SB 789 Threatens Property Owners with New Vacancy Tax
A new California Senate bill—SB 789—is proposing a statewide Commercial Vacancy Tax that would charge $5 per square foot annually on any unoccupied commercial space. This unprecedented move threatens to burden property owners with steep penalties during a time when many are already navigating prolonged vacancies due to shifting market conditions.
TAKE ACTION NOW
Send a message or call your representative through NAIOP SoCal using their pre-filled email form or phone script.
Key Provisions
- Applies statewide to all commercial properties, regardless of local vacancy factors.
- Annual tax of $5/sf levied on all vacant commercial space.
- Intended to “incentivize” leasing activity by penalizing landlords—but fails to account for market realities, property type differences, or economic cycles.
Why It Matters
This one-size-fits-all tax overlooks the complexities of commercial real estate and punishes owners for vacancies often beyond their control—such as long entitlement periods, market absorption rates, and tenant-specific buildouts. In some submarkets, especially those still recovering from pandemic-era disruptions, vacancy is not a matter of negligence but of economic reality.
If passed, SB 789 would result in:
- Hundreds of thousands of dollars in annual penalties for mid-sized properties.
- Reduced capital for reinvestment, maintenance, and upgrades.
- Disincentivized development and new construction.
- Pressure on small tenants, as costs get passed through leases.
What You Can Do
We urge all property owners, brokers, and operators to act now:
🔗 Use NAIOP SoCal’s platform to send an email or call your representative.
📤 Share this alert with your clients and colleagues to amplify the message.
This is a critical moment for the commercial real estate industry. Let’s make sure Sacramento hears from those who understand the market best.
At GM Properties, we are committed to advocating for the long-term interests of our clients and the commercial real estate community. We will continue to keep you informed of the key issues, market shifts, and legislative developments that impact your investments.
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