Proposition D – Retail Vacancy Tax (Who, Why, What, When and How much?)
Proposition D, passed on March 3rd, applies a $250 tax per linear foot of frontage to retail spaces that remain vacant for six or more months in neighborhood commercial zones.
March 16, 2020
- OEA estimates costs to property owners and tenants could be between $500,000 to $5 million per year in fees.
- The tax will go into effect on January 1st, 2021.
- Owners are directly liable for the tax if their space is actively vacant: space that is unoccupied and not leased, on or off the market. The tax can be applied to any party deemed responsible for occupying the space. Lessees or sublessees who vacate a space before the end of the lease term could be liable for the tax.
- As retail evolves under the new normal, retail property owners are likely to get creative on occupying their space, be it retail pop-ups or other options that require less initial capital expense to occupy a tenant
Source: JLL Research