State to Set Warehouse Site Standards in California

A new state law is about to establish siting and design standards for industrial warehouses in California—assuming that pushback from interest groups doesn’t persuade Gov. Gavin Newsom to veto the measure.

Beginning in 2026, the bill known as AB 98 would prohibit cities and counties from approving large new or expanded distribution centers unless they meet specified standards, including setbacks of loading docks by several hundred feet from “sensitive sites” including homes, schools and health care facilities.

Projects involving warehouses encompassing 250K SF or larger that are within 900 feet of these sensitive sites will require truck loading bays that are located a minimum of 300 feet from the property line in areas zoned for industrial use and 500 feet from the property line in areas not zoned for industrial use.

New warehouse developments must be located on major thoroughfares or local roads that mainly serve commercial uses. If a developer demolishes housing to make way for a new warehouse, AB 98 would require two new units of affordable housing for each unit that is destroyed—and the developer would have to provide displaced tenants with 12 months’ rent.

If Newsom signs the measure, it will be enacted first in California’s busiest warehouse cluster in the Inland Empire in 2026, with the law being applied to the rest of the Golden State two years later.

The bill establishing the new standards, approved on August 31 in the final minutes of the legislature’s session, was described by proponents as “a very delicate compromise” resulting from lengthy negotiations among stakeholders including labor, health, environmental and business representatives, the Los Angeles Times reported.

AB 98 is generating pushback from environmental groups who say the bill gives legal cover to development practices that have resulted in Southern California’s warehouse sprawl and ignore reports from state agencies calling for larger buffers between warehouses and sensitive sites.

In a 2022 report, the state attorney general’s office recommended locating warehouses at least 1,000 feet from the property lines of sensitive sites, citing a state Air Resources Board estimate of an 80% drop-off in pollutant concentrations 1,000 feet from a distribution center.

“If they sign this into law, we’re basically saying, ‘Business as usual is OK,” Andrea Vidaurre, senior policy analyst for San Bernardino-based People’s Collective for Environmental Justice, told the LA Times. “We’re going to continue to see warehouses being put across the street from homes and schools because it will be OK with the law.”

Eloise Gomez Reyes, an assembly member who co-authored AB 98, noted that the setbacks established by the bill are state minimums that do not prohibit cities or counties from enacting stronger local standards that impose larger buffers on warehouse developers.

CRE groups also are encouraging members to urge the governor to veto the bill. A sample veto request letter circulated to NAIOP SoCal members said the measure would usurp local control, stifle economic growth and potentially drive businesses out of California.

Several California cities came out in opposition to AB 98 after an analysis by the state senate’s appropriations committee said the legislation will require general plan updates that could cost municipalities millions of dollars, the LA Times reported.