New 2026 Laws Commercial Property Owners Must Know — Is Now the Time to Sell?

Commercial property ownership in California is entering a phase of meaningful regulatory change. For many owners, these changes will create additional burdens, shifting costs or risks that may alter the “hold vs. sell” calculus. If you own a commercial asset (office, retail, mixed-use, industrial) you need to be aware of what’s coming in 2026 — and what that might mean for your decision to sell.

Here’s what’s happening, why it matters, and how you can act.

What’s changing in 2026 (and beyond)

Here are several laws and regulatory changes that commercial property owners should pay attention to:

1. Senate Bill 79 (SB 79) – Transit-oriented up-zoning/rezoning pressure

• This bill authorizes the construction of dense residential housing in residential, mixed-use, and commercial‐zoned districts located within ½ mile of public transit stops, effective July 1, 2026 (unless local agency opts earlier). Wikipedia+2berliner.com+2

• For commercial property owners, this means that some parcels currently zoned for commercial use may now become more valuable (or threatened) by competing residential development pressures.

• If your property is near transit, you may face increased interest from residential developers — or you may face zoning change risk, neighborhood change risk, and increased competition for your tenant base.

2. Assembly Bill 1050 (AB 1050) – Removing restrictive covenants that block residential conversion

• Effective Jan 1, 2026: AB 1050 amends California Civil Code section 714.61 to expand the ability to clear “recorded restrictive covenants” (CC&Rs, reciprocal easement agreements) that prevent residential uses of commercial parcels. Holland & Knight

• For a commercial property owner, this means existing protective covenants that you might have relied on to maintain “commercial only” use might be subject to challenge (and removal) if a residential conversion is proposed. That could increase risk of changing land-use for your property, or lower your “barrier to entry” that gave you an advantage.

3. New lease & tenant-protection obligations for commercial landlords

• For example, under Senate Bill 1103 (SB 1103) effective January 1, 2025, landlords of commercial property with “qualified commercial tenants” must comply with new rules about how building-operating costs are passed through to tenants (California Civil Code §1950.9). California Lawyers Association

• Though this started earlier, these kinds of regulatory obligations are a signal that the commercial leasing landscape is evolving — meaning more cost, more oversight, more risk.

4. Rental unit habitability appliance mandate – spillover effect

• Though primarily targeted at residential units, the principle is: under Assembly Bill 628, effective January 1, 2026, rental units must include functioning refrigerators and stoves. San Francisco Chronicle

• While this is for residential, commercial owners that have mixed‐use or convertible property should note the direction: regulatory expectations rising for tenant amenities, basics, and standard of care.

Why these changes matter to you (the commercial owner)

Here are the implications:

• Risk of increased competition / changing land-use: With SB 79 and AB 1050, parcels near transit or mixed‐use neighborhoods may become subject to residential conversion pressures. If you were relying on the “commercial only” zoning as part of your value proposition, that advantage may fade.

• Potential for obsolescence: If your property is office/retail in an area where demand is falling, and zoning is shifting toward residential or mixed‐use, your asset may face a steeper hurdle to maintain value.

• Rising cost & regulatory burden: More rules around leases, building systems, tenant protections mean your cost of ownership may go up, and your risks (litigation, compliance) may grow.

• Opportunity to monetize now: On the flip side — if your property is well positioned (good location, near transit, or with redevelopment potential) you may be in a “sell before conversion/value shift” window to lock in value rather than hold through shift.

• Financing & investor perception: Investors and lenders increasingly price in regulatory risk and land‐use flexibility. Holding an asset in a zone facing change may make refinancing or sale harder later.

Should you sell now? Questions to ask

As you decide whether to hold your commercial property or list it for sale, run through these questions:

1. Location & zoning scrutiny: Is your property located within ½ mile of major transit or in a zone likely to be rezoned under SB 79? If yes, then the “land-use risk” is elevated.

2. Current tenant/occupancy mix: Are your tenants stable, leases long-term, condition good? Or is the building older, with functional obsolescence, and in a declining commercial sub‐market?

3. Redevelopment potential vs. “hold value”: Does the property have redevelopment upside (e.g., convert to residential) that the market hasn’t fully priced in? Or is your value primarily as an operating (commercial) asset facing headwinds (e.g., remote work reducing office demand)?

4. Cost of ownership trend: Are the regulatory burdens or upcoming compliance costs significant (long‐term maintenance, tenant protection rules, compliance risk)? If yes, the “hold” scenario has downside.

5. Market timing & liquidity: Is the local commercial market healthy? If you sell now you may avoid future value erosion from macro trends. If you hold, are you confident in future cash flow/exit value?

6. Alternative investment opportunities: If you sell, what will you do with the proceeds — reinvest, diversify, reduce risk? If the potential return on other uses is higher, that argues in favor of selling.

How the Romine Group can help

At the Romine Group we specialise in guiding property-owners through these pivotal decisions. Here’s how we support you:

• Local market intelligence: We closely monitor commercial property trends in California and your region (including zoning changes, demand shifts, redevelopment activity).

• Asset evaluation: We’ll run a full diagnostic: your property’s current value, comparative issues, regulatory headwinds, redevelopment potential.

• Sell strategy or hold strategy: Depending on the analysis, we help craft a plan — whether that means listing now to maximize value or holding with a road-map to mitigate risk and enhance value.

• Marketing to right buyer pool: If you choose to sell, we target the right buyers (investors, developers, repositioners) who understand the regulatory changes and land-use opportunities.

• Timing & execution: We help you choose optimal timing, prepare the property for sale (or hold) and navigate the details.

Final word

Commercial property ownership in California is not static — the landscape is shifting. The new laws coming into effect in 2026 are not just abstract: they change the calculus of value, risk and timing for owners.

If you hold an asset that might be affected by transit‐oriented up-zoning, changing commercial demand, or increased regulatory burdens, now is the time to review your position. Selling now may make sense — or you may choose to hold, but with a sharper plan.

Want to talk through your specific property? Contact the Romine Group today and let’s map out your best path forward.

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