Henderson's commercial construction market is among the most active in the Western United States, fueled by rapid population growth, expanding infrastructure, and Nevada's business-friendly development environment. From multifamily apartment communities in Inspirada to industrial warehouses in the West Henderson corridor, ground-up commercial development is reshaping the city's landscape and creating substantial opportunities for developers who understand the construction lending process.
Construction loans for Henderson commercial projects carry higher rates and more complex structures than permanent financing, reflecting the development risk that lenders must evaluate. However, Henderson's strong market fundamentals, including population growth of approximately 8.2% annually, low vacancy across most property types, and sustained absorption of new inventory, give construction lenders confidence in the demand side of the equation. This guide covers the full spectrum of construction financing options for Henderson commercial development.
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What Types of Construction Loans Are Available for Henderson Projects?
Henderson commercial construction financing varies by project type, developer experience, and the lending source. The primary construction loan programs each serve different project profiles and developer needs.
Bank construction loans from regional and national banks represent the most common financing for Henderson commercial development. Rates range from 7.5% to 9.0% with loan-to-cost ratios of 70% to 80%, meaning the developer must contribute 20% to 30% equity. Banks require full personal recourse guarantees, extensive documentation including architectural plans, cost breakdowns, market studies, and developer resumes, and impose strict draw inspection requirements. The advantage is competitive pricing and the potential for the same bank to provide permanent take-out financing at loan maturity.
Debt fund construction loans from specialized real estate debt funds offer higher leverage and more flexible terms than bank programs. Rates of 9.0% to 10.5% with loan-to-cost up to 80% provide larger proceeds, and non-recourse options are available for experienced developers with strong project economics. Debt funds are typically more comfortable with out-of-state sponsors, larger projects, and development in emerging Henderson submarkets where banks may be more conservative.
SBA 504 construction loans provide the most advantageous terms for Henderson owner-occupants building their own commercial facilities. With as little as 10% equity, a below-market fixed rate on the SBA portion, and combined financing up to 90% of total project cost, SBA 504 is the premier construction financing option for Henderson businesses. The program serves manufacturers, distributors, medical practices, and other businesses that will occupy the completed building.
Hard money construction loans from private lenders serve Henderson projects that cannot qualify for bank or debt fund programs, whether due to the developer's experience level, property type, or project complexity. Rates of 10% to 13% with loan-to-cost of 60% to 70% are expensive but provide access to construction capital for developers who can demonstrate a viable project in a strong Henderson location.
How Do Construction Loan Draws Work for Henderson Projects?
Construction loan draws are the mechanism through which loan proceeds are disbursed as the project progresses. Unlike a term loan where the full amount is funded at closing, construction loans fund incrementally as work is completed and inspected.
The typical Henderson construction loan draw process works as follows. The developer submits a monthly draw request detailing the work completed since the last draw, supported by contractor invoices, lien waivers from subcontractors and suppliers, and photographs of completed work. The lender's construction inspector, typically a third-party engineering firm, visits the Henderson project site to verify that the reported work is complete and matches the approved plans and budget.
Once the inspector certifies the work, the lender approves the draw and releases funds, typically within five to ten business days. The draw amount corresponds to the percentage of the approved budget line items that have been completed. For example, if the approved budget allocates $500,000 for foundation work and the inspector confirms 100% completion, the full $500,000 is released for that line item.
Interest accrues only on the drawn balance, not the full loan commitment. This is a significant cost advantage during the early stages of construction when only a portion of the loan has been funded. On a $10 million Henderson construction loan at 8.5%, interest on the first draw of $1.5 million costs approximately $10,625 per month, versus $70,833 per month if the full loan were funded.
Retainage of 5% to 10% of each draw is held back by the lender until substantial completion, creating a reserve that ensures contractors complete punch list items and the project meets all specifications. The retainage is released after the City of Henderson issues the certificate of occupancy and the developer confirms all construction obligations are satisfied.
What Are Construction Costs Like in Henderson?
Construction costs in Henderson have increased significantly since 2022, driven by labor market constraints, material price inflation, and the high volume of development activity across Southern Nevada.
Multifamily construction costs in Henderson range from approximately $225 per square foot for wood-frame apartment buildings to $300 per square foot for concrete and steel mid-rise construction. A 100-unit wood-frame apartment community with an average unit size of 850 square feet costs approximately $19 million to $22 million to build, including site work, amenities, and soft costs.
Industrial and warehouse construction is the most cost-efficient at approximately $125 per square foot for tilt-up concrete construction with 32-foot clear heights. A 100,000 square foot Henderson warehouse costs approximately $12.5 million to build, making industrial development attractive for developers who can secure pre-leasing from distribution and logistics tenants.
Retail construction costs approximately $200 per square foot for strip center and pad site development, though costs vary significantly based on tenant build-out requirements. Restaurant-anchored retail with commercial kitchen infrastructure can exceed $300 per square foot.
Medical office construction is the most expensive at approximately $350 per square foot, reflecting the specialized mechanical, electrical, plumbing, and build-out requirements of healthcare facilities. The premium construction cost is offset by significantly higher rents and tenant stickiness.
Labor availability is a persistent challenge in Henderson construction. The Las Vegas Valley's active development pipeline creates competition for skilled trades, and contractors often manage multiple projects simultaneously. Developers should vet general contractors carefully, verify bonding capacity, and confirm that the GC has sufficient labor resources committed to the Henderson project.
Where Are the Best Development Opportunities in Henderson?
Henderson's development landscape offers opportunities across multiple submarkets, each with distinct product types, demand drivers, and land cost profiles.
West Henderson represents the most active commercial development zone in the city. The industrial corridor's expansion creates demand for warehouse, manufacturing, and distribution facilities. Retail and service commercial development is following the industrial growth. Land costs of $400,000 to $800,000 per acre are significantly below Henderson's established residential areas, making development economics more favorable. Infrastructure improvements including road widening, utility extensions, and Interstate 11 connectivity are supporting continued development.
Inspirada and South Henderson are experiencing rapid residential growth that creates derivative demand for multifamily, retail, medical office, and service commercial development. Land costs of $600,000 to $1.2 million per acre reflect the premium location and established infrastructure. Developers building multifamily communities in this area benefit from proximity to top-rated schools, parks, and the master-planned amenity package that attracts high-quality tenants.
Water Street District presents Henderson's most compelling mixed-use development opportunity. The downtown revitalization has created a walkable urban environment that supports residential, retail, restaurant, and entertainment development. Land costs of $1.5 million to $3.0 million per acre reflect the urban location and infrastructure investment. The city's commitment to public realm improvements, parking structures, and event programming supports the long-term viability of new development in the district.
Henderson Executive Airport area is an emerging development opportunity zone. The airport's proximity to Interstate 11 and US Highway 95 creates logistics and industrial demand, while the surrounding area has available land for commercial and mixed-use development.
What Do Construction Lenders Require from Henderson Developers?
Construction lenders evaluate Henderson development projects through a rigorous underwriting process that assesses both the project's feasibility and the developer's ability to execute.
Developer experience is the threshold qualification. Most Henderson construction lenders require the developer to have completed at least three to five comparable projects. A developer seeking a loan for a 120-unit Henderson apartment community needs to demonstrate prior experience building and stabilizing similar multifamily projects. First-time developers can qualify by partnering with experienced development managers or general contractors who bring the required track record.
Equity contribution requirements range from 20% to 30% of total project cost. The equity must typically be cash or unencumbered land value, not subordinate debt or credit lines. A $15 million Henderson development project requires $3 million to $4.5 million in developer equity.
Pre-leasing or pre-sales may be required for certain Henderson project types. Retail and office construction loans commonly require 40% to 60% pre-leasing before the lender will fund the first draw. Multifamily projects in strong Henderson locations may not require pre-leasing, but demonstrating strong market demand through a third-party market study is essential.
Post-close liquidity requirements ensure the developer can fund cost overruns and carry costs during the construction period. Most lenders require the developer to demonstrate liquidity equal to 10% of the loan amount after closing. On a $10 million construction loan, this means $1 million in accessible liquid assets.
Guarantor net worth and liquidity covenants extend to all personal guarantors on the construction loan. Lenders typically require guarantor net worth equal to or exceeding the loan amount and liquidity of 10% to 20% of the loan amount maintained throughout the construction period.
How Does the Henderson Permitting Process Affect Construction Timelines?
The City of Henderson's permitting and entitlement process directly impacts construction loan timelines, costs, and overall project feasibility. Understanding this process is essential for developers planning Henderson commercial projects.
Henderson's Community Development and Services Department oversees the entitlement, plan review, and permitting process for commercial construction. Entitlements, including zoning verification, conditional use permits, and site plan approval, can take three to nine months depending on the project's conformance with existing zoning and the complexity of required public hearings.
Plan review for commercial construction typically takes four to eight weeks from submission to approval, assuming no significant revisions are required. Henderson's plan review process evaluates structural, mechanical, electrical, plumbing, fire protection, and accessibility compliance. Projects that require multiple revision cycles can experience delays of two to four additional weeks per cycle.
Building permits are issued after plan approval and payment of permit fees. Henderson permit fees vary by project value and type but typically range from 1% to 3% of construction cost. Impact fees for transportation, parks, police, and fire infrastructure add additional per-unit or per-square-foot charges.
Construction lenders factor Henderson's permitting timeline into their underwriting. Loans are typically structured so that the construction period begins after all permits are in hand, avoiding the risk of funding a project that encounters permitting delays. Some lenders will fund land acquisition and soft costs before permits are issued, with the balance of construction draws contingent on permit approval.
What Is the Permanent Financing Exit Strategy for Henderson Construction Loans?
Every Henderson construction loan requires a clear permanent financing exit strategy, and the strength of this exit directly influences the construction lender's willingness to fund the project.
Multifamily construction in Henderson benefits from the broadest range of permanent take-out options. Agency loans through Fannie Mae and Freddie Mac provide the most competitive permanent rates for stabilized Henderson apartment communities, starting around 5.25% to 5.75% with up to 80% LTV and terms of 5 to 30 years. The transition from a construction loan at 8% to 9% to agency permanent debt at 5.5% dramatically reduces debt service and unlocks cash flow for the developer.
Industrial construction projects in the West Henderson corridor exit into conventional commercial mortgages or CMBS loans, particularly when pre-leased to creditworthy distribution or manufacturing tenants. Permanent rates of 5.75% to 7.25% with terms of 5 to 10 years are available for stabilized Henderson industrial properties. Visit our permanent loan programs page for details.
Retail and mixed-use construction projects exit into conventional, CMBS, or DSCR financing depending on tenant quality and stabilization level. Properties with national credit tenants on long-term leases receive the most competitive permanent terms.
SBA 504 construction loans have a built-in permanent financing structure. The SBA portion converts to a long-term fixed-rate permanent loan at construction completion, eliminating the need for a separate permanent refinance. This seamless transition is one of the key advantages of the SBA 504 program for Henderson owner-occupant construction.
Use our commercial mortgage calculator to model the transition from construction financing to permanent debt for your Henderson project.
Frequently Asked Questions About Construction Loans in Henderson
What is the minimum project size for a Henderson construction loan?
Most bank construction lenders set minimum loan amounts at $1 million to $2 million for Henderson commercial projects. Debt fund construction lenders typically start at $5 million. SBA 504 construction loans can start at lower amounts for owner-occupied projects. Smaller Henderson construction projects under $1 million may need to use local bank portfolio loans or hard money construction financing.
How much equity do I need for a Henderson construction project?
Equity requirements range from 10% for SBA 504 owner-occupied projects to 20% to 30% for conventional bank and debt fund construction loans. A $10 million Henderson multifamily development typically requires $2 million to $3 million in developer equity. Land value can often count toward the equity requirement if the developer already owns the site, provided the land is unencumbered or has minimal existing debt.
Can I get a construction loan in Henderson without development experience?
First-time Henderson developers face significant challenges securing construction financing from institutional lenders. The most effective approach is to partner with an experienced development manager, hire a general contractor with a strong Henderson track record, or start with smaller projects funded through hard money or portfolio lenders. Building a track record of two to three successful projects opens access to competitive bank and debt fund construction programs.
How long does a Henderson construction loan term last?
Henderson commercial construction loan terms typically range from 12 to 30 months depending on project type and complexity. Industrial warehouse projects may need only 12 to 15 months. Multifamily apartments typically require 18 to 24 months. Mixed-use projects with complex phasing may need 24 to 30 months. Most construction loans include one to two extension options of three to six months each for an additional fee.
What happens if my Henderson construction project goes over budget?
Cost overruns are a significant risk in Henderson construction. If the project exceeds the approved budget, the developer must fund the overage from personal equity, as the construction loan amount is fixed at closing. This is why construction lenders require post-close liquidity of 10% or more of the loan amount and why developers should build 10% to 15% cost contingencies into their budgets. Severe cost overruns can exhaust the developer's reserves and jeopardize project completion.
Do I need pre-leasing for a Henderson construction loan?
Pre-leasing requirements depend on the property type. Henderson multifamily construction loans generally do not require pre-leasing in strong submarkets, though a market study demonstrating demand is required. Retail and office construction loans typically require 40% to 60% pre-leasing before the lender will close. Industrial construction loans may require a single anchor pre-lease covering 50% or more of the building. SBA 504 construction loans for owner-occupied projects require the borrower's occupancy commitment as the primary pre-lease.
Contact Clearhouse Lending to discuss construction financing for your Henderson commercial development project and receive preliminary terms based on your project specifications.