Tenant Bankruptcy: The Retail Realty Rollercoaster You Can Master!

Aldi, Trader Joe’s, and Lidl: Grocery's Power Trio The grocery segment has never been more competitive, and Aldi, Trader Joe’s, and Lidl have consistently emerged as top players. The three chains share similarities: all offer a limited assortment of groceries and tend to operate at lower price points – however, each one is carving out its own distinct path to growth...

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