What Makes Colorado Springs a Strong Market for Industrial Real Estate Investment?
Colorado Springs has emerged as one of the most compelling industrial real estate markets along the Front Range corridor, driven by a unique combination of defense sector demand, aerospace manufacturing growth, and strategic logistics positioning along Interstate 25. For investors and owner-occupants seeking industrial loans in Colorado Springs, the market offers fundamentals that lenders view favorably, including tight vacancy, steady absorption, and a diversified tenant base anchored by the defense and aerospace industries.
The numbers tell a clear story. Colorado Springs industrial vacancy sits at approximately 5.4%, well below the national average of around 7.2%. Roughly 180,000 square feet of industrial space is currently under construction, representing just 0.4% of total inventory. This minimal pipeline ensures that existing industrial properties will continue to benefit from limited competition, supporting both occupancy levels and rental rate growth through 2026 and beyond.
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What sets Colorado Springs apart from other secondary industrial markets is the depth of its defense and aerospace tenant base. The metro area is home to Fort Carson, Peterson Space Force Base, Schriever Space Force Base, NORAD at Cheyenne Mountain, and the recently established U.S. Space Command. More than 200 space, aerospace, cybersecurity, and defense companies operate in El Paso County, employing approximately 111,000 people and generating an annual economic impact exceeding $10 billion. This concentration creates sustained demand for manufacturing, assembly, warehouse, and flex industrial space that is largely insulated from broader economic cycles.
Average asking rents for industrial space in Colorado Springs have climbed to around $11.58 per square foot, reflecting the market's tight conditions and growing demand from both defense contractors and logistics operators serving the Pikes Peak region's population of roughly 750,000 residents.
For borrowers exploring commercial loans in Colorado Springs, the industrial sector presents some of the most favorable lending conditions available in the current market.
What Industrial Loan Programs Are Available in Colorado Springs?
Colorado Springs industrial borrowers can access multiple financing programs, each designed for different property profiles, borrower qualifications, and investment strategies. Understanding which program matches your specific situation is essential to securing competitive terms.
Conventional Bank Loans serve as the primary financing vehicle for stabilized Colorado Springs industrial properties with established tenants and strong occupancy. Local and regional banks with Colorado market expertise offer rates between 6.25% and 7.75%, terms of 5 to 10 years, and up to 75% loan-to-value (LTV). Properties leased to defense contractors or national logistics companies on long-term leases receive the most favorable pricing.
SBA 504 Loans provide the strongest financing option for owner-occupied industrial properties in Colorado Springs. Manufacturing companies, aerospace subcontractors, and defense technology firms purchasing their own facilities can access up to 90% financing at fixed rates between 5.75% and 6.75% for 20 to 25 year terms. The SBA 504 program is particularly well suited to the many small and mid-size defense contractors operating in the Colorado Springs market.
Bridge Loans serve industrial properties undergoing renovation, tenant transition, or repositioning. Rates range from 8.5% to 11.0% with 12 to 36 month terms and up to 75% LTV. Investors acquiring older industrial buildings along the Powers corridor or near the airport often use bridge financing to fund tenant improvements and modernization before refinancing into permanent debt.
CMBS and Conduit Loans offer non-recourse financing for larger Colorado Springs industrial assets. Rates range from 5.88% to 7.49% with 5 to 10 year terms and up to 75% LTV. CMBS lenders favor single-tenant industrial properties with creditworthy tenants on long-term NNN leases.
DSCR Loans provide investor-focused financing that qualifies based solely on the property's rental income rather than the borrower's personal income. With rates between 7.0% and 9.0% and 30 year amortization, DSCR loans work well for investors acquiring smaller industrial properties in Colorado Springs without extensive income documentation.
Which Colorado Springs Submarkets Attract the Best Industrial Financing?
Colorado Springs industrial submarkets vary significantly in terms of tenant quality, rental rates, and lender appetite. Knowing where lenders are most comfortable deploying capital helps borrowers target acquisitions that will secure the most competitive terms.
The Airport/Southeast Submarket anchors Colorado Springs industrial activity. Proximity to the Colorado Springs Airport and Peterson Space Force Base creates a natural cluster of aerospace, defense, and logistics tenants. The Colorado Aerospace Business Center at 8470 Launch Point represents the caliber of modern industrial development in this corridor, with an 84,750 square foot warehouse facility completed in early 2026. Lenders view airport-area industrial properties favorably due to the concentration of creditworthy defense sector tenants.
The Powers Boulevard Corridor has transformed from rangeland into one of Colorado Springs' most dynamic commercial corridors. Industrial properties along Powers benefit from excellent north-south connectivity, proximity to the growing northeast residential population, and access to the planned Powers Boulevard Extension connecting Highway 83 to Voyager Parkway. This infrastructure investment, with bridge construction anticipated to begin in early 2026, will further enhance the corridor's logistics appeal.
The I-25 Corridor/North Gate area offers strategic positioning for distribution and logistics operations serving both Colorado Springs and the broader Front Range market stretching north to Denver. Industrial properties near I-25 interchanges command premium rents and attract strong lender interest due to their regional distribution capabilities.
The Fountain/Security-Widefield submarket south of Colorado Springs benefits from proximity to Fort Carson, which generates approximately $2.5 billion in annual economic impact with over 25,000 military and civilian personnel. Industrial properties in this area serve defense contractors, equipment suppliers, and logistics companies supporting base operations.
The Downtown/West Side industrial corridor includes older, smaller industrial buildings that present value-add opportunities. While these properties may require modernization to meet current tenant standards, their central location and lower acquisition costs appeal to investors comfortable with repositioning strategies.
What Types of Industrial Properties Are Colorado Springs Lenders Most Willing to Finance?
Lender appetite varies significantly by industrial property type, reflecting the different risk profiles and tenant demand patterns across the industrial spectrum in Colorado Springs.
Aerospace and Defense Manufacturing Facilities represent the premier industrial asset class in Colorado Springs. Properties leased to defense contractors with government contracts enjoy the most favorable financing terms, as the tenant's revenue stream is backed by federal spending. Lenders recognize that Colorado Springs' position as the nation's second-largest defense hub (behind only the D.C. metro area) provides structural demand support for these facilities.
Modern Warehouse and Distribution buildings with clear heights of 28 feet or more, dock-high loading, and adequate truck court depths attract strong lender interest. The growth of e-commerce fulfillment and last-mile delivery operations serving El Paso County's growing population drives demand for this product type.
Flex Industrial/R&D space serves the cybersecurity and technology companies that have clustered in Colorado Springs. These hybrid spaces combining office, lab, and light manufacturing appeal to lenders when leased to established technology firms, particularly those with defense sector contracts.
Cold Storage and Specialized Facilities command premium rents in Colorado Springs due to limited supply and high construction costs. The growing population base and expansion of food distribution networks create sustained demand for temperature-controlled industrial space.
Using a commercial mortgage calculator helps Colorado Springs industrial borrowers model different financing scenarios and compare total costs across loan programs before committing to a specific structure.
How Do You Qualify for an Industrial Loan in Colorado Springs?
Qualifying for industrial loans in Colorado Springs requires meeting lender criteria across several key areas. While requirements vary by loan program, understanding common thresholds helps borrowers prepare successful applications.
Debt service coverage ratio (DSCR) requirements for Colorado Springs industrial properties typically range from 1.20x to 1.35x, meaning the property's net operating income must exceed annual debt service by 20% to 35%. Properties with defense contractor tenants on long-term leases often achieve DSCR well above these minimums, making qualification straightforward. You can model your property's DSCR using a DSCR calculator.
Loan-to-value ratios for Colorado Springs industrial financing range from 65% to 80%, depending on property type, tenant quality, and loan program. Single-tenant industrial properties with investment-grade defense tenants can reach 80% LTV, while multi-tenant flex buildings typically max out at 70% to 75%.
Borrower net worth requirements generally equal or exceed the loan amount for conventional bank financing. Liquidity requirements range from 6 to 18 months of debt service depending on the property's risk profile.
Credit score minimums start at 680 for most conventional industrial loans, with SBA programs requiring 660 or higher. DSCR loan programs may accept scores as low as 640 but charge premium rates below 700.
Experience with industrial property ownership and management strengthens any loan application. First-time commercial investors may need to partner with experienced operators or accept lower leverage to secure financing in the Colorado Springs market.
What Are Current Interest Rates for Industrial Loans in Colorado Springs?
Interest rates for industrial loans in Colorado Springs reflect both national capital market conditions and the local market's strong fundamentals. As of early 2026, Colorado Springs industrial borrowers benefit from rates that reflect the sector's favorable risk profile.
Colorado Springs industrial loan rates benefit from the sector's tight vacancy, defense-driven demand stability, and limited new construction. Lenders view Colorado Springs industrial properties as relatively low-risk assets, particularly those leased to tenants with government contract backing. This favorable risk assessment translates into pricing that sits at or below the national average for comparable industrial assets.
Borrowers should understand that quoted rates represent a starting point. Final pricing depends on property-specific factors including tenant credit quality, lease term remaining, location within the metro, property condition, and borrower financial strength. A modern warehouse leased to a defense prime contractor near Peterson SFB will price 75 to 150 basis points below a multi-tenant flex building with small-business tenants on short-term leases.
The maturity wall presents both challenge and opportunity for Colorado Springs industrial investors. Approximately $1.2 trillion in commercial mortgages are maturing nationally in 2025 and 2026, with the average rate on expiring loans significantly below current market rates. This dynamic may create acquisition opportunities as some owners choose to sell rather than refinance at higher rates.
How Does the Defense Economy Influence Industrial Lending in Colorado Springs?
Colorado Springs' defense economy creates a unique industrial lending dynamic that differentiates this market from other secondary cities. Understanding how lenders evaluate defense-driven demand helps borrowers position their loan applications effectively.
The defense sector's influence on Colorado Springs industrial real estate extends beyond simple tenant demand. Government-backed revenue streams create a credit profile that commercial lenders can underwrite with greater confidence than private-sector tenants of comparable size. When a defense contractor signs a 10-year lease backed by multi-year government contracts, lenders treat that income stream as significantly more secure than a lease from a similarly sized company dependent on commercial revenue.
Fort Carson's economic footprint alone, with around 25,000 military and civilian personnel and approximately $2.5 billion in annual economic impact, generates demand for maintenance facilities, equipment storage, logistics operations, and contractor support space. Peterson Space Force Base and Schriever Space Force Base add another layer of demand, particularly for secure facilities and specialized technical space.
The growth of U.S. Space Command and the Space Force, which Congress authorized to expand from 9,800 to 10,400 guardians in the 2026 National Defense Authorization Act, signals continued federal investment in Colorado Springs' military infrastructure. This growth translates directly into industrial space demand from the network of contractors, subcontractors, and support service providers that serve these installations.
Lenders familiar with Colorado Springs' defense economy often provide more favorable terms, including higher LTV ratios, lower interest rate spreads, and longer amortization periods, for industrial properties with defense sector tenants. Working with a lender experienced in the Colorado Springs market ensures your application benefits from this nuanced understanding.
What Environmental and Due Diligence Issues Affect Colorado Springs Industrial Loans?
Environmental considerations play a significant role in Colorado Springs industrial loan underwriting, and borrowers must be prepared to address potential issues during the due diligence process.
Phase I Environmental Site Assessments are required for all industrial loan applications. Colorado Springs industrial properties near current or former military installations may trigger additional environmental scrutiny due to historical contamination from military operations. Properties in the southeast corridor near Peterson SFB and the airport submarket should budget additional time and cost for environmental reviews.
Phase II assessments, involving soil and groundwater sampling, may be required if the Phase I identifies recognized environmental conditions (RECs). The cost of Phase II assessments ranges from $5,000 to $25,000 depending on the scope of investigation required.
Property condition assessments evaluate the physical condition of industrial buildings, including roofing, HVAC, structural systems, loading docks, and fire suppression equipment. Older industrial buildings in Colorado Springs' west side and downtown corridors may require capital expenditure reserves for deferred maintenance items.
Seismic risk in Colorado Springs is generally low, but lenders may require seismic assessments for certain industrial building types, particularly pre-engineered metal buildings and older masonry structures. The region's arid climate means that moisture-related structural issues are less common than in other markets, but freeze-thaw cycles at the 6,035-foot elevation can affect foundation and pavement conditions.
What Role Does Location Play in Colorado Springs Industrial Loan Underwriting?
Location drives industrial property value and financing terms in Colorado Springs more than almost any other factor. The city's geographic spread and diverse submarket characteristics create a wide range of underwriting outcomes.
Lenders evaluate Colorado Springs industrial locations based on several key metrics. Proximity to I-25, the primary north-south transportation artery connecting Colorado Springs to Denver and points south, is paramount for distribution and logistics properties. Access to Powers Boulevard and the future Powers Extension influences valuations for properties serving the northeast growth corridor. Proximity to military installations affects tenant demand profiles and creditworthiness assessments.
The Interquest area at the northern edge of Colorado Springs has emerged as a premium commercial corridor, with the Polaris Pointe development and surrounding infrastructure attracting institutional-quality tenants. Industrial properties in this area benefit from proximity to I-25 and the growing Briargate residential community, though land costs are higher than more established industrial corridors.
El Paso County's position within Colorado's economic landscape matters for lender evaluation. The county's population of around 750,000, combined with steady in-migration and a diverse employment base spanning military, technology, healthcare, and tourism (anchored by the U.S. Olympic and Paralympic Training Center and attractions like the Cheyenne Mountain Zoo and Garden of the Gods), provides a stable economic foundation that supports industrial property values.
How Can Colorado Springs Industrial Borrowers Strengthen Their Applications?
Strengthening an industrial loan application requires proactive preparation across several areas that lenders prioritize during underwriting.
Start with a detailed rent roll showing each tenant's name, lease start and expiration dates, base rent, NNN pass-through structure, renewal options, and any termination rights. Colorado Springs industrial lenders pay close attention to lease rollover concentration. Having more than 30% of total rent rolling within the first two years of a loan term raises concerns about income stability.
Provide at least three years of historical operating statements demonstrating consistent or improving net operating income. If acquiring a property, request trailing 12-month financials from the seller and reconcile them against the rent roll and tax records.
For properties requiring capital improvements, prepare a detailed budget with contractor bids and a timeline for completion. Industrial modernization projects, such as increasing clear heights, adding dock-high doors, or upgrading electrical capacity for manufacturing tenants, should include cost estimates from qualified contractors familiar with Colorado Springs construction costs.
Highlight any defense sector tenant relationships or proximity to military installations. Lenders value the income stability provided by government-backed tenants, and your application should clearly articulate how the property's tenant base benefits from Colorado Springs' defense economy.
Contact Clearhouse Lending to discuss your Colorado Springs industrial financing needs and get a customized rate quote for your property.
Frequently Asked Questions About Industrial Loans in Colorado Springs
What is the minimum down payment for an industrial loan in Colorado Springs?
The minimum down payment for a Colorado Springs industrial loan depends on the financing program. SBA 504 loans for owner-occupied industrial properties require as little as 10% down. Conventional bank loans typically require 25% to 35% down (65% to 75% LTV). DSCR investor loans require 25% to 30% down. Single-tenant industrial properties with strong credit tenants, particularly defense contractors, may qualify for up to 80% LTV, requiring just 20% down. The specific requirement depends on property type, tenant quality, location within the metro, and borrower qualifications.
How long does it take to close an industrial loan in Colorado Springs?
Closing timelines for Colorado Springs industrial loans vary by program. Conventional bank loans typically close in 45 to 60 days. SBA 504 loans take 60 to 90 days due to additional government agency review. Bridge loans can close in as few as 14 to 30 days for experienced borrowers with clean properties. CMBS loans require 60 to 90 days. The timeline begins after a complete loan application is submitted with all required documentation, including the property appraisal, environmental reports, and tenant estoppel certificates.
Can I finance a vacant industrial property in Colorado Springs?
Financing vacant Colorado Springs industrial properties is more challenging than stabilized assets but remains possible. Bridge lenders will finance vacant industrial acquisitions at 60% to 70% LTV with rates between 9% and 12%, provided the borrower presents a credible lease-up plan and demonstrates relevant experience. SBA 504 loans can finance vacant industrial properties if the borrower will occupy at least 51% of the space for their own business operations. Conventional banks generally require at least 70% to 80% occupancy before extending permanent financing.
What DSCR do Colorado Springs industrial lenders require?
Most Colorado Springs industrial lenders require a minimum DSCR of 1.20x to 1.35x, meaning the property's net operating income must cover the annual mortgage payment by at least 120% to 135%. SBA loans may accept DSCR as low as 1.15x. CMBS lenders typically require 1.25x or higher. Properties with long-term defense contractor tenants often achieve DSCR of 1.50x or above, making qualification straightforward and potentially securing better rate pricing.
Are industrial loans available for properties near military bases in Colorado Springs?
Yes, and properties near Fort Carson, Peterson SFB, and Schriever SFB often receive favorable financing treatment because of the tenant demand generated by military operations. Lenders recognize that military-adjacent industrial properties benefit from consistent demand driven by defense contractors, equipment suppliers, and support service providers. However, properties on leased military land or within security-restricted zones may face additional underwriting requirements. Properties within standard commercial zones adjacent to military installations are financed using the same programs available throughout the Colorado Springs market.
How do property taxes affect industrial loan qualification in Colorado Springs?
Colorado property taxes directly impact industrial loan qualification because they affect net operating income and therefore the DSCR. Colorado's assessment rate for commercial property is currently 29%, applied to the actual value determined by the El Paso County Assessor. Industrial property owners should review assessments annually and file appeals if the assessed value exceeds market reality. NNN lease structures pass property tax obligations to tenants, which improves the owner's DSCR and loan qualification. Colorado Springs' relatively moderate property tax rates compared to many other states make industrial investments more cash-flow favorable than competing markets.
Moving Forward With Your Colorado Springs Industrial Loan
Colorado Springs' industrial real estate market offers investors and owner-occupants a compelling combination of defense-driven demand stability, tight vacancy, limited new construction, and a growing regional economy that supports property values and rental growth. Whether you are acquiring a warehouse near the airport, purchasing a manufacturing facility for your defense contracting business through an SBA 504 loan, or refinancing an existing industrial portfolio along the Powers corridor, understanding the financing landscape is essential to securing the best available terms.
The key to successful industrial financing in Colorado Springs is matching your property profile and investment strategy with the right lending program. Each option carries distinct advantages and requirements, and working with a lending team experienced in the Colorado Springs market ensures you benefit from the most competitive terms available.
Contact Clearhouse Lending to discuss your Colorado Springs industrial financing needs and connect with lenders who understand the unique dynamics of the Pikes Peak region's defense-driven industrial market.