Newsom Signs Bill Imposing Design and Build Standards on Warehouse Projects

California Gov. Gavin Newsom has signed AB 98, a bill that creates buffer zones and imposes other statewide design and build standards around new warehouse development. Response from the state’s real estate and business community was largely negative.

NAIOP SoCal warned that the measure, which takes effect on Jan. 1, 2026, will have “sweeping negative impacts on the supply chain, jobs and greenhouse gas emissions.” Conversely, a coalition including the California Chamber of Commerce called the bill “a compromise that avoids the negative economic and environmental impacts that would arise from much more stringent and unworkable legislation while still addressing community concerns.”

Prior to Newsom signing the bill, passed in early September shortly before the legislative session ended, Daniel Parra, Fowler mayor and president of the California League of Cities, said, “AB 98 represents a massive, unfunded mandate that would not only stifle local economies, but also seriously damage our local communities. It’s a bill that was rushed through the legislature in the final week of the session with little regard for the impact it would have on cities.”

At NAIOP SoCal, CEO Timothy Jemal said, “Rather than offering practical solutions, AB 98 imposes statewide mandates that strip local control, stunt economic growth, negatively impact the supply chain and will push more warehouses further away from ports and population centers, increasing emissions and costs to consumers.”

Eric Paulsen, NAIOP SoCal Board president, added, “Hundreds of NAIOP SoCal members who are directly impacted by AB 98 urged the Governor to veto this costly, burdensome bill, because our concerns were never heard or addressed in the process. We are committed to strengthening the voice of commercial real estate in Southern California and Sacramento and will seek a fix to this harmful bill in next year’s legislative session.”