Study warns that reducing industrial land capacity could weaken regional competitiveness, supply chains, and middle-class employment opportunities
LOS ANGELES — A new white paper released by the Pepperdine School of Public Policy and Beacon Economics highlights the outsized role industrial real estate plays in Southern California’s economy, finding that businesses operating in industrial properties support approximately 1.5 million jobs and generate nearly 11% of the region’s gross domestic product.
The report, The Industrial Ecosystem’s Economic Contributions to Southern California, examines the economic impact of warehouses, distribution centers, manufacturing facilities, and industrial flex properties across Los Angeles, Orange, Riverside, and San Bernardino counties. Researchers argue that industrial land should be viewed as critical infrastructure because of its central role in supporting trade, employment, and economic growth.
According to the study, industrial-sector businesses provide a wide range of services tied to goods movement, manufacturing, construction, and distribution. These industries also support middle-class employment, with average annual wages exceeding $75,000 in Los Angeles County, $82,000 in Orange County, and $64,000 in the Inland Empire.
The report warns that policies that reduce industrial land capacity or convert industrial sites to other uses could have long-term economic consequences. Researchers contend that industrial properties function as part of an interconnected regional ecosystem linking ports, transportation networks, manufacturers, retailers, and consumer markets.
“The importance of the industrial ecosystem to our regional economy cannot be overstated,” said Pete Peterson, dean of the Pepperdine School of Public Policy. He noted that restrictive land-use policies can undermine job creation, economic competitiveness, and regional growth while contributing to the migration of middle-class jobs to other states.
The study emphasizes that the value of industrial real estate extends beyond individual properties. Christopher Thornberg, founding partner of Beacon Economics, said the economic costs of converting industrial land often remain hidden because they affect supplier networks, labor pools, and broader economic activity rather than appearing in individual property transactions.
Researchers found that Southern California’s industrial ecosystem benefits from decades of investment in transportation infrastructure, specialized labor, and supplier relationships that would be difficult and costly to replicate elsewhere. As a result, land-use decisions should consider the performance of the regional economic system rather than focusing solely on the value of individual parcels, the report argues.
Industry groups that supported the research say the findings underscore the strategic importance of preserving industrial capacity in a region that serves as one of the nation’s most important trade gateways.
Tim Jemal, chief executive officer of the Supply Chain Federation and NAIOP SoCal, said Southern California’s industrial base functions as the physical infrastructure supporting the largest containerized trade gateway in the United States. Decisions that diminish that infrastructure, he said, can have repercussions extending far beyond the region.
The report also highlights the role industrial development plays in providing jobs for workers without four-year college degrees. Many industrial employers are located near residential communities and offer career pathways with competitive wages and benefits.
Labor leaders pointed to industrial construction as a key source of middle-class employment. Jon P. Preciado, business manager of the LiUNA Southern California District Council of Laborers, noted that many industrial projects are built by union workers and provide family-supporting wages, benefits, and retirement security.
A major focus of the report is the San Pedro Bay port complex, which includes the Ports of Los Angeles and Long Beach and handles nearly one-third of all U.S. containerized waterborne trade. Port officials said the surrounding industrial network is essential to maintaining efficient cargo movement throughout the country.
Dr. Noel Hacegaba, chief executive officer of the Port of Long Beach, said the industrial ecosystem described in the report is critical to supporting the port’s operations and the broader national supply chain. Gene Seroka, executive director of the Port of Los Angeles, added that every four cargo containers moving through the port support one job and that nearly a quarter of port cargo is destined for manufacturing supply chains.
The report is the first in a planned three-part series examining why industrial real estate should be considered critical infrastructure for Southern California’s economy. The research was supported by the Supply Chain Federation, NAIOP SoCal, and NAIOP Inland Empire.
Researchers hope the findings will inform future land-use and economic development decisions as Southern California continues to balance housing, commercial development, environmental concerns, and industrial growth.
The full white paper and related materials are available through the Pepperdine School of Public Policy.
