A recently passed bill to restrict new warehouses throughout California is drawing opposition from both sides of the divide over one of the few hotspots in commercial real estate, with property owners’ trade group NAIOP among the odd political bedfellows.
Commercial real interests object to the legislation on claims it hamstrings development, while environmental groups worried about increased traffic and pollution that comes with trucks are opposing it from the other side, Bisnow reported.
The bill affects new warehouses of more than 250,000 square feet. It is currently on the desk of Gov. Gavin Newsom, who must sign, veto or allow it to expire by Sept. 30.
A sample letter that NAIOP SoCal, a commercial development trade group, has made available for members to request a veto by the governor says the bill “imposes prescriptive and impractical mandates that usurp local control and stifle economic growth and drive businesses out.”
Among the specifics of the bill that have drawn the ire of the trade group is a requirement of buffer zones of several hundred feet between new warehouses and residential neighborhoods and schools. The legislation also would require setbacks between 300 and 500 feet in some cases.
The bill is seen as holding the potential for a particularly broad effect in the Inland Empire, which comprises San Bernardino and Riverside counties east of Los Angeles and has become one of the biggest warehouse markets in the U.S., in large part because of its extensive freeway and and rail links to the seaports.
The bill’s exclusion of warehouses of less than 250,000 square feet is likely cold comfort to developers who have put up much larger developments amid a boom in online shopping and delivery. The Inland Empire led the nation in big warehouse developments, including those of more than 1 million square feet in the first half of the year.
Average lease rates nationwide, which are around 70 cents a square foot, rose by 7.7 percent in the first half of 2024 compared to last year. The average rate in the Inland Empire was around $1.24 per square foot.