What Do We Lose When We Lose Industrial Land?
By Tim Jemal, Chief Executive Officer, Supply Chain Federation and NAIOP SoCal
Reliable data on Southern California’s industrial ecosystem – a cornerstone of the region’s economy – hasn’t always been easy to come by.
Good policy depends on accurate information. When data is scarce, assumptions fill the void and decisions with generational implications are made based on instinct, instead of evidence.
To help close that information gap and better equip policymakers to make important decisions, Pepperdine University’s School of Public Policy and Beacon Economics – with the support of the Supply Chain Federation & NAIOP SoCal – have launched a new, three-part white paper series examining the economic contributions of industrial real estate in Southern California.
The first paper in this series, “The Industrial Ecosystem’s Economic Contributions to Southern California,” launched in June and is the first research-driven attempt to answer the critical question often overlooked in state and local land-use debates: what is at stake when decisions are made to regulate or restrict the use of industrially zoned land?
The answer, research found, is a great deal.
What the Data Shows
The white paper’s findings are clear: industrial real estate is the physical foundation of Southern California’s economic engine.
The region's industrial activities support roughly 1.45 million jobs and $196 billion in regional GDP. It drives trade, provides middle-class careers close to home without four-year college degree requirements, and delivers food, medicine, and other essential goods and services to people across California and the nation. That activity connects ports, transportation networks, manufacturing, distribution centers, retailers, and consumer markets across Los Angeles, Orange, Riverside, and San Bernardino counties – creating an ecosystem that relies on each component’s important, individual role.
Together, this interconnected system supports the nation’s largest trade gateway: the Ports of Los Angeles and Long Beach, which handle close to one-third of all U.S. containerized waterborne trade. The warehouses, distribution centers, and logistics facilities surrounding those ports move goods to businesses and households across Southern California and the entire country.
That same ecosystem supports families across Southern California by providing middle-class career opportunities. Average annual compensation for these jobs – across goods movement, manufacturing, construction, and more – exceeds $75,000 in Los Angeles County, $82,000 in Orange County, and $64,000 in the Inland Empire.
A Successful Ecosystem is More Than a Collection of Parcels
The white paper’s findings point to a single organizing principle: that land-use decisions should optimize the efficiency of the regional system, rather than considering only the value of individual sites in isolation.
That’s because Southern California’s industrial ecosystem – like any ecosystem – thrives when its parts work together. It would become weaker if any one of them is stripped away. Findings indicate that Los Angeles and Orange counties are home to manufacturing, high-value production, and last-mile delivery. The Inland Empire, which consists of Riverside and San Bernardino counties, provides the large-format warehousing capacity that makes regional freight movement possible. These functions are interdependent, and none can substitute for one another.
The true value of industrial real estate, the paper shows, derives from where it sits and what it connects to: proximity to ports, freight corridors, specialized labor pools, and deeply embedded supplier networks. Disrupt those networks through conversion, downzoning, or displacement, and they are slow and costly to rebuild — if they can be rebuilt at all. Policies forcing relocation impose regional costs that no individual parcel valuation can ever capture. Constraining any part of this ecosystem risks disrupting supply chains that extend not only to Southern California, but also to the entire nation.
But the region's industrial real estate is also aging. More than 80 percent of Los Angeles County's industrial real estate, and roughly 77 percent of Orange County's industrial real estate, was built before 1990. That makes modernization and redevelopment essential. As land-use restrictions tighten, both become more difficult, limiting production and strangling job growth. And in these built-out coastal markets, every conversion is permanent: industrial land lost to other uses is effectively gone forever.
The Policy Implications Are Clear
As Gene Seroka, Executive Director of the Port of Los Angeles, puts it: “a world-class port is only as strong as the industrial ecosystem surrounding it.”
The white paper’s prescription for policymakers follows directly from that evidence: protect well-located industrial land, treat modernization of aging facilities as the primary lever for productivity, plan for housing and industry in tandem -- rather than in competition – and preserve the employment centers that anchor middle-class careers.
The questions surrounding industrial land use deserve the same rigor we bring to any other policy debate, because what happens to this land will shape Southern California’s economic capacity – and competitiveness – for decades to come.
About Tim Jemal
Tim Jemal brings decades of leadership experience and a powerful voice in advocacy. He is CEO of the Supply Chain Federation, a leading national advocacy group working to secure and strengthen America’s supply chain. The Supply Chain Federation unites business and labor to protect jobs, invest in domestic infrastructure and safeguard the supply chain – all to ensure access to the goods and services Americans depend on. Mr. Jemal also serves as CEO of NAIOP SoCal, where his tenure has been distinguished by significant organizational growth and policy impact. He has stood strong for industrial and logistics operators and successfully challenged policies that threatened economic vitality.