Industrial Property Mortgage Financing

Industrial remains a top-performing asset class. Lenders are particularly aggressive on warehouse and logistics space due to e-commerce growth and supply chain reshoring.

Clear height is the usable height inside a warehouse. Modern logistics tenants often require 32' to 40'+ for racking. Higher clear heights typically command better loan terms.

Flex space is a building that can be used for both office and industrial purposes (e.g., warehouse in the back, showroom or office in the front). Lenders like flex space because it attracts a wider variety of tenants, providing better income stability.

Light industrial (warehousing, assembly) is generally seen as lower risk than heavy industrial (manufacturing with specialized machinery or hazardous materials). Heavy industrial requires more extensive environmental and structural due diligence due to the potential for soil contamination and specialized building requirements.

In an NNN lease, the tenant pays for all property expenses—taxes, insurance, and maintenance—in addition to rent. This makes the income very predictable for the owner and very attractive to lenders, often resulting in more favorable loan terms.

For stabilized, well-located warehouses, lenders typically offer 65% to 75% LTV. For specialized or owner-occupied facilities, the terms might vary based on the strength of the operating business.

Yes. Industrial properties almost always require a Phase 1 Environmental Site Assessment (ESA). Lenders are cautious about historical contamination from industrial processes and will require soil testing (Phase 2) if the report shows any red flags.

Yes, single-tenant industrial is a highly sought-after asset class. Lenders will focus heavily on the creditworthiness of the tenant and the remaining term of their lease. High-quality tenants with long-term leases can often secure the best rates available in the commercial market.

The growth of e-commerce has significantly increased demand for "last-mile" distribution centers and large-scale warehouses. Lenders view these assets very favorably today due to high occupancy rates, rising rents, and the essential nature of the logistics supply chain.

Yes, for larger industrial portfolios or high-value assets, mezzanine financing can be used to fill the gap between the senior mortgage and your equity, allowing for higher total leverage and better cash-on-cash returns.

Yes, but these are considered specialized industrial. Lenders focus heavily on the 'reusability' of the building and the credit strength of the tenant.

Industrial properties almost always require a Phase I Environmental Site Assessment (ESA) to ensure there is no contamination from previous manufacturing uses.