California AB 98 Could Be a Game Changer for Logistics Development

Governor Gavin Newsom recently signed California Assembly Bill No. 98 (AB 98) into law, which aims to regulate the development and expansion of logistics use developments, particularly warehouses, across the state.

The bill is a response to the rapid growth of warehouse facilities in regions like the Inland Empire — and hopes to address the environmental and community impacts associated with these developments.

While the bill provides a framework for more sustainable and community-friendly logistics operations and may enhance the reputation of businesses that comply with the new standards, many across the industry fear the new law will significantly increase the cost of developing and operating logistics facilities.

The effective date of this legislation is January 1, 2026. Cities and counties will be required to update their circulation elements by January 1, 2028.

Key provisions of AB 98

The bill prescribes statewide standards for the design and construction of new or expanded logistics facilities, including:

• Building design and energy efficiency — Specific requirements for the architectural design and construction of logistics facilities. Properties will need to adhere to energy efficiency requirements (e.g., electric vehicle charging readiness, and high-efficiency heating, ventilation, and air-conditioning systems).
• Affordable housing replacement — A 2-to-1 replacement of any demolished housing unit occupied within the last 10 years, unless the unit was declared substandard by a building official. This aims to mitigate the impact of logistics developments on housing availability and affordability.
• Parking and truck loading bays — Standards for parking areas and truck loading bays to maintain efficient and safe operations.
• Setbacks and buffer zones — Depending on the zoning and size of the warehouse, setbacks of 300 to 500 feet from sensitive receptors such as homes, schools, and daycares are required. Additionally, landscaping buffers ranging from 50 to 100 feet must be implemented.
• Entry gates and signage — Requirements for entry gates and signage to enhance safety and navigation.
• Truck routing plans — Facility operators must establish and enforce truck routing plans to and from the state highway system.
• Zero-emission technology — All forklifts and specific equipment used in these warehouses must be zero-emission by 2030. New warehouses must also meet energy efficiency standards and ban trucks from idling their engines.

As AB 98 takes effect, it will be crucial for stakeholders, including local governments, businesses, and community groups, to collaborate and achieve the successful implementation of the new standards.

There is also a hope the enhanced regulations and higher development and operating costs will not dissuade future development of logistics facilities in California, as this could adversely affect the state’s economy and ability to create new jobs.