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  • Writer's pictureDeodate

Fortune 500 Logistics Conglomerate Told “It’s Time to Move” Amidst Regulatory Changes


Introduction

While maintaining positive working relationships with local governments has always been important for any business, this has become increasingly crucial—and challenging—for logistics companies in large primary markets, such as Los Angeles, New York/New Jersey, and San Francisco/East Bay. Local governments are making a concerted effort to rezone commercial lands historically used for container and truck storage into lands zoned for housing or other commercial uses.


Logistics companies—and the landlords who’ve leased to them—are being told it’s time to move.


This policy shift will impact logistics companies of all sizes, particularly those that are reliant on the strategic positioning of their storage yards near ports, rail lines, and roads permitted for use by large trucks. In the face of increasing regulatory scrutiny and stricter enforcement of violations, these companies often feel like they have no choice but to move, but then wonder “...to where?” especially in an area like LA County where available land is scarce.


DEODATE’s client found itself in this exact scenario and needed a proactive solution to maintain its strategic presence and avoid financial losses and disruption to its business operations if forced to relocate a container storage yard.


Client Scenario

A Fortune 500 logistics conglomerate, whose storage yard is strategically located close to vital transportation hubs in LA County, found itself in the crosshairs of this pivot by a local government. Having been previously granted usage rights to this land, they now faced an increased risk of losing these rights due to stricter regulatory oversight and claims of permit violations–factors that had been largely overlooked in the past.


The city’s newfound diligence in reviewing use permits and cracking down on violations like excessive parking, traffic obstruction, and noise, posed a threat not only to our client but to the landlord of this property. Both desired to remain in good standing with local government staff and regulations but lacked the experience and resources to negotiate with the public sector. Our client had always been an ideal tenant for their landlord, but they were suddenly faced with being pushed off of the property, and farther away from mission-critical infrastructure. This move would significantly increase their operational costs to an impossible degree, due to their increased distance from ports, rail lines, and other logistics-related requirements for their business.


Challenges

  • Lack of experience negotiating with local government authorities

  • Navigating the complexity of conditional use permits and rezoning regulations

  • Limited internal commercial real estate resources

  • Increased issuance of violations could result in breaches of permits and accelerate forced relocation

  • If forced to relocate, lack of available, use-permitted lands leaves few options

Solution

Our team at DEODATE stepped in to mediate between our client, their landlord, and the local LA County government. This resulted in reaching a solution that met each party’s needs—the issuance of a new conditional use permit that ensured our client's operational continuity, a reputable tenant would remain on the landlord’s property, and in a use case in full compliance with the city’s code.


This new arrangement was only possible due to our team’s deep expertise in not only understanding complex zoning laws, temporary use permits, and evolving regulations but also in fostering positive, productive dialogues with local governments. This experience is critical for diffusing potentially combative situations between public and private entities and is not typically found within traditional brokerages.


The result of this negotiation was not to merely maintain the status quo of a previously permitted land use, it was to avert a complete disruption to our client’s operations had their business-critical proximity to sea, rail, and highway assets been erased.


The shifts in land use policy within LA County are not isolated incidents; they’re indicative of larger trends that could affect logistics companies across the region. The potential disruption to business operations, should a company suddenly find itself out of compliance with zoning regulations or permit requirements is significant.


Understanding and addressing compliance and permit standing is critical for any business, but logistics companies in particular can no longer assume that the renewal of their permits is a given. Forced relocations are not only costly, they can be financially impossible, due to limited available property that meets a logistics company’s unique needs.


We encourage you to be proactive in these matters, and we invite you to leverage DEODATE’s deep knowledge and long track record in ensuring that our logistics clients’ business operations and lines of business continue to thrive amidst evolving landscapes.


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