Commercial and Mixed-Use Property Management in San Diego

Reviewed by Brendan McKee, Managing Broker, DRE #01882732, on October 21, 2026.

Commercial property management in San Diego runs mostly on the lease you negotiate, not on tenant protection statutes: California has no statewide rent cap or just-cause rule for commercial tenants. Since 1 Jan 2025, though, SB 1103 has added notice and cost-documentation rules for small "qualified commercial tenants." A mixed-use building gets both worlds at once: its storefronts follow commercial rules, and its apartments follow every residential rule, including the City of San Diego's Tenant Protection Ordinance where it applies.

Key takeaways

• Commercial tenancies are governed mainly by the lease. The residential rent cap, state just cause and residential deposit rules don't extend to them.
• SB 1103 protects qualified commercial tenants: microenterprises, restaurants with fewer than 10 employees, and nonprofits with fewer than 20 employees that give the landlord a written notice and self-attestation.
• For those tenants, operating-cost pass-throughs need proportional allocation and supporting documentation (Civ. Code § 1950.9).
• In a mixed-use building, residential units keep every residential protection, so you are running two rule sets in one property.

How commercial management differs

In a residential rental, statutes fill in much of the relationship: deposit caps, entry notice, habitability, rent caps and, in the City of San Diego, just cause from day one. In a commercial lease, most of those terms are whatever the parties negotiated. That puts more weight on the lease itself and on the manager who administers it:

• Rent and escalations are set by the lease, not by the state cap.
• Operating costs. Leases often pass building operating costs to tenants. For qualified commercial tenants, SB 1103 now sets documentation rules (below).
• Maintenance and repair duties are split by the lease between landlord and tenant, so the manager has to know who owns each system.

What stays the same is licensing and money handling. A person who, for pay and on behalf of others, leases real property or collects rents is acting as a broker (B&P § 10131(b)), and funds held for owners belong in a trust account under DRE rules (B&P § 10145). Our guide to property management agreements covers the contract side.

SB 1103: rules for small commercial tenants

SB 1103 (Stats. 2024, ch. 1015) took effect 1 Jan 2025. It amended Civil Code §§ 827, 1632 and 1946.1 and added § 1950.9. As of October 2026:

Who qualifies

A "qualified commercial tenant" must meet both tests:

1. The tenant is a microenterprise (five or fewer employees, including the owner, and generally lacking access to capital, per B&P § 18000), a restaurant with fewer than 10 employees, or a 501(c)(3) nonprofit with fewer than 20 employees.
2. The tenant has given the landlord a written notice that it is a qualified commercial tenant, with a self-attestation of its employee count, within the previous 12 months. For a fixed-term lease, that notice comes before or at signing and annually after. Protections begin when the notice is given.

Rent increase and termination notices (periodic tenancies)

• Rent increases: 30 days' notice for an increase of 10% or less (counting all increases in the prior 12 months), 90 days for more. The notice must include information about these rules, and the increase isn't effective until the notice period runs (Civ. Code § 827(b)).
• Termination: 60 days' notice, or 30 days if the tenant has occupied the property for less than a year, with information about the rule in the notice (Civ. Code § 1946.1).

Operating-cost pass-throughs (Civ. Code § 1950.9)

A landlord may not charge a qualified commercial tenant a fee to recover building operating costs unless:

• Costs are allocated proportionately per tenant, by square footage, or by another documented method.
• Costs were incurred within the previous 18 months or are reasonably expected within the next 12.
• Before the lease is signed, the tenant is told it may inspect the supporting documentation.
• Documentation is provided within 30 days of a written request.
• The costs weren't paid directly by the tenant to a third party or reimbursed by someone else.

"Building operating costs" include common-area maintenance, utilities that aren't separately metered, and taxes or assessments charged to the landlord as owner. "Supporting documentation" means dated, itemized quotes, contracts, receipts or invoices from licensed contractors or service providers, an allocation table and a signed, dated landlord attestation. Remedies include an unlawful detainer defense and up to three times actual damages for willful violations; waivers are void. The section applies to leases executed or renewed on or after 1 Jan 2025, periodic tenancies, and older leases with no operating-cost provision.

Translation

The Civil Code § 1632 translation requirement now covers agreements for nonresidential-zoned commercial space with a qualified commercial tenant entered on or after 1 Jan 2025. See lease translation requirements.

For a manager, SB 1103 is mostly a records job: track and date each tenant's notice, and keep the invoices behind every pass-through.

Mixed-use buildings: two rule sets

In a building with shops below and apartments above, the commercial spaces follow the lease and SB 1103. The apartments follow residential law in full. As of October 2026, for units in the City of San Diego:

• Tenant Protection Ordinance. Just cause from the start of the tenancy, with two months' relocation for no-fault terminations, or three months for tenants 62 or older or disabled (SDMC § 98.0706). Multi-unit buildings don't get the single-family exemption.
• State rent cap. For covered units in San Diego County, 8.2% over 12 months for increases from 1 Aug 2026 to 31 Jul 2027 (Civ. Code § 1947.12). The 15-year new-construction exemption is based on the certificate of occupancy.
• Penal Code § 396. San Diego County is under a state of emergency after Tropical Storm Rachel, so residential rent generally can't be raised more than 10% above the pre-emergency amount, including at turnover, stated through 14 Nov 2026. Check whether it has been extended. This rule is about housing, not the commercial spaces.
• Rental Unit Business Tax. Owed for the residential units, with base and per-unit fees by unit count, generally due 1 Mar.
• Deposits. Residential deposits are generally capped at one month's rent (Civ. Code § 1950.5(c)); commercial deposits are set by the lease.

Chula Vista and Imperial Beach have their own residential ordinances, and the rest of the county generally follows state law. Our guide to managing a small apartment building in San Diego covers the residential side in more depth, and rent increases in San Diego covers the cap.

Commercial vs. residential at a glance

This is general information, not legal or tax advice. Confirm the details for your situation with a California attorney or tax professional.

Choosing a manager for commercial or mixed-use property

Ask any candidate how it tracks qualified commercial tenant notices, documents operating-cost charges, and keeps residential compliance separate from commercial lease work in the same building. The guide on how to choose a property manager in San Diego walks through the rest, and the series hub is San Diego property management.

Frequently asked questions

Is there rent control for commercial property in San Diego?

No. California has no statewide rent cap or just-cause rule for commercial tenants, and the City's Tenant Protection Ordinance covers residential tenancies. Commercial rent is set by the lease, though SB 1103 requires 30 or 90 days' notice of increases for qualified commercial tenants on periodic tenancies.

What is a qualified commercial tenant under SB 1103?

A microenterprise, a restaurant with fewer than 10 employees, or a 501(c)(3) nonprofit with fewer than 20 employees that has given the landlord a written notice that it qualifies, with a self-attestation of its employee count, within the past 12 months. For a fixed-term lease, the notice is given before or at signing and annually after. The protections start when the notice is given.

Can I pass CAM charges to a small commercial tenant in California?

Yes, if the lease allows it and, for qualified commercial tenants, you follow Civil Code § 1950.9: proportional or documented allocation, costs within the past 18 months or expected within 12, and itemized documentation provided within 30 days of a written request.

Do apartments in a mixed-use building get tenant protections?

Yes. Apartments in a mixed-use building are residential rentals, so the state rent cap, deposit and habitability rules apply, and in the City of San Diego so does the Tenant Protection Ordinance. The commercial spaces follow their leases and SB 1103.

Does a commercial property manager need a license in California?

Yes, if the manager leases property or collects rent for others for compensation. B&P § 10131(b) treats that as broker activity for real property generally, not only homes. Check the license on the DRE public lookup.

Next step: talk to McKee Commercial

McKee Commercial is the commercial division of McKee Properties, which has managed San Diego property since 1982. Read about our commercial property management services and how to reach the team about your commercial or mixed-use building.