Why Multiple Retail Property Owners Struggle to Make Timely Decisions

Marc Perlof • November 2, 2026

By Marc Perlof | @MarcRetailGuy
CA #01489206

October 28, 2026


If you own retail real estate, here’s what just changed for you.


California has passed AB 1693, a new law designed to speed up permit review for certain retail tenant improvements. Starting January 1, 2027, qualifying retailers may be able to use a licensed architect or engineer to certify their building plans instead of depending only on the normal city plan check process.¹


For property owners, the potential benefit is important. Faster plan approval could mean less vacancy, an earlier tenant opening, and earlier rent commencement.


What Does AB 1693 Change?

Governor Gavin Newsom signed AB 1693 on September 30, 2026. The law applies statewide, including charter cities such as Los Angeles.¹ ² AB 1693 applies to tenant improvements for qualifying retailers. The law defines a tenant improvement as a change to the interior of an existing building.¹


A retailer can request to use what the law calls a qualified professional certifier. This person must be a California licensed architect or professional engineer with at least five years of commercial building design or plan review experience. The professional must also carry at least $2 million of professional liability insurance.¹


The retailer pays for this outside review. The architect or engineer reviews the plans and certifies that they meet applicable building, health, safety, and local building codes. The local building department must then approve or deny a complete application within 20 business days.¹


If the city denies the application and corrected plans are submitted, the city generally must approve or deny the resubmittal within 10 business days. Its review is also limited to the problems identified in the original denial.¹ That could create a more predictable permit timeline for some retail buildouts.


Which Retail Tenants Can Use It?

AB 1693 defines a retailer as a business making retail sales directly to the general public.¹ That could include many traditional storefront businesses selling products to consumers.


The law does not include restaurants or other retail food businesses that prepare and serve food to customers. California already has a separate permit process covering certain restaurant tenant improvements.¹ Medical and dental offices also should not assume they qualify. They primarily provide professional services rather than making retail sales to the public.


Cities and counties also keep some control over how the program works. They may add requirements for qualified certifiers and may set certain limits on eligible building sizes and business or occupancy types. However, those local rules cannot effectively prevent use of the program.¹ Owners should therefore confirm local requirements before assuming a particular tenant or space qualifies.


How Could This Affect Your NOI?

Permit delays can cost an owner real money. Assume you sign a lease with a retailer paying $12,000 per month, but rent does not begin until the tenant completes its improvements and opens. If plan review delays the project by two additional months, that could mean $24,000 of delayed rent, based on those assumptions. The owner may also continue paying property taxes, insurance, utilities, debt service, and other expenses while waiting for the tenant to open.

That is why permit timing matters when negotiating a lease. A strong rent number is less valuable if the property sits without rent for months while plans wait for approval.


AB 1693 does not guarantee that a tenant will open faster. Construction delays, inspections, utility work, tenant financing, and other issues can still affect the schedule. The law also does not eliminate required inspections. Fire, health, structural, and other inspections may still be required during or after construction.¹


What Should Retail Property Owners Do?

  1. Determine whether your proposed tenant qualifies as a retailer under AB 1693. 
  2. Review the permit process before negotiating rent commencement dates and construction deadlines. Do not assume that signing the lease means rent will start quickly.
  3. Beginning January 1, 2027, ask the local building department and your tenant's architect whether AB 1693 could be used for the proposed tenant improvements.


The biggest issue is time. Every extra month between lease signing and rent commencement can affect the economics of your deal.


Owner Self Assessment

If you signed a lease with a new retailer today, do you know how many months you are underwriting between lease signing, permit approval, construction, opening, and the first rent payment?


Final Takeaway

AB 1693 may help qualifying California retailers get tenant improvement plans approved faster, which could help property owners reduce downtime and start collecting rent sooner.


If you're evaluating a retail lease, vacant space, or the effect of tenant improvement timing on your property's value, call or DM me. I can help you compare the rent, downtime, carrying costs, and value impact before you make the decision.


Sources

1 California Assembly Bill 1693


2 Office of Governor Gavin Newsom, September 30, 2026.


Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide.


#CaliforniaRetailRealEstate #RetailRealEstate #CommercialRealEstate #RetailProperty #AB1693 #RetailLeasing #TenantImprovements #RetailOwners #CommercialLeasing #CaliforniaRealEstate



Disclaimer

This post is for information only. It is not legal, tax, or financial advice. Always check with a licensed professional before making decisions.




© 2026 Marc Perlof Group. All rights reserved.

Weekly Perl: A Commercial Real Estate News Recap

By Marc Perlof • October 30, 2026
Tractor Supply Q3 sales rise 5.1%; to moderate new store openings Tractor Supply Company delivered third-quarter earnings and sales that beat analyst expectations and said it was gaining share against most categories and metrics even as its customers remain cautious. On the company’s earnings call, CEO Hal Lawton said that elevated interest rates and reduced housing mobility are weighing on property improvements and larger projects. Pet ownership headwinds, particularly new pet acquisition, continue to affect demand in certain categories...

AB 1693: Can California AB 1693 Help Retail Tenants Open Faster?

By Marc Perlof • October 28, 2026
By Marc Perlof | @MarcRetailGuy CA #01489206 October 26, 2026 If you own retail real estate, here’s what just changed for you. A lease guaranty can become less useful if the tenant changes entities, the guaranty expires, or a later agreement releases a guarantor. That can affect your income security, refinancing options, and property value. The main owner decision is whether the guaranty still supports your planned hold, refinance, renewal, or sale. Why Should You Review a Lease Guarantee Every Few Years? Many owners review the lease when they buy the property and do not examine the guaranty again until there is a tenant problem or planned sale. During that time, the tenant may be acquired, reorganized, assigned to another entity, or operating under a guaranty that is capped, reduced, or approaching expiration. A review every few years can help you identify those issues while you still have time to respond. Annual Lease Guarantee Review Checklist 1. Confirm the Current Tenant and Every Guarantor Start with the exact legal name of the tenant currently responsible for the lease. Then identify every company or individual that signed a guaranty. Do not rely on the brand name displayed at the property. The company on the sign may not be the legal tenant or the entity supporting the rent. Confirm whether the guaranty comes from the national parent ompany, a subsidiary, an affiliate, a franchise operator, a location-specific LLC, an individual, or more than one guarantor. 2. Check What the Guaranty Covers and When It Ends A signed guaranty may not cover every lease obligation for the entire lease term. Determine whether it is full, capped, reduced over time, limited to certain lease years, or restricted to specific obligations. It may cover base rent but exclude additional rent, property expenses, repair obligations, or legal costs. Compare the guaranty term with the remaining lease term. Do not assume that a lease extension automatically extends the guaranty. 3. Review Later Documents and Ownership Changes The original lease and guaranty may have been changed by later documents. Review amendments, extensions, assignments, assumption agreements, landlord consents, estoppel certificates, ownership change notices, and any guarantor releases or replacements. A tenant may continue using the same brand while the legal tenant, ownership structure, or guarantor changes behind the scenes. When the relationship among the tenant, guarantor, parent company, and affiliates is unclear, request an organizational chart or entity structure. The chart can explain how the companies are connected, but the lease and guaranty documents still determine who is legally responsible. Qualified legal counsel should confirm unclear obligations. 4. Review the Guarantor’s Current Financial Support A guaranty is only as useful as the company or person behind it. Depending on your lease rights and the information available, review current financial information, rent payment history, operating locations, recent closures, ownership changes, and whether the guarantor still appears to own meaningful assets. The goal is not to complete a full credit analysis. It is to determine whether the support behind your rent is still consistent with what you believed when you bought the property or negotiated the lease. 5. Compare the Guaranty with Your Ownership Plan The value of a guaranty depends partly on what you plan to do with the property. If you expect to hold for several years, determine whether the guaranty lasts through your planned ownership period. If you think you are going to refinance, renew, or sell, consider whether the guaranty will still provide meaningful support at that time. You should also consider what happens if the tenant leaves. Contract rent, market rent, vacancy downtime, leasing commissions, tenant improvement costs, repairs, and replacement demand can all affect NOI, capital needs, and net sale proceeds. The central question is whether the guaranty, the underlying real estate, or both support your next major ownership decision. Owner Self Assessment Could you clearly explain who guarantees your largest tenant’s rent, what the guaranty covers, when it ends, and whether it still supports your ownership plan? Reviewing your lease guaranty every few years can help you identify income, financing, vacancy, and value risks before they limit your options. Contact me for the expanded Retail Lease Guarantee Review Checklist . It includes a more detailed document list, guarantor review questions, financial and ownership checks, vacancy and replacement cost considerations, and a one page owner summary you can use before a refinance, renewal, hold, or sale decision. Are you relying on a guaranty that will still provide meaningful support when you refinance, renew the lease, or sell the property? Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #RetailRealEstate #CommercialRealEstate #RetailProperty #NetLease #LeaseGuarantee #CorporateGuarantee #TenantCredit #PropertyValue #RetailInvesting #InvestmentSales #MarcRetailGuy #MarcPerlof

What Retail Property Owners Should Review Before Relying on a Lease Guarantee

By Marc Perlof • October 26, 2026
By Marc Perlof | @MarcRetailGuy CA #01489206 October 26, 2026 If you own retail real estate, here’s what just changed for you. A lease guaranty can become less useful if the tenant changes entities, the guaranty expires, or a later agreement releases a guarantor. That can affect your income security, refinancing options, and property value. The main owner decision is whether the guaranty still supports your planned hold, refinance, renewal, or sale. Why Should You Review a Lease Guarantee Every Few Years? Many owners review the lease when they buy the property and do not examine the guaranty again until there is a tenant problem or planned sale. During that time, the tenant may be acquired, reorganized, assigned to another entity, or operating under a guaranty that is capped, reduced, or approaching expiration. A review every few years can help you identify those issues while you still have time to respond. Annual Lease Guarantee Review Checklist 1. Confirm the Current Tenant and Every Guarantor Start with the exact legal name of the tenant currently responsible for the lease. Then identify every company or individual that signed a guaranty. Do not rely on the brand name displayed at the property. The company on the sign may not be the legal tenant or the entity supporting the rent. Confirm whether the guaranty comes from the national parent ompany, a subsidiary, an affiliate, a franchise operator, a location-specific LLC, an individual, or more than one guarantor. 2. Check What the Guaranty Covers and When It Ends A signed guaranty may not cover every lease obligation for the entire lease term. Determine whether it is full, capped, reduced over time, limited to certain lease years, or restricted to specific obligations. It may cover base rent but exclude additional rent, property expenses, repair obligations, or legal costs. Compare the guaranty term with the remaining lease term. Do not assume that a lease extension automatically extends the guaranty. 3. Review Later Documents and Ownership Changes The original lease and guaranty may have been changed by later documents. Review amendments, extensions, assignments, assumption agreements, landlord consents, estoppel certificates, ownership change notices, and any guarantor releases or replacements. A tenant may continue using the same brand while the legal tenant, ownership structure, or guarantor changes behind the scenes. When the relationship among the tenant, guarantor, parent company, and affiliates is unclear, request an organizational chart or entity structure. The chart can explain how the companies are connected, but the lease and guaranty documents still determine who is legally responsible. Qualified legal counsel should confirm unclear obligations. 4. Review the Guarantor’s Current Financial Support A guaranty is only as useful as the company or person behind it. Depending on your lease rights and the information available, review current financial information, rent payment history, operating locations, recent closures, ownership changes, and whether the guarantor still appears to own meaningful assets. The goal is not to complete a full credit analysis. It is to determine whether the support behind your rent is still consistent with what you believed when you bought the property or negotiated the lease. 5. Compare the Guaranty with Your Ownership Plan The value of a guaranty depends partly on what you plan to do with the property. If you expect to hold for several years, determine whether the guaranty lasts through your planned ownership period. If you think you are going to refinance, renew, or sell, consider whether the guaranty will still provide meaningful support at that time. You should also consider what happens if the tenant leaves. Contract rent, market rent, vacancy downtime, leasing commissions, tenant improvement costs, repairs, and replacement demand can all affect NOI, capital needs, and net sale proceeds. The central question is whether the guaranty, the underlying real estate, or both support your next major ownership decision. Owner Self Assessment Could you clearly explain who guarantees your largest tenant’s rent, what the guaranty covers, when it ends, and whether it still supports your ownership plan? Reviewing your lease guaranty every few years can help you identify income, financing, vacancy, and value risks before they limit your options. Contact me for the expanded Retail Lease Guarantee Review Checklist . It includes a more detailed document list, guarantor review questions, financial and ownership checks, vacancy and replacement cost considerations, and a one page owner summary you can use before a refinance, renewal, hold, or sale decision. Are you relying on a guaranty that will still provide meaningful support when you refinance, renew the lease, or sell the property? Based in Los Angeles. Serving Southern California. Active across California. Advising clients nationwide. #RetailRealEstate #CommercialRealEstate #RetailProperty #NetLease #LeaseGuarantee #CorporateGuarantee #TenantCredit #PropertyValue #RetailInvesting #InvestmentSales #MarcRetailGuy #MarcPerlof
More Posts