2026 Legislative Changes: California Commercial Real Estate – Part I
2026 California Legislative Changes Affecting Commercial Real Estate – Part 1
©Norma J. Williams 2026
Below is an analysis of three new laws enacted effective January 1, 2026 that changed the laws on the same topics that were enacted a year earlier. These new laws were previewed in our 2025 Legislative Update.
TIME DEADLINES FOR MOTIONS IN UNLAWFUL DETAINER ACTIONS
Under law effective January 1, 2025, a hearing on a demurrer or a motion to strike in a commercial or residential unlawful detainer case had to be set between five and seven court days after the filing of the motion. A court, on good cause shown, could order the hearing to be held on a later date.
The law effective January 1, 2026 makes a distinction between commercial and residential unlawful detainer cases. In residential unlawful detainers, a court may set a later hearing date without any limitation on how long after the five to seven court days deadline, based on good cause shown.
In commercial unlawful detainers, such an extension cannot exceed ten court days. If the parties stipulate to a later date in either type of matter, the hearing can be set for the later date. Other provisions of the law relate to the requirements for filing and service of replies and oppositions to replies. Those provisions make no distinctions between residential and commercial tenancies.
SITING OF LOGISTICS FACILITIES
Legislation enacted in 2024 established California’s first attempt to set uniform standards for the siting and operation of logistics facilities, including distribution centers, warehouses, and other operations.
The bill was designed to address the effect of such facilities on residential communities and other “sensitive receptors.” However, the 2024 bill was generally thought to have a number of ambiguities and some imbalances in its resolution of issues. “Clean-up legislation” enacted on October 3, 2025, effective January 1, 2026, sought to address some of these issues.
The law imposes statewide standards for proposed new or expanded logistics use developments as to elements including but not limited to, design and siting requirements, vehicular access to the facilities via roadways, building design and location, parking, truck loading bays (including their orientation vis-à-vis sensitive receptors), truck routing, buffer areas, idling standards, entry gates, signage, energy efficiency standards and air quality standards.
SIGNIFICANT FEATURES OF THE NEW LEGISLATION ARE:
A new definition, “logistics use development,” was adopted to refer to all of the uses covered by the legislation.
“Sensitive receptors," the uses the bill was designed to protect, continue to be schools, residences, daycare centers, parks, and other facilities, with the 2026 addition of land used to ensure coastal access and land adjacent to an airport or seaport. The new provisions
were added to create buffer areas between sensitive receptors and those facilities.
The new law adds a “logistics park” definition so that it is clear whether the standards apply on a building-by-building or a project-by-project basis.
A local agency would be prohibited from approving a logistics use development that does not meet or exceed the standards outlined in the law. If the development would demolish housing that has been occupied in the preceding 10 years, the law also requires that a local agency condition any approval on a 2-to-1 replacement of that housing unless the housing had been declared substandard.
The replacement housing must be affordable housing for families of low or moderate income, as defined by the statute. The law also requires payment by the developer of 12 months of rent to displaced tenants if residential buildings are purchased for the development.
The obligations of the developer under the law are in addition to those under California’s previously enacted Housing Crisis Act. That law also requires certain replacement, relocation benefits, and rights to return for housing that is rent-controlled, affordable, or withdrawn from the rental market.
The law requires that each public agency that is located within a “warehouse concentration region"—those areas of the state that are most heavily affected by logistics use developments, including the Inland Empire - must, by January 1, 2026, update the Circulation Element of its General Plan to identify and establish specific truck traffic routes.
Those routes must
avoid sensitive receptors; and
maximize the use of interstate or state divided highways as preferred routes for trucks, or, if not utilized, then of arterial roads, major thoroughfares, and predominately commercially oriented streets.
Jurisdictions that are outside of warehouse concentration regions may adopt ordinances on such matters rather than updating the Circulation Element of General Plans. The ordinances must be adopted by January 1, 2028, or by January 1, 2030, for smaller cities.
The law would authorize the California Attorney General to enforce the circulation-related changes, including by imposing fines of up to $50,000 for every six months that the required updates are not made, on jurisdictions that have been found by a court to be in violation of the law. The Attorney General may also recover designated costs. A court may consider whether there are mitigating circumstances that delayed compliance by the jurisdiction and whether the jurisdiction is making a “good faith effort” to comply with the law’s requirements or is facing undue hardship in complying.
RESIDENTIAL DENSITY NEAR TRANSIT STOPS
Our 2025 Legislative Update article ended with a “2026 Preview” on legislation regarding Residential Development on Commercially Zoned Properties. The legislation, California Senate Bill 79, was previewed because of its provisions that, like SB6 and AB 11 previously reported on, override local zoning ordinances in the interest of incentivizing housing production.
SB 79 permits such transit oriented housing development on properties zoned residential, commercial or mixed use if those developments are within designated distances from qualifying local transit stops. The properties must also meet other criteria regarding number of units, density, floor space, and other factors.
The legislation becomes effective on July 1, 2026 but can be made effective earlier if the State Department of Housing and Community Development approves a local agency ordinance or Transit Oriented Development plan that would make the legislation effective earlier.
A full review of the new legislation (SB 79) is beyond the scope of this Newsletter, but it is noted that its key provisions for privately owned property (there are separate provisions for projects on land owned by a transit agency) include the following general provisions, most of which are more specifically qualified:
The project must be within one-half mile of a Tier 1 transit stop (one within an urban transit county served by heavy rail transit or very high frequency commuter rail) or a Tier 2 transit stop (one that is not a Tier 1 stop that is within an urban transit county served by light rail transit, high frequency commuter rail or designated bus service). Certain provisions apply if the development is between 1⁄4 and 1⁄2 mile from a Tier 1 or Tier 2 transit stop.
With certain exceptions, the legislation permits a housing development that is at least 2/3 residential by square footage to be an allowed use on sites zoned as residential, mixed-use, or commercial.
The project must include at least five dwelling units, and must meet density requirements equal to the greater of a) at least thirty dwelling units per acre or b) the minimum density required under local zoning (if applicable).
Projects with a hotel, motel, or other transient lodging use are excluded, as specified.
The average total floor area for the dwelling can’t exceed 1,750 net habitable square feet (excludes parking spaces, garages, cellars, and other uses).
If the project includes more than ten dwelling units, specified on-site affordable housing must be included.
The project cannot require the demolition of rent-controlled housing under certain circumstances and must comply with anti-displacement requirements.
If a building is more than 85 feet high, certain labor standards must be met.
The project must be consistent with the noise, height, and safety standards of adopted airport plans and consistent with statewide fire standards.
A streamlined approval process may apply to certain projects. The full legislation is very complex, so it should be referred to for the full text and requirements.
Disclaimer: Nothing in this article shall be construed as legal advice. Persons are advised to consult with their individual legal advisers as to the legal effect of any item described in this article.