AB 98 – Reshaping California’s Industrial Market with Julia Ticus – March 2026

March 11, 2026

How AB 98 Could Impact California’s Industrial Real Estate Market

On the Spot with Steve Williams and Julia Ticus

California’s industrial real estate sector has been one of the most resilient and in-demand segments of CRE over the past decade. However, new legislation, California Assembly Bill 98, is introducing new considerations for developers, investors, and valuation professionals across the state.

In the latest On the Spot podcast, Steve Williams sits down with Julia Ticus to discuss what AB 98 means for California’s industrial market and whether the legislation could cool development activity in one of the nation’s most important logistics hubs.

What Is AB 98?

AB 98 is a California law designed to regulate certain aspects of warehouse and logistics development, particularly those located near sensitive land uses such as residential communities and schools. The legislation establishes statewide standards for warehouse development, including operational and design requirements intended to address environmental and community concerns.

While the bill provides a clearer regulatory framework, it also introduces additional costs and compliance considerations for developers planning new industrial facilities in California.

Will AB 98 Slow Industrial Development?

According to Julia Ticus, the impact of AB 98 will likely be more nuanced than many headlines suggest.

California’s industrial market has already been navigating elevated costs, from land prices to construction expenses and regulatory hurdles. AB 98 adds another layer to that cost structure.

However, the state’s underlying demand drivers remain extremely strong.

California continues to benefit from:

• Major population centers that support consumption and distribution demand
• Critical port infrastructure, including Los Angeles and Long Beach
• Established logistics networks that are difficult to replicate elsewhere

Because of these advantages, large-scale tenant or developer relocations outside the state may remain limited, even as operating costs rise.

Regulatory Clarity vs. Higher Costs

One of the interesting dynamics discussed in the podcast is the tradeoff between regulatory clarity and financial burden.

Developers often seek predictability in regulations so they can better plan projects and underwriting. AB 98 establishes a clearer baseline for what developers must meet when building warehouse facilities.

But clarity does not necessarily mean affordability.

As Julia explains, the new standards will likely increase development costs. In response, developers may need to identify operational efficiencies, design innovations, or cost-saving measures elsewhere in their projects in order to maintain project feasibility.

Why Appraisers Should “Beware Valuation Errors”

A particularly important point from the conversation relates to valuation risk.

New regulations like AB 98 can introduce subtle but meaningful shifts in the market.

For example:

• Development timelines may change
• Construction costs may increase
• Supply pipelines could adjust
• Tenant demand patterns could evolve

For valuation professionals, this means carefully monitoring emerging market data as the legislation begins influencing new projects and transactions.

Julia emphasizes that this does not necessarily make the appraisal process more difficult, but it does reinforce the need for close attention to evolving market signals to avoid valuation errors.

The Long-Term Outlook for California Industrial Real Estate

Despite new regulatory pressures, California’s industrial sector remains structurally strong.

The state continues to play a central role in U.S. logistics, global trade, and e-commerce distribution. These long-term fundamentals suggest that demand for strategically located warehouse space will remain durable.

That said, legislation like AB 98 may influence where and how new industrial developments occur, potentially pushing developers to rethink project design, site selection, and cost management strategies.

For investors, developers, and valuation professionals, understanding these dynamics will be essential as the market adapts to the new regulatory environment.

📬 Let’s Talk

At Capright, we are uniquely positioned to support institutional investors, operators, and developers navigating this evolving environment. As an independent valuation and advisory firm, we provide clarity, accuracy, and confidence, especially where the stakes are highest.

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