Industrial and warehouse properties are financed through conventional loans, SBA programs for owner-users, and bridge financing for acquisitions or repositioning. Demand for industrial space has made these attractive to lenders. They look at tenancy, lease terms, clear height and functionality, location relative to transportation, and condition. Owner-users often do well with SBA financing.
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Industrial and warehouse space has been one of the strongest commercial asset classes, driven by distribution, logistics, and e-commerce demand. That strength shows up in the financing: lenders have been eager to lend on functional, well-located industrial property.
An industrial lender evaluates the tenancy and lease terms if the building is leased, the functionality of the building itself, clear height, loading docks, power, column spacing, the location relative to highways and distribution routes, the condition, and the market. Functional space in a good logistics location with solid tenancy is a strong deal. Older or functionally obsolete space, or a specialized building hard to re-tenant, draws more scrutiny.
Conventional financing fits leased, stabilized industrial buildings, and given how favorably lenders view the asset class, terms can be attractive.
SBA financing fits owner-users. If your business operates from the warehouse, occupying a majority of the space, SBA programs can offer a lower down payment and long-term fixed rates, a strong way to own the building your business runs from instead of leasing it.
Bridge financing fits acquisitions and repositioning, buying a building that needs improvements, re-tenanting, or repositioning before it qualifies for permanent financing.
For a business that operates out of leased warehouse space, owning the building is often more reachable than assumed, and industrial is a prime candidate because SBA programs work well for owner-users. Instead of paying rent that builds someone else's equity, an owner-user can finance the purchase with a lower down payment and lock in long-term fixed costs.
If you are buying, refinancing, or want your business to own its industrial space, send us the details and we will lay out the path that fits.
Alan is Managing Partner at BluRidge Funding and has worked in mortgage and real estate finance since 1996, with commercial lending as a principal focus since 2003. He holds an economics degree from BYU and a law degree from the University of Utah, and is a founding board member and former President of the Utah Association of Mortgage Brokers. More about the team.
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