Group.

“We’ll work with the city to understand what they really want now,” Shkolnik said. “It’s going to make us work harder, but the business environment is never static. We’re prepared to adjust our strategy around that.”

The San Diego City Council in early March gave preliminary approval to changes in the city’s bonus accessory dwelling program that regulates where apartment additions, called Accessory Dwelling Units (ADUs), can be made to existing single-family homes.

“We won’t be able to do this in as many places as we used to,” Shkolnik said. “The city has been a model in the state and nationally in terms of their housing program and they need to tread lightly when they try to make modifications.”

Atlas West concentrates on urban infill projects, and much of the company’s work involves adding ADUs under a bonus density program to existing homes that the company buys, renovates and leases.

Among other things, the program allows homeowners to build more than one ADU on their property if their project includes apartments for low-income tenants.

“It’s not the only program that we use, but it’s a major one that we rely on,” Shkolnik said, adding that, “My entire portfolio was built upon buying dilapidated, under-utilized properties and completely transforming them.”

Typically, Atlas West projects are between six and 12 apartments on what had been single-family lots, according to Shkolnik.

“We try to fix up what’s there. We try to reuse what’s there and then add on to it,” Shkolnik said, adding that the company’s only focus is “urban infill redevelopment to create workforce and attainable housing in San Diego.”

Growth Plan: Building for ‘Missing Middle’

In 2024, Atlas West bought five properties, had six projects under construction, and finished eight projects, according to the company’s website.

Shkolnik said that much of the new housing being built in San Diego is either luxury products that most people can’t afford or subsidized housing for low-income tenants.

“We’re building for the missing middle. Our tenants are the military, first responders, librarians, teachers – really people who make up the fabric of the city, people who make $100,000 to $110,000. It’s the hard-working folks who have been ignored,” Shkolnik said.

Interest rates that have remained stubbornly high have caused problems for most developers, and Atlas West is no exception.

“It’s moderated our acquisition pace. We’re working twice as hard to cover the same number of projects verses being able to be a little more risky or gutsy when interest rates are low,” Shkolnik said. “I’m bullish on rates. You can’t be a developer without being a little optimistic and having a thick skin with a big smile.”

Even with the changes in the ADU regulations, Shkolnik said he’s hoping to dramatically increase the company’s holdings.

With a 2025 portfolio that Shkolnik estimated was worth about $100 million, he said that “In five years, we’d like to grow to a $500 million portfolio. Five years might be tight, but maybe over the next five to seven years. That’s kind of where our eyes are.”

Atlas West Group specializes in converting single-family homes to apartment buildings. Photo courtesy of Atlas West Group

Partnership to Temporarily House Refugees

Two years ago, Atlas West partnered with Jewish Family Services of San Diego to provide free temporary housing to refuges, using single-family homes that the company bought with plans to renovate them.

Pending permitting, Atlas West allows refugees to stay in the homes until they can find permanent housing.

Shkolnik said that he has continued the program, when it has vacant homes available.

“When we buy a project that’s in decent shape and habitable, we typically bring in refugees for them to have an easier time integrating into San Diego,” Shkolnik said. “My family immigrated, so that’s kind of my way of giving back.”

Atlas West Group

FOUNDED: 2013

HEADQUARTERS: Downtown San Diego

CEO: Daniel Shkolnik

BUSINESS: Housing developer

EMPLOYEES: 15

WEBSITE: www.atlaswestgroup.com

CONTACT: info@atlaswestgroup.com

NOTABLE: Atlas West specializes in urban infill development