Why Is Aurora Attracting Development Activity Despite a National Construction Slowdown?
Commercial construction activity in Aurora has remained notably resilient compared to many peer markets, driven by the city's unique combination of strategic infrastructure, institutional demand anchors, and available development sites. While elevated interest rates and higher construction costs have slowed ground-up development nationally, Aurora continues to see active construction across industrial, life science, multifamily, and mixed-use sectors.
The numbers underscore Aurora's development advantage. The I-70 industrial corridor contains over 500 acres of developable land within master-planned parks like Majestic Commercenter, HighPoint Logistics, and Aero 70. The 578-acre Fitzsimons Innovation Community continues expanding with life science and medical office projects backed by approximately $4.3 billion in total campus investment. Northeast Aurora and the Painted Prairie area are building out residential communities that create demand for supporting commercial development.
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Aurora construction loans typically carry interest rates between 7% and 9%, require equity contributions of 25% to 40%, and offer 18 to 36 month terms. The interest-only structure means borrowers pay interest only on the drawn amount during construction, with the full loan balance due at maturity when the project refinances into permanent debt or is sold.
For developers and investors exploring construction financing in Aurora, Clear House Lending connects borrowers with a network of over 6,000 commercial lenders, including banks, debt funds, and specialized construction lending platforms, to find the most competitive terms for ground-up development.
What Construction Loan Programs Are Available in Aurora?
Aurora's construction lending market includes programs from traditional banks, private capital sources, government-backed programs, and structured finance providers.
Bank Construction Loans represent the most common financing source for Aurora development projects. Colorado banks and national lenders offer rates between 7.0% and 8.5%, loan-to-cost (LTC) up to 65% to 75%, and terms of 18 to 36 months. Banks typically require 30% to 50% pre-leasing for speculative projects, a guaranteed maximum price (GMP) contract with a qualified general contractor, and a developer track record that includes completed projects of similar scale and complexity. Banks with active Aurora construction lending programs include FirstBank, Vectra Bank, and several national banks with Denver metro lending teams.
Private Lenders and Debt Funds provide construction financing with more flexibility but at higher costs. Rates range from 9.0% to 12.0% with LTC up to 70% to 80% and terms of 12 to 24 months. These lenders are more willing to finance speculative development without pre-leasing requirements and can close faster than banks. Private construction loans are active in Aurora for smaller projects, time-sensitive developments, and borrowers who do not meet traditional bank underwriting requirements.
SBA 504 Loans with construction components allow owner-occupants to build new facilities with as little as 10% equity contribution. The SBA 504 program provides a one-time close structure that converts from construction to permanent financing without a second closing. This program works well for Aurora medical practices, manufacturing companies, and service businesses building custom facilities.
HUD/FHA 221(d)(4) Loans provide construction and permanent financing for multifamily projects with the most favorable terms in the market: LTC up to 85%, 40-year fully amortizing permanent terms, and rates between 5.0% and 6.5%. These loans are non-recourse and include a single close from construction through permanent financing. The tradeoff is a lengthy approval process (6 to 12 months) and significant documentation requirements. Aurora multifamily developers building projects with 20 or more units should evaluate this program.
Mezzanine and Preferred Equity fills the gap between senior construction debt and developer equity, typically providing capital at 80% to 90% of total project cost at rates between 12% and 18%. This structured capital allows Aurora developers to reduce their equity contribution, though the higher cost of capital must be justified by the project's projected returns.
Use the commercial mortgage calculator to model construction loan interest carry and permanent financing scenarios.
Which Aurora Development Corridors Attract the Most Construction Lending?
Aurora's development geography includes several distinct corridors, each attracting different types of construction projects and lending approaches.
The Fitzsimons Innovation Community attracts the most institutional construction lending interest in Aurora. The campus's life science and medical office development pipeline, backed by the $4.3 billion total campus investment and the University of Colorado health system, provides the kind of demand certainty that construction lenders value most. The planned Bioscience 4 facility (230,000 to 800,000 square feet of life sciences space) and the Fitz 500 mixed-use office building represent the type of large-scale development that attracts bank construction financing at the most competitive terms. Lenders are comfortable underwriting Fitzsimons construction projects because the institutional tenant pipeline reduces lease-up risk.
The I-70 Industrial Corridor remains Aurora's most active construction zone. Majestic Commercenter continues expanding toward its 21 million square foot build-out. Aero 70 Logistics Park delivered four new buildings in late 2025 with 32 to 36 foot clear heights and Class AA features. HighPoint Logistics Park is developing additional phases on its 125-acre site. Industrial construction lenders favor this corridor because of DIA proximity, highway access, and the demonstrated absorption of modern logistics space by tenants like Amazon, Home Depot, and Dollar General.
Northeast Aurora and Painted Prairie are experiencing rapid residential growth that creates demand for supporting commercial construction, including retail, medical office, and mixed-use projects. As these communities reach critical population density, developers are finding viable opportunities for ground-up commercial development with pre-leasing commitments from national tenants.
Contact Clear House Lending to discuss construction financing for development projects in Aurora's growth corridors.
What Does It Cost to Build in Aurora?
Construction costs in Aurora reflect the broader Denver metro market dynamics, with costs varying significantly by property type, building materials, and site conditions.
Industrial and warehouse construction represents the most cost-effective development in Aurora, with costs ranging from $80 to $120 per square foot for tilt-up concrete or pre-engineered metal buildings. Timelines run 8 to 14 months from groundbreaking to certificate of occupancy. The relatively straightforward construction process and Aurora's available industrial-zoned land make this the most active development type in the city.
Wood-frame multifamily construction costs $180 to $250 per square foot for three to five story apartment buildings, with timelines of 14 to 20 months. Colorado's labor market remains competitive, and materials costs have stabilized after the pandemic-era volatility but remain elevated above pre-2020 levels.
Concrete multifamily construction ranges from $250 to $350 per square foot for mid-rise and high-rise projects, with timelines of 18 to 28 months. These higher costs are typically justified only for premium locations near the Anschutz campus or in established mixed-use areas.
Medical office construction costs $250 to $400 per square foot due to the specialized MEP (mechanical, electrical, plumbing) systems required for healthcare facilities. Timelines of 12 to 18 months include the additional time needed for specialized inspections and equipment installation.
Retail and commercial construction ranges from $150 to $250 per square foot depending on the complexity of the project and tenant improvement requirements. Timelines of 10 to 16 months are typical for standard retail development.
Construction lenders evaluate these costs against market rent projections to determine whether the completed project will generate sufficient income to support permanent financing. Projects where the development yield (projected stabilized NOI divided by total development cost) exceeds the market cap rate by 100 to 200 basis points are considered viable by most construction lenders.
How Does the Construction Draw Process Work for Aurora Projects?
Understanding the draw process is essential for Aurora developers because it determines how and when construction loan proceeds are disbursed during the building phase.
Construction loans are funded through a series of draws, typically on a monthly basis, as work progresses and costs are incurred. The lender releases funds based on the percentage of work completed, verified by a third-party construction inspector who visits the site before each draw.
The typical Aurora construction draw process follows a structured sequence. Site work (grading, utilities, foundation) represents the first 10% to 15% of the budget and establishes the project's physical footprint. Structural work (framing, roofing, building shell) accounts for 20% to 25% and is the phase where the project becomes visually recognizable. MEP rough-in (mechanical, electrical, plumbing systems) represents 15% to 20% and involves the most code-intensive inspections. Interior finish (drywall, flooring, fixtures, paint) accounts for 20% to 25% and is where the project approaches completion. Final completion (punchlist items, landscaping, certificate of occupancy) represents 10% to 15%. Retainage of 5% to 10% is held by the lender until the project is fully complete and all lien waivers are received from subcontractors.
Developers should budget for the interest carry during construction, which accrues only on the funded portion of the loan. For a $10 million construction loan at 8% with an 18-month draw period, the total interest carry might be approximately $600,000 to $800,000, assuming a steady draw schedule. This interest is typically capitalized into the loan balance rather than paid in cash each month.
What Do Aurora Construction Lenders Evaluate During Underwriting?
Construction lending involves the most rigorous underwriting of any commercial loan type because the lender is financing a project that does not yet exist and relying on the developer's ability to execute the business plan.
Developer Experience is the most heavily weighted factor. Construction lenders want to see that the borrower has successfully completed similar projects in terms of property type, scale, and geographic market. First-time developers can improve their positioning by partnering with experienced development firms or hiring project managers with proven track records. A developer who has completed multiple industrial projects in the Denver metro will receive more favorable terms for an Aurora warehouse development than one whose experience is in a different property type or market.
Market Feasibility requires the developer to demonstrate sufficient demand for the completed project. This includes rent comparables from the target submarket, absorption data, population and employment growth projections, and competitive supply analysis. Aurora's strong fundamentals in industrial (DIA proximity, I-70 access), medical office (Anschutz campus demand), and residential (population growth) provide compelling feasibility narratives for these property types.
Pre-Leasing and Pre-Sales reduce the lender's lease-up risk and are strongly preferred for speculative construction projects. Bank construction lenders for Aurora commercial projects often require 30% to 50% pre-leasing before funding. Build-to-suit projects with signed leases from creditworthy tenants receive the most favorable terms because the lease-up risk is essentially eliminated.
General Contractor Qualifications matter because the GC's ability to deliver the project on time and on budget directly impacts the lender's collateral. Construction lenders evaluate the GC's financial strength (via bonding capacity), track record of completing similar projects, and the specific project team assigned to the Aurora development.
Equity Contribution demonstrates the developer's financial commitment. Most Aurora construction lenders require 25% to 40% equity funded before the first construction draw. Land contributed at appraised value can count toward the equity requirement, which benefits Aurora developers who own development sites.
What Is the Path from Construction to Permanent Financing in Aurora?
Every construction loan needs a clear exit strategy, and the path from construction financing to permanent debt is one of the most critical planning elements for Aurora developers.
Multifamily projects typically convert to agency permanent financing (Fannie Mae or Freddie Mac) after achieving 90% or higher occupancy with a DSCR of 1.25x or above. The construction-to-permanent timeline is typically 24 to 36 months, including 14 to 20 months of construction and 6 to 12 months of lease-up. HUD/FHA 221(d)(4) loans provide a single-close alternative that eliminates the need for a separate permanent takeout.
Industrial projects refinance into CMBS or bank permanent financing after achieving substantial pre-leasing or full occupancy. The timeline is typically 18 to 24 months, as industrial buildings construct faster than other property types and single-tenant buildings may be pre-leased before construction begins.
Medical office projects near the Anschutz campus convert to life insurance company or bank permanent financing, with the healthcare tenant base supporting competitive permanent terms. The 18 to 24 month timeline includes construction and initial tenant occupancy.
Retail projects refinance to CMBS or bank permanent debt after anchor tenants open and the property achieves stabilized occupancy. Pre-leased anchor tenants are essential for securing competitive permanent financing.
Developers should engage permanent lenders early in the construction process, ideally before the construction loan closes, to understand permanent financing requirements and ensure the project is designed and operated to meet those criteria.
What Are the Risks of Construction Lending in Aurora?
Construction loans carry inherent risks that Aurora developers must understand and mitigate through careful planning and conservative budgeting.
Cost overruns are the most common risk. Aurora construction costs have stabilized from their pandemic-era peaks, but unexpected site conditions, material price fluctuations, and labor shortages can still push budgets beyond initial projections. Developers should include 5% to 10% contingency reserves in their budgets and ensure the construction loan includes sufficient capacity for change orders.
Timeline delays increase interest carry costs and can push the project beyond the construction loan term. Colorado's winter weather can slow exterior construction work, and permitting timelines in Aurora currently run 60 to 120 days depending on project complexity. Developers should build weather and permit contingency into their schedules.
Market changes during the construction period can reduce the projected value or income of the completed project. A multifamily developer who breaks ground expecting rents of $2,000 per month may face a market where achievable rents have fallen to $1,800 by the time the building delivers. Conservative underwriting with realistic rent assumptions mitigates this risk.
Entitlement and permitting risk can delay or prevent projects entirely. Aurora developers should secure all necessary zoning approvals, site plans, and building permits before closing the construction loan. Lenders will not fund construction without confirmed entitlements.
Contact Clear House Lending to discuss risk mitigation strategies for your Aurora construction project.
Frequently Asked Questions About Aurora Construction Loans
What is the minimum equity required for an Aurora construction loan?
Most Aurora construction lenders require 25% to 40% of total project cost as developer equity. The specific requirement depends on the property type, pre-leasing status, developer experience, and lender type. Bank construction loans typically require 30% to 35% equity. Private lenders may accept 20% to 25% with higher interest rates. SBA 504 loans require only 10% for owner-occupied projects. Land value at appraised amount can count toward the equity requirement.
How long does it take to close an Aurora construction loan?
Aurora construction loans typically take 60 to 120 days from application to closing, depending on the lender type and project complexity. Bank construction loans require 75 to 120 days. Private lender construction loans can close in 30 to 60 days. SBA construction loans take 90 to 150 days. HUD/FHA 221(d)(4) loans require 6 to 12 months. The longest lead items are appraisal (3 to 4 weeks), environmental assessment (2 to 3 weeks), and plan review by the lender's construction consultant.
Can I get a construction loan without pre-leasing in Aurora?
Yes, though the terms will be more restrictive. Bank construction lenders typically require 30% to 50% pre-leasing for speculative Aurora commercial projects. Private lenders and debt funds may provide speculative construction financing without pre-leasing requirements, but at higher rates (9% to 12%) and lower LTC (60% to 70%). Industrial projects along the I-70 corridor have the best track record of securing speculative construction financing in Aurora due to the strong demand fundamentals and demonstrated absorption history.
What is the interest rate on an Aurora construction loan?
Aurora construction loan rates range from 7.0% to 9.0% for bank loans, 9.0% to 12.0% for private lenders, 5.75% to 7.0% for SBA 504 loans, and 5.0% to 6.5% for HUD/FHA programs. Most construction loans use floating rates tied to prime or SOFR plus a margin. Interest is charged only on the funded portion of the loan, so the effective interest cost is lower during the early months when only a portion of the loan has been drawn.
Do Aurora construction lenders require a GMP contract?
Most bank construction lenders in Aurora require a guaranteed maximum price (GMP) contract or a fixed-price contract with a qualified general contractor. This protects both the developer and lender from cost overruns. Private lenders may be more flexible, accepting cost-plus contracts with caps. The GC must demonstrate financial capacity (typically through bonding), relevant project experience, and adequate insurance coverage. Lenders review the GC's references and may require a specific GC approval process before loan closing.
Can I get a construction-to-permanent loan in Aurora?
Yes. Several Aurora construction loan structures include a permanent financing component. SBA 504 loans provide a one-time close that converts from construction to permanent without a second closing or additional fees. HUD/FHA 221(d)(4) loans offer a single-close structure with 40-year permanent terms for multifamily projects. Some banks offer mini-perm conversion options where the construction loan converts to a 3 to 5 year permanent loan at maturity. These single-close structures eliminate refinancing risk and reduce total closing costs.
Positioning Your Aurora Development Project for Success
Aurora offers one of the most compelling development environments in the Denver metro, with available land, strategic infrastructure, institutional demand anchors, and a growing population that supports new commercial construction across multiple property types.
Whether you are building industrial space along the I-70 corridor, developing life science facilities near Fitzsimons, constructing multifamily apartments to serve Aurora's growing workforce, or building retail to serve new residential communities, securing the right construction financing structure is essential to managing costs, controlling risk, and maximizing development returns.
Contact Clear House Lending today to discuss your Aurora construction project and get matched with the right development lender from our network of over 6,000 commercial lending sources.