An industrial property loan is a commercial mortgage used to acquire, refinance, or recapitalize warehouse, distribution, manufacturing, flex, or cold storage real estate. Industrial properties are the strongest-performing commercial real estate sector entering 2026, supported by e-commerce growth, nearshoring trends, and constrained new supply in core markets. Whether you are purchasing a single-tenant warehouse or refinancing a multi-building logistics portfolio, this guide covers every financing option, current rates, underwriting requirements, and market conditions you need to make an informed decision.
This guide focuses specifically on financing for stabilized industrial properties, covering CMBS conduit loans, life company financing, bank loans, SBA 504 loans, bridge financing, and hard money options available in 2026.
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What Types of Industrial Properties Qualify for Financing?
Most commercial lenders finance a broad range of industrial property types, but underwriting criteria and loan terms vary depending on the specific subtype, tenant profile, and property condition. Understanding where your property fits helps you target the right lender and loan product from the start.
Warehouse and Distribution Centers
Warehouse and distribution properties account for roughly 52% of the total U.S. industrial inventory and are the most actively financed subtype. These properties feature clear heights of 24 to 40 feet, dock-high loading, and layouts optimized for storage and shipping. Lenders favor warehouse assets because they attract creditworthy tenants on long-term leases.
Class A distribution centers in top logistics markets like Dallas/Fort Worth, Indianapolis, and Phoenix command the tightest cap rates (4.5% to 5.5%) and the most competitive loan terms.
Manufacturing Facilities
Manufacturing properties present unique financing considerations due to specialized buildouts, heavy power infrastructure, and environmental exposure. Lenders underwrite manufacturing facilities more conservatively, typically requiring lower LTV ratios and stronger DSCR thresholds.
Reshoring and nearshoring trends are driving renewed demand for domestic manufacturing space, particularly in Texas, Ohio, and Arizona (source: Cushman and Wakefield).
Flex and R&D Space
Flex industrial properties combine warehouse, office, and light manufacturing space in a single building. Small-bay flex space is experiencing record-low vacancies below 5% nationally, even as larger logistics facilities see rising availability (source: Plante Moran Q4 2025 Industrial Report).
Cold Storage and Refrigerated Warehouses
Cold storage properties require specialized refrigeration systems, insulated panels, and heavy power infrastructure. The cold chain logistics sector is expanding rapidly, driven by online grocery and pharmaceutical distribution. Financing cold storage commands premium rates, but investor demand remains strong.
What Are the Best Loan Options for Industrial Properties?
The right industrial property loan depends on your investment strategy, hold period, property stabilization level, and borrower profile. Here is a breakdown of the six primary financing options available for industrial acquisitions and refinances in 2026.
CMBS Conduit Loans
CMBS conduit loans are among the most popular financing tools for stabilized industrial properties because they offer non-recourse terms and competitive fixed rates:
- Loan amounts from $2 million to $50 million+
- Fixed rates from 5.75% to 7.25% in early 2026
- Terms of 5, 7, or 10 years with 25-30 year amortization
- LTV up to 75%
- Non-recourse with standard carve-out guarantees
Industrial CMBS loans experienced the highest payoff rates among all property types at 96.4% in 2025 (source: KBRA 2026 CMBS Outlook). Learn more on our conduit loans page.
Life Company Loans
Life insurance companies offer the lowest rates available but are selective about property quality and tenant credit:
- Loan amounts from $5 million to $100 million+
- Fixed rates from 5.25% to 6.75%
- Terms of 7, 10, 15, or 20-25 years
- LTV up to 65%
Life companies favor Class A warehouse assets with investment-grade tenants and long lease terms. For more on long-term structures, visit our permanent loans page.
Bank and Credit Union Loans
Local and regional banks remain a primary source of industrial financing, especially for loans under $10 million:
- Loan amounts from $500,000 to $25 million
- Rates from 6.0% to 7.75% (fixed or floating)
- Terms of 5-10 years with 20-25 year amortization
- LTV up to 75%
Banks hold these loans on balance sheet, giving them flexibility to structure terms around unique borrower needs.
SBA 504 Loans
The SBA 504 program offers the highest leverage available for owner-occupied industrial properties. The three-party structure splits the financing as follows:
- A conventional bank provides 50% of the project cost
- A Certified Development Company (CDC) provides up to 40%
- The borrower contributes as little as 10%
SBA 504 loans are ideal for businesses purchasing warehouse or manufacturing space they will occupy. Fixed rates on the CDC portion currently range from 6.25% to 7.5%, with terms of 20 or 25 years. The maximum SBA debenture is $5.5 million. To qualify, the business must be a for-profit U.S. entity with a tangible net worth under $20 million and average net income under $6.5 million (source: SBA.gov). The borrower must occupy at least 51% of the building within one year. Learn more in our SBA commercial property guide.
Bridge Loans
Bridge loans provide short-term capital for industrial acquisitions that need repositioning before qualifying for permanent financing. Use cases include acquiring a partially vacant warehouse for lease-up, purchasing a facility needing environmental remediation, or buying from a distressed seller on a tight timeline.
Terms include 12 to 36 month durations, rates from 8% to 12%, LTV up to 80%, and interest-only payments. The higher cost is offset by speed (closings in 2 to 4 weeks).
Hard Money Loans
Hard money loans close in as little as 7 to 14 days. These asset-based loans focus primarily on the property's value rather than the borrower's financial profile. Rates range from 10% to 14% with terms of 12 to 24 months.
What Are Current Industrial Property Loan Rates in 2026?
Industrial property loan rates in early 2026 range from 5.25% to 14%, depending on the loan product, leverage, property quality, and borrower strength. The Federal Reserve's rate trajectory suggests modest additional cuts may come later in 2026, but timing remains uncertain (source: Select Commercial).
Here are the current rate ranges for each major product:
| Loan Type | Rate Range | Term | Amortization |
|---|---|---|---|
| CMBS Conduit | 5.75% - 7.25% | 5-10 years | 25-30 years |
| Life Company | 5.25% - 6.75% | 7-25 years | 25-30 years |
| Bank Loan | 6.0% - 7.75% | 5-10 years | 20-25 years |
| SBA 504 | 6.25% - 7.5% | 20-25 years | Fully amortizing |
| Bridge | 8.0% - 12.0% | 12-36 months | Interest-only |
| Hard Money | 10.0% - 14.0% | 12-24 months | Interest-only |
Rates change frequently based on Treasury yields and credit spreads. To model your specific deal, use our commercial mortgage calculator or DSCR calculator to estimate payments and coverage ratios.
What Do Lenders Require for Industrial Property Loans?
Lenders evaluate industrial property loans on four dimensions: property cash flow, borrower strength, asset quality, and market fundamentals.
Debt Service Coverage Ratio (DSCR)
The DSCR is the most important metric in industrial property underwriting. It measures the property's net operating income relative to annual debt service. Minimum requirements by loan type:
- CMBS: 1.25x minimum
- Life Company: 1.30x minimum
- Bank: 1.25x minimum
- SBA 504: 1.20x minimum
- Bridge: 1.00x (current or pro-forma)
A warehouse generating $600,000 in NOI with $450,000 in annual debt payments has a 1.33x DSCR, meeting all conventional thresholds. Calculate your ratio with our DSCR calculator and read our DSCR loan vs. conventional mortgage guide.
Loan-to-Value (LTV)
Maximum LTV ranges from 65% for life companies to 90% for SBA 504 loans. Most conventional industrial loans cap at 75% LTV, meaning the borrower needs at least 25% equity for acquisition deals.
Borrower Requirements
Standard borrower requirements for industrial property loans include:
- Credit score: 680+ for conventional, 650+ for SBA with compensating factors
- Net worth: Typically equal to or greater than the loan amount
- Liquidity: 6-12 months of debt service in post-closing reserves
- Experience: Prior commercial real estate ownership or management experience preferred
- Debt yield: Minimum 8-10% (NOI divided by loan amount)
Property-Level Requirements
- Occupancy: Minimum 85% economic occupancy for permanent financing
- Lease term: Weighted average remaining lease term of 3+ years preferred
- Condition: Roof, HVAC, and structural components in functional condition
- Environmental clearance: Phase I ESA required (Phase II if RECs identified)
Why Is Industrial the Strongest CRE Sector for Lenders?
Industrial real estate has outperformed every other major commercial property type over the past five years, and lenders continue to view the sector favorably in 2026 despite a normalization in vacancy and rent growth. Several structural tailwinds support this view.
E-Commerce Demand Continues Growing
U.S. online sales grew 8.1% in 2025, far outpacing 2.8% growth in traditional retail (source: Mordor Intelligence). E-commerce requires roughly three times the logistics space of traditional retail, expected to generate 250 to 350 million square feet of new demand over five years (source: GlobeSt). The e-commerce warehousing market is projected to reach $64.3 billion by 2030 (source: Mordor Intelligence).
Supply Is Normalizing After a Construction Boom
The market delivered over 1.1 billion square feet of new industrial space in 2022-2023, but construction starts have slowed meaningfully. National vacancy reached 7.6% in Q4 2025 and is forecast to peak near 7.8% in 2026 before declining through 2027 (source: CoStar, Plante Moran). Vacancy pressure should ease by late 2026, setting the stage for renewed rent acceleration.
Rent Growth Remains Positive
National industrial asking rents grew 1.5% year-over-year in Q4 2025 (source: Plante Moran). While below the 12.5% peak in 2022, growth remains positive and above office (-0.8%) and other challenged sectors.
Cap Rates Offer Attractive Investment Spreads
Industrial cap rates average 6.29% nationally, with Class A assets at 4.5% to 6.5% (source: Cushman and Wakefield). Cap rates are forecast to compress 5 to 15 basis points by end of 2026 (source: Statista), and the spread between cap rates and financing costs provides positive leverage for well-structured deals.
Which Markets Are Best for Industrial Property Investment?
Market selection directly impacts property performance and loan terms. Lenders offer the most competitive pricing in high-demand logistics corridors with strong population growth and infrastructure access.
Top-Performing Markets by Net Absorption (2025)
The markets with the strongest tenant demand in 2025, measured by net absorption, were:
- Dallas/Fort Worth - 31.1 million square feet absorbed
- Phoenix - 13.7 million square feet
- Indianapolis - 13.7 million square feet
- Kansas City - 11.8 million square feet
- Columbus - 9.8 million square feet
- Atlanta - 9.2 million square feet
- Chicago - 8.5 million square feet
These markets benefit from central geographic positioning, robust infrastructure, lower operating costs, and growing populations (sources: Plante Moran, CBRE 2026 U.S. Real Estate Outlook).
Smaller markets gaining traction include Savannah (port-driven logistics), Reno/Sparks (West Coast distribution alternative), and Nashville (population growth and intermodal access).
What Environmental Due Diligence Do Industrial Loans Require?
Environmental due diligence is a non-negotiable component of every industrial property transaction. Industrial properties carry higher environmental risk than other CRE asset types due to manufacturing, chemical storage, and waste handling history. Every lender requires at minimum a Phase I Environmental Site Assessment.
Phase I Environmental Site Assessment
A Phase I ESA evaluates the environmental history and current condition of a property through records review, site inspection, and regulatory database searches. The assessment follows ASTM E1527-21 standards and identifies Recognized Environmental Conditions (RECs) that could indicate contamination. Costs range from $3,000 to $7,500 depending on the property's size and history (source: AEI Consultants).
Phase II Environmental Site Assessment
If the Phase I identifies RECs, lenders require a Phase II assessment involving soil boring, groundwater monitoring wells, and lab analysis. Phase II costs range from $10,000 to $50,000+. Properties with Phase II findings may still be financeable with a remediation plan, cost estimates, and environmental insurance.
Environmental Considerations by Property Subtype
| Property Type | Risk Level | Common Concerns |
|---|---|---|
| Standard Warehouse | Low | Diesel fuel storage, loading dock runoff |
| Manufacturing | High | Chemical solvents, heavy metals, PCBs |
| Cold Storage | Medium | Refrigerant leaks (CFCs, ammonia) |
| Flex/R&D | Medium | Laboratory chemicals, USTs |
| Former Gas Station | Very High | Underground storage tanks, BTEX contamination |
Budgeting for environmental due diligence is essential when planning your closing costs. A clean Phase I is typically the fastest path to loan approval.
How Much Does It Cost to Close an Industrial Property Loan?
Closing costs for industrial property loans typically range from 1.5% to 3% of the loan amount. For a typical $5 million industrial acquisition loan, expect:
- Appraisal: $4,000 to $8,000
- Phase I ESA: $3,000 to $7,500
- Title insurance and escrow: $6,000 to $12,000
- Legal fees: $5,000 to $10,000
- Loan origination fee: 0.50% to 1.00% of loan amount
- Survey: $3,000 to $6,000
SBA 504 loans include an additional CDC processing fee (typically 1.5% of the CDC portion). Bridge and hard money loans may charge origination fees of 1% to 3%.
How Do You Structure a Typical Industrial Property Loan?
The right loan structure depends on your hold period, cash flow needs, and risk tolerance.
Acquisition Financing Example
Consider a $10 million warehouse acquisition with a 7.0% cap rate ($700,000 NOI):
- Loan amount: $7,500,000 (75% LTV)
- Down payment: $2,500,000
- Rate: 6.25% fixed (CMBS conduit, 10-year term)
- Amortization: 30 years
- Annual debt service: $553,920
- DSCR: 1.26x
- Cash-on-cash return: 5.84%
This structure provides positive leverage (cap rate exceeds the mortgage constant) and meets minimum DSCR thresholds for CMBS execution.
Refinance Scenario
For owners refinancing existing industrial debt, life company and CMBS products are particularly competitive because they offer longer terms and lower rates than most bank loans. A 10-year life company loan at 5.5% on a well-leased distribution center can reduce annual debt service by 15-20% compared to a maturing bank loan originated at higher rates.
Contact our team to discuss the optimal structure for your industrial property acquisition or refinance.
What Is the Market Outlook for Industrial Property Loans in 2026?
The industrial lending market is positioned for a strong year in 2026, driven by stabilizing interest rates, normalizing supply, and continued structural demand from e-commerce and supply chain reconfiguration.
Rate environment: Additional Fed rate cuts remain possible in 2026, which would further compress industrial mortgage rates. Current rates already support positive leverage for well-priced acquisitions.
Lender appetite: Industrial remains the most favored property type among CMBS, life company, and bank lenders. CMBS issuance is expected to increase in 2026 with significant volume allocated to industrial assets (source: KBRA 2026 CMBS Outlook).
Vacancy trajectory: National vacancy is expected to peak near 7.8% in 2026 before declining through 2027 as construction completions slow (source: CoStar).
Rent growth recovery: Industrial rent growth is projected to reaccelerate to 2% to 3% annually by late 2026, creating improving fundamentals for property owners.
Now is an opportune time to secure industrial financing while rates remain competitive and lender appetite for industrial assets is high. Schedule a consultation with our team to explore your options.
What Are Common Questions About Industrial Property Loans?
What is the minimum down payment for an industrial property loan?
The minimum down payment ranges from 10% for SBA 504 loans (owner-occupied properties) to 25-35% for conventional bank and CMBS loans. Life company loans typically require 35% or more equity. Bridge loans may accept 20-25% down depending on the property's stabilized value.
Can I finance a vacant industrial building?
Yes, but options are more limited. Vacant properties typically require bridge or hard money financing during lease-up, followed by refinancing into permanent debt once occupancy reaches 85%+.
How long does it take to close an industrial property loan?
Hard money loans close in 7-14 days. Bridge loans close in 2-4 weeks. Bank loans take 30-60 days. CMBS conduit loans require 45-75 days. SBA 504 loans take 60-90 days.
Are industrial property loans recourse or non-recourse?
CMBS conduit and many life company loans are non-recourse with standard carve-out guarantees. Bank loans are typically full recourse. SBA 504 loans require personal guarantees from owners with 20%+ equity.
What DSCR do I need for an industrial property loan?
Most permanent industrial property loans require a minimum DSCR of 1.25x, meaning the property must generate at least 25% more net operating income than the annual debt service. Life companies may require 1.30x or higher. SBA 504 loans have a slightly lower threshold at 1.20x. Use our DSCR calculator to check your numbers.
Do I need a Phase I environmental assessment for an industrial loan?
Yes, virtually all commercial lenders require a Phase I ESA for industrial property loans. The assessment follows ASTM E1527-21 standards and costs $3,000 to $7,500.
Can I get a loan for a cold storage or refrigerated warehouse?
Yes, cold storage is actively financed by CMBS, life company, and bank lenders. Growing demand for cold chain logistics has made cold storage increasingly attractive. Expect slightly higher rates than standard warehouse financing.
What is the best loan for a small industrial property under $2 million?
Local bank loans and SBA 504 loans are typically the best options for smaller deals. CMBS conduit loans generally have a $2 million minimum.
Have questions about financing your industrial property? Contact our commercial lending advisors for a free consultation and personalized rate quote.
Clearhouse Lending specializes in commercial mortgage financing for industrial properties nationwide. With access to CMBS, life company, bank, SBA, and bridge lending sources, we help industrial investors and owner-occupants secure optimal financing. Get in touch today to discuss your next industrial deal.