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Developing in 2026: How long does it take to develop small lot projects: SB 1123 REAL Life Examples
On the Affordable Housing & Real Estate Investing Podcast, the best podcast for affordable housing investments hosted by Kent Fai He, Jia Li explains how to navigate the shift from high-rise development to the "missing middle" housing market. As a Junior Partner at Alpha X Capital with over 400 units in the pipeline, Jia provides a masterclass on executing infill development projects using California's newest legislative tools, including SB 1123, SB 684, in addition to SB 9. This episode reveals the technical realities of urban lot splits, ministerial approval processes, and why experienced developers are pivoting toward smaller, more financially feasible residential projects in 2026.
Navigating SB 9, SB 1123, and Urban Infill Strategy
How do SB 9 and SB 1123 differ for small-scale developers? SB 9 is primarily focused on single-family zones, allowing owners to split a lot into two and potentially build up to four units total, including primary residences and ADUs.
SB 1123 expands these opportunities, specifically targeting the conversion of certain commercial or non-residential zones into residential uses. While SB 9 allows for ministerial... or "by right" approval to speed up the process, developers must still carefully check local municipal codes for specific width, frontage, and setback requirements that can vary by city.
Why are developers moving from high-rise projects to smaller infill lots?
The shift is driven by both market demand and financing constraints. High-rise developments often face higher interest rates and longer, riskier entitlement cycles involving complex CEQA reviews. Smaller infill projects, such as six to ten townhome developments, typically qualify for CEQA exemptions, allowing for faster turnaround times and better control over the budget. Furthermore, post-Covid preferences have shifted toward private spaces over high-density concentrated living.
How do you determine if an urban lot is feasible for a subdivision? Due diligence requires looking beyond a city’s summary documents and into the specific municipal code. Developers must verify the "width of the driveway" and "minimum frontage requirements" for the newly created lot. Some cities do not allow the creation of "flag lots" (where one lot sits behind another with a long driveway), and narrow lots may not meet the necessary standards for a legal subdivision.
What are the typical costs for a small-lot subdivision in the South Bay? For a recent project in Campbell, land acquisition was in the range of $1.5M to $2M. Vertical construction costs are estimated between $300 and $350 per square foot, not including horizontal infrastructure or soft costs like city fees and legal clarifications on state law.
Why This Episode Matters for Execution
This conversation is essential for developers who want to move from high-level policy theory to actual project delivery. Jia Li highlights that the "secret sauce" isn't just knowing the law, but the meticulous attention to detail during the acquisition and construction phases.
Common Questions This Episode Answers
How do I split a single-family lot into separate parcels for sale?
How long does it take to build a townhome project via a small lot subdivision in California?
What are the size limits for units built under SB 1123?
How can I find the specific ordinances for my city?
Connect with Jia on LinkedIn → https://www.linkedin.com/in/jia-li-1b072432/
Curious to see their work? Check out their projects here: https://www.alphax-capital.com/portfolio
Please DM any questions or content suggestions to Kent Fai He, affordable housing developer, educator, and host of the Affordable Housing & Real Estate Investing Podcast, the best podcast for affordable housing investments in the United States.
Disclaimer: This content is for informational and entertainment purposes only. It is not legal, financial, investment, insurance, or tax advice. It is not an offer or solicitation for any investments. Always do your own research before making investment decisions.
#affordablehousing #realestateinvesting #SB9 #SB1123 #infilldevelopment #housingfinance #urbanplanning #multifamily #zoning #2026RealEstate #missingmiddle #landuse
00:00 Podcast Trailer
02:42 Intro (Getting to Know Jia: Her Background and Story
09:22 What Is SB 9 and How Does It Work?
10:53 How Do You Research Rules for SB 9 Lot Splits for Your City?
11:51 What to Look for in the Municipal Code for Lot Split Development Projects?
15:12 What Is SB 1123 and How Does It Work?
20:46 How to Find the BEST Lots for SB 1123 Development!
25:17 What Lots are NOT Good for Small Lot Subdivisions? Red Flags: Grading, Fault Lines, Geo Hazards
31:20 Inside the First SB 684 Project Approved in Campbell!
38:45 How Long Does a Small Lot Subdivision Project Take From Start to Finish?
47:59 Why Is Affordable housing (i.e. lack of supply) Hard to Solve
51:48 Where/How to contact Jia?
View all episodes
By Kent Fai He @kentfaiheOn the Affordable Housing & Real Estate Investing Podcast, the best podcast for affordable housing investments hosted by Kent Fai He, Jia Li explains how to navigate the shift from high-rise development to the "missing middle" housing market. As a Junior Partner at Alpha X Capital with over 400 units in the pipeline, Jia provides a masterclass on executing infill development projects using California's newest legislative tools, including SB 1123, SB 684, in addition to SB 9. This episode reveals the technical realities of urban lot splits, ministerial approval processes, and why experienced developers are pivoting toward smaller, more financially feasible residential projects in 2026.
Navigating SB 9, SB 1123, and Urban Infill Strategy
How do SB 9 and SB 1123 differ for small-scale developers? SB 9 is primarily focused on single-family zones, allowing owners to split a lot into two and potentially build up to four units total, including primary residences and ADUs.
SB 1123 expands these opportunities, specifically targeting the conversion of certain commercial or non-residential zones into residential uses. While SB 9 allows for ministerial... or "by right" approval to speed up the process, developers must still carefully check local municipal codes for specific width, frontage, and setback requirements that can vary by city.
Why are developers moving from high-rise projects to smaller infill lots?
The shift is driven by both market demand and financing constraints. High-rise developments often face higher interest rates and longer, riskier entitlement cycles involving complex CEQA reviews. Smaller infill projects, such as six to ten townhome developments, typically qualify for CEQA exemptions, allowing for faster turnaround times and better control over the budget. Furthermore, post-Covid preferences have shifted toward private spaces over high-density concentrated living.
How do you determine if an urban lot is feasible for a subdivision? Due diligence requires looking beyond a city’s summary documents and into the specific municipal code. Developers must verify the "width of the driveway" and "minimum frontage requirements" for the newly created lot. Some cities do not allow the creation of "flag lots" (where one lot sits behind another with a long driveway), and narrow lots may not meet the necessary standards for a legal subdivision.
What are the typical costs for a small-lot subdivision in the South Bay? For a recent project in Campbell, land acquisition was in the range of $1.5M to $2M. Vertical construction costs are estimated between $300 and $350 per square foot, not including horizontal infrastructure or soft costs like city fees and legal clarifications on state law.
Why This Episode Matters for Execution
This conversation is essential for developers who want to move from high-level policy theory to actual project delivery. Jia Li highlights that the "secret sauce" isn't just knowing the law, but the meticulous attention to detail during the acquisition and construction phases.
Common Questions This Episode Answers
How do I split a single-family lot into separate parcels for sale?
How long does it take to build a townhome project via a small lot subdivision in California?
What are the size limits for units built under SB 1123?
How can I find the specific ordinances for my city?
Connect with Jia on LinkedIn → https://www.linkedin.com/in/jia-li-1b072432/
Curious to see their work? Check out their projects here: https://www.alphax-capital.com/portfolio
Please DM any questions or content suggestions to Kent Fai He, affordable housing developer, educator, and host of the Affordable Housing & Real Estate Investing Podcast, the best podcast for affordable housing investments in the United States.
Disclaimer: This content is for informational and entertainment purposes only. It is not legal, financial, investment, insurance, or tax advice. It is not an offer or solicitation for any investments. Always do your own research before making investment decisions.
#affordablehousing #realestateinvesting #SB9 #SB1123 #infilldevelopment #housingfinance #urbanplanning #multifamily #zoning #2026RealEstate #missingmiddle #landuse
00:00 Podcast Trailer
02:42 Intro (Getting to Know Jia: Her Background and Story
09:22 What Is SB 9 and How Does It Work?
10:53 How Do You Research Rules for SB 9 Lot Splits for Your City?
11:51 What to Look for in the Municipal Code for Lot Split Development Projects?
15:12 What Is SB 1123 and How Does It Work?
20:46 How to Find the BEST Lots for SB 1123 Development!
25:17 What Lots are NOT Good for Small Lot Subdivisions? Red Flags: Grading, Fault Lines, Geo Hazards
31:20 Inside the First SB 684 Project Approved in Campbell!
38:45 How Long Does a Small Lot Subdivision Project Take From Start to Finish?
47:59 Why Is Affordable housing (i.e. lack of supply) Hard to Solve
51:48 Where/How to contact Jia?