3 New California Commercial Real Estate Laws Tighten Cold Storage Rules, Speed Retail Permitting

California recently enacted three new laws affecting commercial real estate: AB 817 affects cold storage facilities, SB 716 affects large nonresidential buildings, and AB 1693 affects retail tenant improvement projects.

California Raises Emergency Funding Requirements for Cold Storage Facilities

In June, a fire broke out at a Los Angeles cold storage facility operated by Lineage, the world’s largest temperature-controlled warehousing and cold-chain logistics REIT. The fire burned for eight days, leaving approximately 88 million pounds of frozen food to spoil. Smoke, odors, and pest problems significantly affected the surrounding community.

California Governor Gavin Newsom declared a state of emergency and later signed AB 817 and SB 716 following the fire.

Starting July 1, 2028, AB 817 applies to cold storage facilities regulated under California’s CalARP program that maintain at least 20,000 square feet of space at or below 45°F (approximately 7.2°C). When these facilities apply for building permits, local governments may require owners, tenants, or operators to maintain emergency funds or insurance to cover expenses such as resident assistance following a major incident.

SB 716 increases penalties for serious violations at large nonresidential buildings. If an incident is severe enough to result in a state emergency declaration or federal disaster declaration, local governments may increase the penalty for each violation to as much as $50,000, ten times the previous maximum penalty.

According to Lineage’s fire response information, the company removed nearly 89 million pounds of spoiled food and fire debris, demolished damaged structures, cleaned the site, and disposed of waste. The total cost is expected to exceed $100 million. Lineage also provided more than $3.3 million in assistance to the surrounding community.

Retail Renovation Permits Get Set Review Deadlines and Professional Pre-Review

Retailers renovating leased spaces have traditionally had to submit design plans to local building departments and wait for government staff to review them.

These approvals take about 12 weeks on average and can take as long as 31 weeks in some jurisdictions. During that time, businesses may already be paying rent while portions of the renovation work cannot begin.

Beginning January 1, 2027, AB 1693 allows qualified architects or engineers to review tenant improvement plans in advance. Once an application is submitted, the local building department must approve or deny it within 20 business days.

Architects and engineers conducting these reviews must have at least five years of experience in commercial building design or plan review and carry professional liability insurance of at least $2 million per occurrence.

The program, however, applies only to interior tenant improvements in retail spaces. Restaurants, beverage establishments, and fast-food restaurants are excluded.

CUPS Realty notes that the new laws also create an issue tenants could easily overlook. AB 817 allows cold storage property owners to make tenants or operators responsible for establishing and maintaining the required emergency financial assurance. Businesses leasing qualifying cold storage facilities in California should therefore determine which party will bear this cost under the lease. The required financial assurance does not necessarily have to be held in cash; it can also take forms such as a bond or qualifying insurance.

AB 1693 also sets a deadline when a retail renovation application is denied the first time. After the business addresses the issue and resubmits its application, the local building department may continue reviewing only that issue and must approve or deny the revised application within 10 business days. For businesses planning to renovate existing retail locations, this provides a significantly more favorable permitting process than before.