How Much Can a Landlord Raise Commercial Rent in California?

Record-high inflation has driven up costs in California, including rent. If you rent a commercial property in California, you might wonder how much your landlord can legally raise your monthly rent. Many residential tenants in California benefit from rent control laws and ordinances that prevent landlords from significantly increasing rental rates, but commercial tenants don’t enjoy the same protections. As a result, landlords can raise rental prices on commercial properties whenever it suits them and depending on the terms of the lease, they might not even have to provide notice.

That’s why you should consider hiring a commercial lease attorney if you rent a commercial building. An attorney can help you protect yourself and your business by negotiating a fair commercial lease agreement on your behalf.  

What’s the Maximum Amount Landlords Are Allowed to Increase Rent Prices?

One of the main factors that lead to rental price hikes is inflation. In the United States, the average inflation rate tends to be between one percent and four percent most years. But this year, the rate of inflation has drastically increased to more than eight percent due to the COVID-19 pandemic and supply shortages coupled with increased demand and the war in Ukraine. As a result, many business owners in California are concerned about how runaway inflation could impact rent costs.

California’s Tenant Protection Act, a rent control law that was passed in 2019, limits how much landlords can raise the rent on certain properties. However, commercial properties are not included in this law and are not protected by rent control ordinances, which gives commercial landlords the freedom to raise rental prices as much as they need to.

As a commercial tenant, you aren’t protected from significant rent increases by rent control laws, but you can protect yourself by hiring an attorney to help you negotiate a fair, unambiguous commercial lease.  

How a Commercial Real Estate Lawyer Can Help You Negotiate a Favorable Lease

If you are renting a commercial property, it’s critical to hire an experienced commercial real estate lawyer as you’re negotiating the terms of your lease with the landlord. The landlord will be looking out for their own interests, but your attorney will be looking out for yours.

Commercial leases tend to be significantly more complex than the average residential rental agreement. For example, while the primary factor affecting the cost of many residential leases is square footage, additional factors can impact the monthly rental price of a commercial property, such as the type of business that will occupy the property and how the space will be used.

Commercial lease agreements could also cover other expenses — including maintenance costs, property insurance, taxes, and utilities — and who will pay for them. Commercial tenants are often responsible for these costs, and in some cases, they’re included in the rent.

An attorney can help you craft a lease agreement that clearly outlines the expectations for each party. Your lawyer will ensure that the language of the lease agreement leaves no room for misinterpretation, so there are no surprises if and when the cost of your monthly rent increases. Your attorney can also push for a provision that requires your landlord to notify you if they plan to raise the rent.

Contact a Riverside Commercial Real Estate Lawyer

At Wagner Zemming & Christensen, LLP, we’ve been helping clients with commercial real estate issues for almost two decades. If you need help negotiating a commercial lease for your business, our Riverside commercial real estate lawyers can help make sure that you get a fair deal on your rental property. Contact us for a consultation today by calling 951-686-4800.