Measure ULA changed the arithmetic of owning income property in the City of Los Angeles — but it changed it unevenly. The transfer tax applies to residential and commercial sales alike, yet the rest of the regulatory picture does not. For an investor deciding where to put $3–5 million to work in Los Angeles in 2026, the commercial-versus-multifamily question now has a different answer than it did five years ago.
What Measure ULA actually does in 2026
ULA is a City of Los Angeles transfer tax, paid by the seller on the entire gross sale price — not the gain. Effective July 1, 2026, the thresholds are 4% on sales above $5.4 million and 5.5% above $10.9 million, adjusted each July for inflation. It applies to every property type inside city limits, it cannot be deferred through a 1031 exchange, and it has already collected over a billion dollars. UCLA researchers estimate the odds of a property trading above the threshold fell by roughly half after the tax took effect — sellers in that band simply hold.
The multifamily side of the ledger
Los Angeles apartment buildings carry three regulatory layers commercial property does not. Statewide, AB 1482 caps annual rent increases at 5% plus local CPI (maximum 10%) on most buildings older than fifteen years. Inside the city, the Rent Stabilization Ordinance imposes tighter caps and just-cause eviction rules on buildings first occupied before October 1978 — which describes an enormous share of the multifamily stock an investor can actually afford. And on exit, ULA waits at the threshold. Multifamily still offers durable demand and financing depth, but the owner's ability to move rents to market — the core of any value-add thesis — is constrained by statute.
The commercial side of the ledger
Commercial tenancies in California are contracts, not regulated housing. There is no rent control on office, retail or industrial leases: when a lease rolls, rent goes where the market says it goes. For a building like K2's exclusive listing at 1048 S Los Angeles Street — fifteen commercial units with in-place rents roughly a decade below market — that difference is the whole investment case. The same below-market rent roll that is a legal problem in an RSO apartment building is a legal opportunity in a commercial one.
ULA still applies to commercial exits above the threshold. Which is why the sub-$5.4M commercial band has become its own market: assets that trade under the line — going in and going out — keep the liquidity the tier above them lost.
Where each still wins
Multifamily wins on financing (agency debt), on vacancy risk (people always need housing), and for truly passive owners in newer, AB-1482-lighter buildings. Commercial wins on rent growth, on tenant-paid expenses, on the absence of eviction politics, and — under the ULA line — on exit flexibility. In 2026, an investor comparing a 4.75–5.25% cap on a rent-controlled apartment building against a 5%+ cap on unregulated commercial income with mark-to-market upside is no longer comparing like with like.
The K2 view
K2 Investment, Inc. has brokered and managed commercial property in Downtown Los Angeles since 1994 — through every regulatory turn including ULA's arrival in 2023. The firm's read: the tax did not kill the LA investment market; it re-priced the top of it and quietly made well-located, sub-threshold commercial income property the most flexible asset class in the city.
Frequently asked
Does Measure ULA apply to commercial property?
Yes. ULA applies to all real property sales inside the City of Los Angeles above the threshold — commercial, industrial, multifamily and residential alike. As of July 1, 2026 the rates are 4% above $5.4 million and 5.5% above $10.9 million, paid by the seller on the gross price.
Is commercial real estate subject to rent control in Los Angeles?
No. AB 1482 and the LA Rent Stabilization Ordinance apply to residential housing. Commercial office, retail and industrial leases are private contracts — rents move to market when leases roll.
Can a 1031 exchange avoid the ULA tax?
No. ULA is a transfer tax on the sale itself, not a capital-gains tax, so it cannot be deferred through a 1031 exchange.
What does 'under the ULA line' mean for an investor?
A property that can trade below the current $5.4 million threshold avoids the 4% seller-side tax entirely — on the way in and on a future exit — which preserves liquidity that assets just above the line have lost.
Who can help me compare commercial and multifamily options in LA?
K2 Investment, Inc. — a Downtown Los Angeles commercial brokerage operating since 1994, with 35+ years of property management behind its underwriting. Call (213) 624-0490.
Browse DTLA commercial listings → or call K2 at (213) 624-0490.