Understanding the Threat of SB 789’s Vacancy Tax to Commercial Real Estate
SB 789 (Menjivar; D-Van Nuys) includes a commercial property vacancy tax that could heavily impact property owners, tenants, and the economy.
What You Need to Know
If passed, SB 789 will require commercial property owners to pay a $5 per square foot fee for buildings vacant more than 182 days a year, starting July 1, 2028.
Business groups are working on assessing the tax's impact and building a coalition to oppose it.
This bill is part of a larger set of restrictive policies, including commercial property price regulations, multifamily rent control, and changes to eviction laws.
How It Impacts You
Increased Costs for Property Owners: Commercial building owners, especially those having trouble finding tenants, could face heavy financial penalties, forcing them to cover extra costs or pass them on to tenants.
Unfair Penalties: The vacancy tax doesn't consider economic downturns, tenant turnover, or renovation timelines, which could unfairly penalize property owners for things outside their control.
Tenant and Business Uncertainty: Higher costs for property owners could lead to higher rents and fewer leasing incentives, making it harder for businesses to find affordable space.
Negative Economic Consequences: This policy could discourage investment in commercial properties and lead to issues like landlords filling vacancies with lower-quality tenants or neglecting property upkeep to avoid the tax.
Stay Connected
We encourage members to provide real-world examples of how this would impact their businesses by emailing [email protected].
Stay connected with us on BOMA on the Frontline for updates on the fight against this bill.
