California AB 380 Could Freeze Your Retail Rents—See the Loopholes Before It’s Too Late

Marc Perlof • July 25, 2025

Hey Retail Real Estate Rockstars!

Let’s talk about something important that’s happening in California: AB 380. This new law was created because, after wildfires and disasters earlier this year, some landlords raised rents on small business tenants by up to 300%. Places like cafés, stores, and barbershops were hit hard. People got angry. The government stepped in.¹

AB 380 is a new rule that may stop landlords from raising rent too much during emergencies. It’s not a normal rent control law, but it does limit how much rent can go up when something like a wildfire or pandemic happens.

What’s Happening Now?
AB 380 already passed the California Assembly. Now it’s going through the State Senate.

  • On July 8, 2025, the bill passed the Senate Public Safety Committee
  • It’s now being reviewed by the Senate Appropriations Committee²
  • After that, it will need to pass a full Senate floor vote
  • The final vote may happen later this summer


What Does AB 380 Do?
If it becomes law, here’s what it would do:

  • Stop rent increases over 10% during emergencies, like wildfires or floods¹
  • Apply to small businesses like cafés, hair salons, stores, and laundromats²
  • Block landlords from raising rent to cover repairs during emergencies²
  • Fine landlords up to $25,000 if they break the rule³


Which Tenants Are Protected?
AB 380 helps small business tenants during hard times. It applies to:

  • Local cafés, bakeries, and restaurants
  • Retail shops, like phone stores or clothing boutiques
  • Barbershops, dry cleaners, and gyms
  • Doctors and other offices in retail spaces
  • If they’re in a declared emergency zone, and you're negotiating new leases or renewals, the law caps rent increases at 10%—even if the old lease has expired.²


Do Big Chains Get Protection Too?
Yes, they do. Even if your tenant is a big-name business, like a fast food restaurant, pharmacy, grocery store, or national gym, the rule still applies. That’s because AB 380 covers all commercial tenants, not just small local shops. So if a franchise or national chain signs a lease or gets a rent increase during an emergency, that increase can’t go over 10%. This means landlords have to follow the same rule, whether the tenant is a local business or a major brand.¹

What AB 380 Does Not Do
Here’s what the law doesn’t do:

  • It does not create permanent rent control
  • It only limits rent during emergencies
  • After the emergency ends, landlords can raise rent as usual⁴


Already Have a Long Lease?
If your lease already includes annual rent increases or CPI adjustments, AB 380 won’t affect it. The rule only applies to new leases or changes made during emergencies. So if your tenant signed a 5-year lease with 3% increases, those terms still count. Just make sure any new deals include rent bumps you can depend on.

Wait—Does This Mean Year-Round Rent Control?
No. That’s a common misunderstanding. AB 380 is not permanent rent control. It only kicks in during emergencies declared by the state or city. Once the emergency is over, you can go back to market rent, as long as your lease allows it.¹ ²

What the Numbers Say

  • Over 5,000 complaints were filed after the 2024 wildfires²
  • Rent overcharges were over $21 million per month in some places⁴
  • Price gouging complaints rose 52% across California since 2021⁵


A Message for Retail Property Owners
AB 380 could change how you do business when disaster strikes. But you still have options. The key is knowing the rules, planning ahead, and protecting your income.
If you’re a retail property owner in California, AB 380 could block you from raising rent above 10% — even if your lease expires — during any declared emergency. That means you might miss out on thousands in rent increases unless your leases are written the right way. The smart move? Make sure your leases are crisis-proof  so you can stay compliant and still protect your income.

Call or DM me for more information.

Think About This…
If a disaster lasts for months and you can’t raise rent past 10%, how will you protect your cash flow and still stay within the law?

#CaliforniaAB380 #PriceGouging #CommercialRentControl #RetailRealEstate #SmallBusinessRights




Footnotes

  1. AB 380 Bill Text – California Legislature
  2. California Penal Code § 396
  3. AB 380 Assembly Bill Analysis
  4. Los Angeles Times – Wildfire Rent Gouging Cases Surge
  5. California Attorney General Consumer Complaint Data 2024


This content is provided for general informational purposes only and does not constitute legal, tax, or financial advice. Landlords, tenants, and property owners should consult with qualified legal counsel or tax professionals to understand how California AB 380 and related regulations apply to their specific situation. No attorney-client or fiduciary relationship is created by this communication.




© 2025 Marc Perlof Group. All rights reserved.

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • September 12, 2025
Cherished Malibu Seafood Shack The Reel Inn May Rebuild After State Reversal  Malibu’s one-of-a-kind seafood spot, The Reel Inn, may once again serve its signature fish puns and fried and grilled platters on Pacific Coast Highway after the state reversed its earlier position that blocked the restaurant’s return, according to Eater LA...

Retail Investors Win: New SALT Deduction Rules Could Supercharge Your Cash Flow

By Marc Perlof • September 8, 2025
Hey, Retail Real Estate Rockstars! The Big Beautiful Bill (H.R. 1) has completely changed the rules for State and Local Taxes (SALT), which is great news for any property owner who has ever cringed when they see their tax bill. For those of you investing in retail real estate, this is the kind of victory that calls for a double espresso and a fresh pro forma. We're talking about actual tax relief in 2025. Let's dissect it. What Just Happened? The SALT deduction cap, once stuck at $10,000 per household, has officially increased to $40,000 for joint filers and $20,000 for single filers — but only between 2025 and 2029. After that, it’s back to the old cap unless Congress re-ups¹. Important Clarification for Property Owners While the IRS frames the new SALT cap in terms of individual filers ($20,000 single / $40,000 joint), the impact depends on how your retail property is owned: LLCs, Partnerships, and S-Corporations (Pass-Throughs): Income, expenses, and property taxes flow through to the owners’ personal returns. The higher SALT cap allows greater deductions here, boosting post-tax cash flow for the individual owners. Trusts & Estates: Similar pass-through treatment, meaning beneficiaries or trustees may capture the benefit depending on structure. C-Corporations: The SALT cap generally doesn’t apply, since corporate taxes are calculated differently and deductions follow corporate rules. REITs (Public or Private): REITs have their own tax regime, but shareholders who receive pass-through income may benefit at the individual level. Direct Individual Ownership: If you hold the property in your own name, property taxes fall directly under the SALT deduction rules. If you live in a high-tax state like California, New York, or New Jersey, this means you can deduct a lot more of your state income, property, and local sales taxes on your federal returns. Why Retail Property Owners Should Care More Deductible Property Taxes You can lower your taxable income on your federal return by deducting a larger portion of your high property taxes on retail assets. Boosts Post-Tax Cash Flow Increased deductions = less tax paid = more cash in your pocket. Offsets Reassessment or NNN CAM Spikes With inflation and property tax reassessments squeezing margins, this SALT cap increase gives you some room to breathe¹. Attractive to High-Income Buyers New investors seeking tax efficiency may find your retail property more alluring if you offer larger deductions. Strategic Planning Window: 2025–2029 These changes expire after 2029, so use this window wisely — structure sales, 1031 exchanges, or renovations when you can best leverage the deduction bump¹. Real Data, Real Impact The original SALT cap from the 2017 Tax Cuts and Jobs Act was projected to cost Californians alone over $12 billion in lost deductions annually². Nearly 30% of households in high-cost areas maxed out the previous SALT deduction limit². What About NNN Leases? Here’s the twist: if your property is on a triple-net (NNN) lease, your tenants — not you — pay the property taxes. For Landlords: The SALT cap change doesn’t directly benefit you, since you aren’t the one writing the property tax check. For Tenants: They may be able to deduct more of those property taxes on their federal returns, depending on how their business or personal tax filings are structured¹. Smart Move: Share this info with your tenants. Suggested Subject Line for Tenant Email: “You May Benefit from New Tax Deduction Rules (H.R. 1)” A simple note saying, “The new federal tax law (H.R. 1) increased the SALT deduction cap for 2025–2029. Since you pay property taxes under your NNN lease, this may be relevant for your tax planning. Please confirm with your CPA.” That small gesture positions you as knowledgeable, supportive, and proactive — which builds goodwill and strengthens tenant relationships. If you’re considering a sale, refinance, or exchange between now and 2029, let’s talk strategy while this deduction window is wide open #RetailRealEstate #CommercialRealEstate #TaxStrategy #SALTdeduction #PropertyOwners

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • September 5, 2025
The Iconic Reel Inn Malibu To Say Goodbye After 36 Years Plans to resurrect The Reel Inn Malibu after the Palisades Fire have been shelved following a decision by the California Department of Parks and Recreation not to renew the restaurant’s lease, as reported by The Wall Street Journal. The move effectively closes a 36-year chapter for the 144-seat seafood shack on Pacific Coast Highway, long recognizable for surfboards on the walls, clever signage, chalkboard menus, and the relaxed Malibu customers...
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