What AB 98 actually changes for Inland Empire warehouse developers — and why the bill it was meant to stop a building wave hasn't slowed one yet
California's AB 98 set the first statewide design and siting rules for warehouses, and they took effect January 1, 2026. For the Inland Empire — named in the law as part of a "warehouse concentration region" that carries the strictest version of the standards — the rules are real and the costs are not small. But the timing of who they actually bind is the part operators need to get right.
The law exempts two large categories. Any logistics project whose local entitlement process commenced before September 30, 2024 is out. So is anything a city or county approved before January 1, 2025. That is a wide gate, and it was visible early. A year before the rules landed, IE industrial brokers were predicting developers would push projects into the pipeline through 2025 to clear the cutoff before the standards applied.
The result is a pull-forward. The bill meant to slow warehouse development gave developers a deadline to build ahead of, and the projects entitled through 2025 are largely grandfathered out of the new standards. The pipeline that actually carries AB 98's full cost is, by design, the one that hasn't shown up yet.
When it does, the cost stack is specific. For new or expanded projects within the concentration region, AB 98 requires loading-bay setbacks of 300 feet from a sensitive receptor in industrial zones and 500 feet in non-industrial ones, landscaped buffers of 50 to 100 feet, photovoltaic systems with battery storage, and zero-emission forklift and equipment timelines that phase in later this decade. Projects of 250,000 square feet or larger would carry additional electrical and EV-charging infrastructure requirements.
The provision with the sharpest land-value implication is housing replacement. A project that demolishes housing occupied within the prior 10 years would have to replace each unit with two deed-restricted affordable units inside the same jurisdiction, and pay displaced tenants 12 months' rent. SB 415, signed in October 2025, clarified that this obligation stacks on top of the existing replacement requirement under the state's 2019 Housing Crisis Act rather than substituting for it. For a developer underwriting a residential-adjacent parcel, that is a cost that did not exist on a comparable parcel entitled 18 months earlier.
That gap is the open question for IE industrial land. Two otherwise-similar parcels — one grandfathered, one not — would now carry different cost structures, and the parcels most exposed are exactly the residential-adjacent ones where the region has historically converted homes to warehouses. How much that divergence pulls down post-cutoff land values is not yet measurable; the post-cutoff deals that would show it are thin on the ground. But the direction is not in doubt, and brokers pricing residential-adjacent industrial land are already underwriting on both sides of the cutoff.
The standards are statewide, but the concentration-region designation means the IE absorbs the strictest version of every one of them. The region that built the most warehouse space under the old rules is the one with the most land sitting on the wrong side of the new line.