Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof | @MarcRetailGuy CA #01489206 October 21, 2026 If you own retail real estate, here’s what just changed for you. As of September 30, 2026, California has passed AB 2418,² a new law aimed at reducing certain delays in commercial plan checks and inspections. For retail property owners, that matters because every extra month a tenant waits for approvals can mean another month before the space opens and starts producing rent. AB 2418 applies statewide, including cities such as Los Angeles, Inglewood, Malibu, Santa Monica and more.¹ What Does AB 2418 Change? For qualifying commercial permit applications, cities and counties must provide an estimated timeframe for determining whether a complete application meets permit standards.¹ The law also creates another option when certain plan checks take too long. An excessive delay generally means the city takes, or says it expects to take, more than 30 business days to complete the first structural building safety plan check after receiving a complete application.¹ If the city returns the plans for corrections, the law also looks at the total review time. If the initial review plus the review of the corrected plans goes beyond 60 days , that can also qualify as an excessive delay.¹ If there is an excessive delay, the applicant can ask the city or county to use a private entity to perform the plan check. If the city cannot provide a qualified outside reviewer, the applicant may be able to hire an approved private professional and pay the cost directly. ¹ That professional must meet the law’s licensing and certification requirements. Does This Apply to Every Retail Tenant? No. This is an important limit. The private plan check portion of AB 2418 applies to qualifying tenant improvements in buildings that are generally: One to three stories No more than 40 feet to an occupied floor Group B Business occupancy Limited to an occupant load of 49 or fewer Not a health facility or public building¹ That means a typical Group M retail store should not assume it qualifies for the private plan check provision. However, AB 2418 includes another rule that can be more relevant to traditional retail. For certain completed commercial projects, local building departments must conduct an inspection within 10 business days after receiving notice that the permitted work is complete. This provision covers several occupancy groups, including Group B and Group M.¹ That could matter when construction is finished but a retail tenant is waiting for an inspection before it can move closer to opening. How Could Delays Affect Your NOI? A signed lease does not necessarily mean the owner is collecting rent. Assume a tenant will pay $10,000 per month once rent commencement occurs. If permitting or inspections push that date back by three months, the owner could have $30,000 of delayed rent, depending on the lease terms. During that period, the owner may still be paying taxes, insurance, utilities, debt service, and other property expenses. This is why permitting should be part of lease underwriting, not something considered only after the lease is signed. Why Should Medical and Dental Owners Pay Attention? Many professional office, medical, and dental uses may fall within Group B occupancy depending on the specific use, building, and patient conditions. That means AB 2418 may be more relevant to certain medical or dental tenant improvements than laws aimed specifically at traditional retailers. But owners should not assume a particular medical or dental project qualifies. The project's architect and local building department should confirm the occupancy classification and eligibility. What Should Retail Property Owners Do? Before signing a lease involving tenant improvements, confirm the property's occupancy classification and expected permit timeline. Review exactly when rent starts under the lease. If commencement depends on permits, construction, opening, or final approvals, delays can shift meaningful income into a later period. For projects that may qualify for AB 2418, ask the tenant's architect and local building department whether the new plan check or inspection rules could apply. The main owner decision is to understand the permitting risk before you agree to the final lease terms. Owner Self Assessment If your next tenant's opening is delayed by 60 or 90 days, how much rent and expense reimbursement would you lose before the property reaches its expected NOI? Final Takeaway AB 2418 may shorten certain commercial plan check and inspection delays, but owners need to understand which parts of the law actually apply to their tenant and property. If you're reviewing a lease, tenant improvement plan, or vacancy where permitting could delay rent, call or DM me. I can help you compare the expected downtime, income, and effect on property value before you make the decision. Sources ¹ California AB 2418 bill text and history ² Governor of California announcement Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #CaliforniaRetailRealEstate #RetailRealEstate #CommercialRealEstate #RetailProperty #AB2418 #RetailLeasing #CommercialPermits #TenantImprovements #PropertyOwners #CaliforniaRealEstate