Multifamily ADU Densification
For Sale
Contact for pricing
2259 Market St, San Diego, CA 92102
Multifamily property with ADU expansion potential in Sherman Heights, San Diego.
Property Size4,608 SF
Lot Size0.17 Acres
Price / SF$368.92
Days on Market192
Property Features for 2259 Market St
General Information
Standard status
Active
Size
4,608 SF
Class
B
Lot size
0.17 Acres
Property subtype
Land, Multifamily
Zoning
CC-3-4
Occupancy
100%
Investment Type
Redevelopment
Net Operating Income
$78,179
Building Details
Year Built
1927
Buildings
1
Stories
3
Units
6
Tenancy
Multi
Listing Agency:
Top Gun CRE Inc
(619) 550-4515
Listed By:
Kenneth Herskind · License #01872460
Source:
Crexi
Added: Feb 1
Changed: Aug 8
Last Checked: Jul 15 at 10:26PM
Displayed information is deemed reliable but is not guaranteed and should be independently verified. All listing content including descriptions, pricing, images are the copyrighted material of Top Gun CRE Inc
Investment Insights
Based on property information with market context.
This multifamily property in Sherman Heights, San Diego, presents a densification opportunity through the construction of additional dwelling units (ADUs). The property currently features a 3-story, 6-unit apartment building constructed in 1927, totaling 4,608 square feet. The unit mix includes 1, 2, and 3-bedroom units across two floors, with an unfinished basement and an exterior parking lot. The existing building maintains classic charm and generates a gross income of over $10,000 per month from month-to-month tenancies. The site, zoned CC-3-4, occupies a 7,500 square foot lot. Professionally prepared ADU plans are in final approval stages for three detached, 2-story structures at the rear of the site, expected to be fully approved within the next 2-3 months. These plans allow for the by-right construction of 6 new ADUs, potentially doubling the unit count to 12. The proposed ADUs total approximately 2,884 square feet and include a mix of one- and two-bedroom units, designed to meet current California Building Code and Title 24 energy standards. These units will feature efficient, open-concept living areas, in-unit washers/dryers, and mini-split HVAC systems. Upon completion, the 12-unit apartment property will feature modern new-construction units complementing the existing improvements. The 6 new ADUs are estimated to contribute an additional $13,000+ per month in gross rental income. This property is suited for investors seeking development upside, unit-count expansion, and long-term rental income growth in an urban San Diego infill location.
Key Highlights
- Opportunity to double unit count from 6 to 12 via by‑right ADU construction (CA SB‑1211).
- Professionally prepared ADU plans (3 detached, 2‑story structures) in final approval stages.
- Significant rental income upside: existing $10K+/month plus estimated additional $13K+/month from new ADUs.
Financial Insights
Estimated NOI and Cap Rate
NOI = area × lease_rate × (100 − vacancy) / 100 × (1 − expense_ratio). Net Operating Income — what the owner takes home each year before mortgage payments and income tax. Effective rent (asking rent minus vacancy losses) minus operating costs (taxes, insurance, maintenance, management).
NOI / Yr
$76,161
Cap rate = NOI / list price × 100. Capitalization rate — annual return on a fully cash purchase, before financing. NOI divided by price. Higher means more income per dollar invested, but usually also more risk or older condition. 5–8% is typical for stabilized commercial property; double digits often signal distressed deals.
Cap Rate
4.48%
Suggested Prices Based on Cap Rates
Cap rates vary significantly by property type, market, and asset quality.
Typical U.S. stable-market ranges:
Multifamily — 4.5% to 6.5% (Class A in primary markets often sub-5%; Class C in secondary markets 6%+)
Industrial / Logistics — 5.0% to 7.0% (compressed heavily in recent years due to e-commerce demand)
Office — 6.5% to 9%+ (wide spread post-2020; CBD Class A vs. suburban Class B varies dramatically)
Retail — 5.5% to 8.5% (grocery-anchored on the low end, unanchored strip centers higher)
Hospitality / Hotels — 7.5% to 10%+ (higher due to operational risk)
Self-Storage — 5.5% to 7.5%
Medical Office — 6.0% to 7.5%
Net Lease (single tenant, credit) — 5.0% to 7.0% depending on tenant credit and lease term
Rules of thumb:
Primary markets (NYC, SF, LA, Boston, DC) trade at lower cap rates than secondary/tertiary markets, often by 100–200 bps (bps, aka basis points; 1 bp = 0.01%).
Class A assets trade ~50–150 bps tighter than Class B, and Class B tighter than Class C.
Cap rates move inversely with price — a lower cap rate means a higher price for the same NOI.
Spread to the 10-year Treasury is a common benchmark; historically 200–400 bps over the 10-year.
Cap Rate 5%
$1,523,220
$1.5M
Cap Rate 7%
$1,088,014
$1.1M
Cap Rate 9%
$846,233
$846.2K
Market Conditions
NOI Build-Up for 4,608 SF
Vacancy — income lost from leasable area expected to sit empty during the year, subtracted from gross rent.
EGI (Effective Gross Income) — gross rent minus vacancy losses, the realistic income before paying operating costs.
OpEx (Operating Expenses) — recurring costs to operate the property (property tax, insurance, utilities, maintenance, management); excludes financing and capital improvements.
NOI (Net Operating Income) — income a property generates after operating costs but before financing and taxes.
Gross rent
$146.5K $31.80/SF
− Vacancy
−$8.1K −$1.75/SF
EGI
$138.5K $30.05/SF
− OpEx
−$62.3K −$13.52/SF
NOI
$76.2K $16.53/SF
Area
San Diego, CA
Vacancy
5.50%
Lease Rate
$31.80 /SF/Yr
Expense Ratio
45.00%
Simulate Cap Rate and NOI
Suggested Prices Based on Cap Rates
Cap rates vary significantly by property type, market, and asset quality.
Typical U.S. stable-market ranges:
Multifamily — 4.5% to 6.5% (Class A in primary markets often sub-5%; Class C in secondary markets 6%+)
Industrial / Logistics — 5.0% to 7.0% (compressed heavily in recent years due to e-commerce demand)
Office — 6.5% to 9%+ (wide spread post-2020; CBD Class A vs. suburban Class B varies dramatically)
Retail — 5.5% to 8.5% (grocery-anchored on the low end, unanchored strip centers higher)
Hospitality / Hotels — 7.5% to 10%+ (higher due to operational risk)
Self-Storage — 5.5% to 7.5%
Medical Office — 6.0% to 7.5%
Net Lease (single tenant, credit) — 5.0% to 7.0% depending on tenant credit and lease term
Rules of thumb:
Primary markets (NYC, SF, LA, Boston, DC) trade at lower cap rates than secondary/tertiary markets, often by 100–200 bps (bps, aka basis points; 1 bp = 0.01%).
Class A assets trade ~50–150 bps tighter than Class B, and Class B tighter than Class C.
Cap rates move inversely with price — a lower cap rate means a higher price for the same NOI.
Spread to the 10-year Treasury is a common benchmark; historically 200–400 bps over the 10-year.
Cap Rate 5%
$1,523,220
Cap Rate 7%
$1,088,014
Cap Rate 9%
$846,233
Alternative Uses
Best Use
Apartment 5plus
$1.09M
$952.0K – $1.27M
NOI $76,161 @ 7.0% cap · market cap 4.48%
Second Best
—
—
no second resolved use
Theoretical Best
Specialty Retail
$1.82M
$1.59M – $2.12M
NOI $127,402 @ 7.0% cap · market cap 7.49%
Zoning and permitted uses should be independently verified with authorities.
Property Analytics
Property Profile
Current Use
Location Intelligence
Trade Area within ½ mile
1,141
Businesses Nearby
Explore this area
Business Placement
Demographics for 92102, CA
39,783
Population
15,622
Households
2.5
Avg Household Size
34
Median Age
29%
College-Educated
80%
High-School Grad
4.5 sq mi
ZIP Area
8,841
Density / Sq Mi
$71,319
Median Household Income
$40,142
Median Earnings
$1,855
Median Rent
$646,600
Median Home Value
Market
Vacancy Rate% for Multifamily in West region
Questions? Ask Rey
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Frequently Asked Questions
What type of property is this?
Apartment building - Multifamily property with ADU expansion potential in Sherman Heights, San Diego.
Where is this apartment building located?
The property is located at 2259 Market St San Diego, CA.
What is the asking price?
The asking price for this property is $1,700,000.
What are key features of this property?
This property features: Opportunity to **double unit count from 6 to 12** via by‑right ADU construction (CA SB‑1211).; Professionally prepared ADU plans (3 detached, 2‑story structures) in final approval stages.; Significant rental income upside: existing $10K+/month plus estimated additional $13K+/month from new ADUs.
