SB 1103: Are You Prepared to Protect Your Retail Investments Before 2025?
Hey, Retail Real Estate Rockstars!
California's retail real estate industry is facing major changes with State Bill 1103 (“SB 1103”), a new law set to alter commercial lease terms starting January 1, 2025. To protect your property, it’s important to know these new rules, whether you own a small mall or mixed-use building.
What is SB 1103, and Why Should You Care?
SB 1103 is all about helping Qualified Commercial Tenants (QCTs) ¹ like:
- Small businesses with 5 or fewer employees.
- Restaurants with less than 10 workers.
- Nonprofits with fewer than 20 staff members.
This law protects renters but also adds new rules for managing properties and leases.
Here’s what’s important:
- Rent Increase Notices:
- Raising rent by 10% or less? You must give tenants 30 days' notice.
- If rent goes up more than 10%, you must give 90 days' notice. ¹
- Cost Transparency:
- Operating costs (like maintenance fees) must be shared fairly among tenants.
- Tenants can ask for detailed cost breakdowns and proof of charges anytime. ¹
- Language Requirements:
- If you discuss a lease in a language like Spanish or Chinese, the lease must be fully translated. If it’s not, tenants might be able to cancel the agreement. ¹
The Numbers Don’t Lie
- 90% of small restaurants in California have fewer than 10 workers, meaning they’re likely protected under this law. ¹
- The retail vacancy rate in California was 4.5% in Q3 2024, so staying competitive with clear and compliant leases is crucial. ²
What Does This Mean for Property Owners?
Good news: SB 1103 doesn’t limit rent or deposits, so you can still follow the market.¹
The challenge: Stricter regulations on rent increases, cost reporting, and translations will require you to modify your leasing procedures.
What Should You Do Now?
1. Check Your Leases: Make sure they follow the new notice and translation rules.
2. Organize Your Costs: Keep records of operating costs so you can share details if tenants ask.
3. Train Your Team: Get your staff up to speed on the new rules before they take effect.
Don’t Wait to Act!
Your transfer will go more smoothly if you begin preparing early. Although these changes are significant, you are not alone in navigating them.
Call or DM me for more information on how to get your retail properties ready for SB 1103.
What’s Next?
How will these new rules change the way you manage your tenants and leases? Are you ready to adjust your practices by 2025?
#RetailRealEstate #SB1103 #CommercialLeaseRegulations #RetailPropertyOwners #EconomicInsights
This information does not constitute legal advice. Property owners should consult with legal counsel to ensure compliance with SB 1103 and to adjust leasing practices accordingly. The changes taking effect in January 2025 will require careful planning, particularly regarding notice requirements, documentation for operating costs, and translation obligations.
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