It’s been two years since California Assembly Bill 98 was first passed, and its design standards went into effect in January of 2026. Since then, major changes have trickled throughout the commercial real estate industry. While the compliance requirements for new developments are already well documented, it’s less clear how Assembly Bill 98 (AB 98) and Senate Bill 415 (SB 415) could affect existing buildings. The good news is: if you already have a logistics use facility or warehouse, your property is protected from all mandates under the bills’ grandfather clauses – unless you expand it by 20% or more. This article will go into further detail on Assembly Bill 98 and Senate Bill 415, how the commercial real estate market has been affected by the bills, and the positive impact they could have on the value of your building.
An Overview of AB 98 and SB 415
California Assembly Bill 98, also known as AB 98, enacted new regulations on warehouse and logistics use developments with the intent of lessening truck pollution and protecting local communities from the day-to-day of warehouse operations nearby.
One could look at the law as dependent on the following categories: 1) whether or not a project is “zoned industrial,” 2) whether or not a project is within 900 feet of a “sensitive receptor,” and 3) whether or not a project is greater than or less than 250,000 square feet (as depicted in this AB 98 Quick Reference Guide by San Bernardino County). A sensitive receptor is an umbrella term for spaces such as private residences, daycare facilities, schools, and hospitals.
While AB 98 has many contingencies and categories, the mandates below apply to ALL new or expanded warehouse and logistics use facilities. (Please note this is a high-level overview. For a comprehensive look at the bill, please refer to LegiScan’s CA AB 98, 2023.)
- Loading truck court entry gates must be positioned to allow for a minimum of 50 feet of stacking depth inside property lines, creating longer driveways for trucks to move off of public streets.
- The location of the facility must be on a designated truck route. A waiver is required if that is not possible.
- The facility operator needs to submit a truck route plan that uses state highways and is based on the jurisdiction’s official truck map.
- Anti-idling signage must be installed near entrances and truck loading bays, along with navigational signs at heavy-duty truck exits.
- If a logistics use facility replaces a residence that was occupied in the last 10 years, the project must replace it with two residences. Evicted tenants of residences are also to be compensated according to the bill.
After AB 98 passed, property owners and developers were left confused. What would the timeline and process be to get approval? Did the 250,000 SF contingency include the entire property or just the building? Why is AB 98 being interpreted differently across cities?
Because AB 98 was vague and ambiguous, it prompted a cleanup bill: Senate Bill 415 (or SB 415). It cleared up language including, but not limited to, which facilities the law covers and which warehouse standards apply, and it granted greater flexibility in how truck loading bays can be oriented (Rutan, 2025).
The Market Post-AB 98 and SB 415
Despite there being so many on-paper changes to the CRE industry due to AB 98, most brokers have yet to see a project be directly impacted by the bill. But that’s largely because “there haven’t been many NEW development deals put into motion […] because declining lease rates and the increased cost of capital have halted developer appetite,” said Shy Assar, Senior Vice President at Voit Ontario. Assar said it was a “perfect storm”; the market prior to AB 98 was already bullish on new projects, but developers were forced to move ahead with properties faster than scheduled to avoid the impact of AB 98 – even if they were no longer economically feasible to build. This exacerbated the excess number of vacancies we are currently seeing on the market.
AB 98 is also forecasted to lengthen project timelines. “Every part of the process, from development to entitlement to certification, is going to become less streamlined,” said Assar. “We’re going to see an industry-wide learning curve.” Adding to potential delays is the fact that the bill is state-mandated but city-executed, meaning there will be no universal interpretation of it.
Lastly, developments are expected to fan out of the Inland Empire area. Because the mandates are tied to proximity to sensitive receptors, builders are more likely to leave a residential area (like the Inland Empire) for places in the High Desert, where they can avoid AB 98’s prerequisites.
AB 98 and SB 415’s Grandfather Clauses
If you already own a logistics use facility or warehouse, it will not be affected by AB 98 or SB 415 due to the bills’ grandfather clauses. However, that changes in the case of an expansion by 20% or more. According to a 2025 town hall summary from AIR Commercial Real Estate Association, AB 98 requirements are triggered in the case of expansion if:
- A logistics use building expands by 20% or more
- Based on logistics-only square footage
- Counted per building
- Office space excluded
Here is an example:
- 100,000-SF warehouse + 20,000-SF office
- Logistics portion = 100,000 SF
- 19,999-SF expansion = exempt
- 20,000-SF expansion = triggers AB 98 (AIR CRE, Section 6)
If your property does undergo a 20% development increase, it may be subject to some of the same requirements as new developments, such as: adjustments to truck loading bays, adding anti-idling and navigational signage, and a truck routing plan.
What This Means for Your Existing Property
If you own a warehouse or logistics use facility, you have a great advantage in this evolving climate. Grandfathered properties are likely to become a scarcer resource in the industry as new developments follow the directives laid out in AB 98 and SB 415.
As an owner, it’s important to have a comprehensive understanding of the market – and your property’s place in it – as you consider holding, expanding, or selling. At Voit, we specialize in market-wide analyses like these to ensure our clients are deriving the highest value they can from their asset.
Contact one of Voit’s trusted real estate advisors to learn how their expertise can help you achieve your real estate goals.