In September of 2022, California Governor Gavin Newsome signed a pair of bills into law that will allow numerous commercial properties to be redeveloped as residential real estate. Most notably, large commercial spaces that used to house retailers and are now vacant are being opened up for redevelopment opportunities.
These new laws were primarily considered to be victories for affordable housing advocates, the unhoused and lower-income California residents, as many of these vacant commercial spaces already feature ample parking and they are located in populated areas that will place any affordable housing structures that may be erected on these lands in the middle of communities.
This is important because affordable housing is too often relegated to the fringes of most populated areas where residents may struggle to seek support, escape food deserts, and have the opportunity to be involved in social and cultural events.
Who else can benefit from these new laws?
Interestingly, it is not only affordable housing developers that stand to benefit from this shift in policy. Many commercial real estate developers and managers can potentially benefit from these shifts in a secondary capacity. When large, vacant retail spaces no longer stand empty, the spaces that remain will potentially become more attractive, especially if they serve niche and/or particularly accessible functions.
California real estate has long been among the most valuable real estate available in the country. By adopting the presence of both residential and commercial real estate utilization within a given community, both kinds of space can be permitted to thrive as society’s use for them evolves.
With that being said, the law concerning both of these kinds of real estate will almost certainly continue to evolve over the next few years as well, simply because Californians are changing the ways that they work, shop and live. Developers who want to stay ahead of the curve can seek legal guidance about their options and the changing nature of the law at any time.