What the ‘California is Over’ Crowd is Missing

Every week another headline announces that California is over.

Companies leaving. Residents leaving. Capital leaving.

We spent the last 18 months buying more industrial land here, not less.

Here is the contrarian case, and why I think right now is the moment to double down.

First, let me concede the point. The exodus is real. California has posted net domestic outmigration for several years running. Household names have moved their headquarters to Texas. The operating environment here is genuinely harder than almost anywhere else in the country. I am not going to argue with that data. But everyone is reading that data the same way. And in investing, when everyone reads the data the same way, the price already reflects it.

Here is what the “California is over” narrative misses for Industrial Outdoor Storage (IOS):

1. Companies leave. The goods do not.

Roughly 40% of the nation’s containerized imports still move through the ports of Los Angeles and Long Beach. Thirty-nine million people still live here and still need everything that gets trucked, staged, and stored to reach them. The trucking operators, utility crews, and contractors who rent our yards serve that population, not a corporate HQ registered in another state. Our IOS facility in Clovis makes the point concretely: it’s fully leased to AT&T and serves as their largest field operations center in the Central Valley – crew rooms, truck bays, a truck wash – keeping fiber and cellular service running for a major population base. When you rent to demand that is tied to 39 million people, you do not lose sleep over which logos moved to Austin.

2. When capital leaves, competition leaves with it.

This is the part I actually love. Every fund chasing Dallas and Tampa is a fund not bidding against us in Sacramento, Gilroy, or Clovis. Fewer buyers at the table means better basis, better cap rates, and sellers who will actually negotiate. We aren’t guessing at this – it’s how two of our last four closings in California came to fruition. In Sacramento, we picked up an infill IOS site off-market after the previous buyer fell out of contract, stepping in at the same below market price. In Gilroy, the seller’s deal with another buyer collapsed, and our strong first-round offer made us the broker’s first call – we closed below our original underwriting. The flight of capital is not the risk in this story.

3. The harder it gets to operate, the harder it gets to build.

Everything that makes California painful (CEQA, housing conversion pressure on industrial land, CARB rules on outdoor truck operations) is the same friction that makes new IOS nearly impossible to entitle. In Gilroy, the specialized improvements on our site – a 70-ft vehicle paint booth, a sandblast booth, dedicated service bays – are fully permitted by the City of Gilroy. Try getting that approved from scratch in most California cities today, and you’ll understand why the IOS sites that already exist become structurally irreplaceable. Demand compounds. Supply cannot respond. Every rule that keeps supply out is a rule that protects what we already own.

So why now, specifically? Because sentiment is at its worst and pricing has followed it down. When a market is universally disliked, you get paid to have conviction the crowd has lost. The window where you can still find positive leverage, motivated sellers, and thin competition does not stay open. It closes the moment sentiment turns and the capital that fled comes back looking for the same irreplaceable dirt.

We did not build this platform by buying what was popular. We zigged into IOS when people called it a parking lot.

We are zigging again. This time it is a whole state.

If you want to see what we’re finding, please reach out – happy to walk you through what’s currently available.