Philadelphia's industrial real estate market is experiencing a pivotal moment. With PhilaPort closing 2025 at a record 889,268 TEUs in container volume, a $30 million state investment fueling the Navy Yard's life sciences transformation, and the largest industrial lease of 2025 signed at the Bellwether District for 1.4 million square feet, demand for industrial financing across the Greater Philadelphia region has surged. Whether you are purchasing a warehouse along the I-95 corridor, building a cold storage facility near Philadelphia International Airport, or refinancing a manufacturing plant in Northeast Philadelphia, understanding your industrial loan options is the key to capitalizing on this market.
Need Financing for This Project?
Stop searching bank by bank. Get matched with 6,000+ vetted lenders competing for your deal.
Why Is Philadelphia a Top Industrial Market on the East Coast?
Greater Philadelphia delivered strong industrial leasing activity in 2025, with year-to-date volume climbing 23.5% year-over-year to 8.9 million square feet through Q3. The fourth quarter was the strongest, reaching 6.6 million square feet of leasing activity and marking the highest quarterly total in two years.
Several factors are driving this momentum. Philadelphia sits at the crossroads of the Northeast Corridor, positioned between New York City and Washington, D.C. with direct access to I-95, I-76, and the Pennsylvania Turnpike. This strategic location makes it a natural distribution hub for reaching 40% of the U.S. population within a one-day truck drive.
PhilaPort has emerged as a growth leader among East Coast ports. The port's 6% year-over-year container volume increase in 2025 outpaced overall U.S. trade growth of approximately 3%. Notably, 64% of PhilaPort's containerized imports were refrigerated, making Philadelphia a dominant player in cold chain logistics. The port's Destination 2040 strategic plan calls for tripling container capacity to 3 million TEUs, acquiring new land, and adding hundreds of thousands of square feet of warehouse space.
Meanwhile, the Navy Yard's ongoing transformation is creating an entirely new category of industrial demand. Governor Shapiro's $30 million PA SITES investment is converting 54 acres into shovel-ready sites for advanced manufacturing and life sciences. The district is already home to over 150 employers and 15,000 jobs, with plans to double employment to 30,000 and add 1.3 million square feet of life science manufacturing space.
What Types of Industrial Properties Can You Finance in Philadelphia?
Philadelphia's industrial market encompasses a diverse range of property types, and lenders offer programs tailored to each. Here are the most common industrial assets that borrowers finance across the region:
- Warehouse and distribution centers: The backbone of Philadelphia's industrial market, these range from small-bay facilities under 50,000 square feet in Northeast Philadelphia to large-format logistics hubs exceeding 500,000 square feet along the I-95 and I-476 corridors. Class A properties captured 40.9% of 2025 leasing volume despite representing only one-third of inventory.
- Cold storage and refrigerated facilities: With PhilaPort handling the highest share of refrigerated cargo on the East Coast, cold storage demand is acute. Bristol Group's new 261,000 square foot cold cargo logistics facility at Philadelphia International Airport and Martin Brower's 147,000 square foot warehouse with 57,000 square feet of cold storage in Northeast Philadelphia reflect this trend.
- Manufacturing and life sciences production: From the Navy Yard's advanced therapies corridor to traditional manufacturing in Delaware County, production facilities often require specialized buildouts and environmental considerations that affect loan structuring.
- Flex and light industrial space: Popular in King of Prussia, Bucks County, and the Route 202 corridor, these hybrid properties combine office and warehouse components and serve tech, pharmaceutical, and distribution tenants.
- Truck terminals and intermodal yards: Properties near PhilaPort's marine terminals, CSX and Norfolk Southern rail lines, and major highway interchanges command premium rents from freight and logistics operators.
What Are the Current Industrial Loan Rates in Philadelphia?
As of early 2026, Philadelphia industrial loan rates reflect a stabilizing interest rate environment following the Federal Reserve's rate adjustments in late 2025. Commercial mortgage rates for industrial properties start as low as 5.23% for well-qualified Philadelphia borrowers, though rates vary significantly based on property type, leverage, and borrower strength.
For stabilized industrial properties, conventional commercial mortgage rates in the Philadelphia market range from the low-to-mid 5% range for strong deals to the upper 6% range for properties with higher risk profiles. SBA 504 loans remain popular for owner-occupied warehouses and manufacturing plants, offering below-market fixed rates on the CDC second mortgage with up to 90% total financing.
Bridge loans for value-add industrial plays, including vacant buildings requiring lease-up or properties needing capital improvements, typically range from 7% to 10%. Construction financing for ground-up industrial development has become more expensive, with rates starting around 7.5% as banks have tightened underwriting standards for speculative projects.
Philadelphia's industrial lease rates averaged $8.60 per square foot in 2025, trailing the national average of $8.87, which means properties here may produce slightly lower debt service coverage ratios than comparable assets in pricier markets. Lenders account for this by evaluating the strength of Philadelphia's tenant base and long-term demand fundamentals.
How Do Philadelphia's Industrial Submarkets Compare for Investors?
Greater Philadelphia's industrial landscape spans the city and multiple surrounding counties, each offering distinct advantages for investors. Understanding these differences is critical for both financing and long-term returns.
I-95 Corridor / South Philadelphia: The spine of Philadelphia's industrial market, anchored by PhilaPort's marine terminals and the Bellwether District (formerly the Navy Yard). The region's largest 2025 lease was signed here at 130 S. Fairview Road, where DrinkPak committed to 1.4 million square feet. Direct access to I-95 and I-476 makes this corridor ideal for port-related logistics and distribution.
Northeast Philadelphia: This submarket has seen renewed investment, with Crow Holdings Development planning a 150,000 square foot industrial building on a 14.4-acre site acquired for $8 million. Martin Brower's 147,000 square foot cold storage warehouse at 14515 McNulty Road demonstrates the area's appeal for food logistics operators serving the metro region.
Philadelphia International Airport Area: Proximity to PHL Airport drives demand for time-sensitive freight and cold chain operations. Bristol Group's new 261,000 square foot cold cargo facility with 241,000 square feet of climate-controlled warehouse space positions this submarket as a cold storage hub.
Navy Yard / Bellwether District: The $30 million PA SITES investment and PhilaPort's acquisition of the 152-acre Mustin Yard property from Norfolk Southern are transforming this area into a mixed-use industrial, life sciences, and logistics district. It is the last available land combining deep-water access, rail connectivity, and highway proximity in Philadelphia.
Bucks County (Bensalem, Bristol): Offers more affordable space than the city, with steady inventory for mid-sized industrial users. The Bucks County Industrial Development Authority supports growth through tax-free financing, and the submarket benefits from Turnpike and I-95 access for distribution to the broader Northeast.
Delaware County: Positioned between Philadelphia and the airport, Delaware County serves manufacturing, distribution, and flex tenants. Its proximity to I-95 and SEPTA regional rail makes it attractive for labor-intensive operations.
King of Prussia / Montgomery County: The largest commercial center in Philadelphia's suburbs and the third-largest employment center in the region, King of Prussia has seen over $5 billion invested in economic development projects since 2010. Industrial and logistics development continues at sites like 555 Flint Hill Road, with strong demand from pharma, tech, and distribution tenants.
What Loan Programs Are Available for Philadelphia Industrial Properties?
Borrowers purchasing or refinancing industrial properties in Philadelphia have access to several loan programs, each designed for different scenarios. Here is a breakdown of the most common options:
Conventional Commercial Mortgages: The standard choice for stabilized, income-producing industrial properties. Expect terms of 5 to 10 years with 25-year amortization, LTVs up to 75%, and rates starting in the low 5% range. Lenders focus heavily on the debt service coverage ratio (DSCR) to ensure the property's income comfortably covers mortgage payments.
SBA 504 Loans: Ideal for owner-occupants purchasing or expanding a warehouse or manufacturing facility in the Philadelphia region. The SBA 504 program offers up to 90% financing with a below-market fixed rate on the CDC second mortgage. This program is particularly popular with small manufacturers, food distributors, and logistics companies expanding into new facilities.
Bridge Loans: If you are acquiring a vacant or below-market-occupancy industrial property, a bridge loan provides short-term capital (typically 12 to 36 months) while you stabilize the asset through lease-up or renovation. These are common for value-add warehouse deals in submarkets where speculative buildings need time to attract tenants.
CMBS Loans: For larger industrial portfolios or single-asset deals above $5 million, conduit (CMBS) loans offer competitive fixed rates with terms up to 10 years. These are non-recourse, which is attractive for investors looking to limit personal liability on Philadelphia industrial acquisitions.
Construction Loans: With 32 new warehouse projects breaking ground in Eastern Pennsylvania in 2025, construction financing remains a significant component of the lending landscape. These loans fund ground-up builds and typically convert to permanent financing upon project completion and stabilization. Speculative projects now account for 76% of ongoing industrial construction, so lenders are scrutinizing pre-leasing activity carefully.
What Is the DSCR Requirement for Philadelphia Industrial Loans?
The debt service coverage ratio is one of the most important metrics lenders evaluate when underwriting a Philadelphia industrial loan. DSCR measures the property's net operating income relative to its annual debt service (mortgage payments). A DSCR of 1.25x means the property generates 25% more income than needed to cover the mortgage.
For Philadelphia industrial properties, most lenders require a minimum DSCR of 1.20x to 1.25x for conventional loans. SBA loans may accept slightly lower ratios, while bridge lenders focus more on the projected stabilized DSCR rather than current income.
To calculate your DSCR, divide the property's annual net operating income by the annual mortgage payment. For example, a 60,000 square foot warehouse in Northeast Philadelphia leased at $8.60 per square foot NNN generates $516,000 in gross rent. After operating expenses of roughly $76,000, the net operating income is $440,000. Against annual debt service of $340,000 on a $3.8 million loan at 5.75%, the DSCR comes in at 1.29x, comfortably above the lender threshold.
You can run your own numbers using our DSCR calculator or our commercial mortgage calculator to estimate payments based on current rates.
How Is PhilaPort's Expansion Reshaping Industrial Demand?
PhilaPort's record-breaking 2025 performance and ambitious Destination 2040 strategic plan are fundamentally reshaping the industrial landscape across Greater Philadelphia. The port's 889,268 TEUs in container volume represent 6% year-over-year growth, and the long-term plan to triple capacity to 3 million TEUs signals massive future demand for warehouse and distribution space.
The October 2025 acquisition of the 152-acre Mustin Yard property from Norfolk Southern is a transformative move. Located adjacent to PhilaPort's SouthPort Marine Terminal, Mustin Yard is the last available parcel combining deep-water access, Class I rail service (CSX and Norfolk Southern), and direct highway connectivity in the region. Development of this site will generate demand for supporting warehouse, transload, and distribution facilities throughout the I-95 corridor.
PhilaPort's specialization in refrigerated cargo, with 64% of containerized imports being temperature-controlled, creates outsized demand for cold storage and climate-controlled warehouse space. Cold storage construction costs run $130 to $350 per square foot, two to three times more expensive than standard warehouse construction, which translates to higher loan amounts and more complex financing structures.
The Delaware River's recently completed dredging to 45 feet enables the largest container vessels calling the East Coast to access Philadelphia. Combined with the port's existing CSX and Norfolk Southern intermodal connections, this positions Philadelphia as a true multimodal logistics hub and drives sustained demand for industrial real estate within a 30-mile radius of the port.
What Role Does Life Sciences Manufacturing Play in Philadelphia Industrial Lending?
Philadelphia's life sciences sector is creating a new category of industrial demand that traditional warehouse metrics do not fully capture. The Navy Yard has become ground zero for this transformation, with tenants including Adaptimmune, Iovance Biotherapeutics, Miniaris Advanced Therapies, and the recently relocated Orchestra Life Sciences, which established a Workforce Development Center of Excellence for advanced therapies and radiopharmaceutical manufacturing.
The master plan for the Navy Yard's Greenway District includes 9 million square feet of new development, with a significant portion dedicated to lab and manufacturing space for life sciences companies. Governor Shapiro's $30 million PA SITES investment is preparing 54 acres of shovel-ready sites specifically for advanced manufacturing and commercial use.
For lenders, life sciences manufacturing facilities present both opportunities and challenges. On the positive side, these tenants typically sign longer leases (10 to 15 years), invest heavily in tenant improvements, and operate in an industry with strong growth fundamentals. The challenge is that highly specialized buildouts, including cleanrooms, biosafety containment areas, and specialized HVAC systems, can limit the pool of replacement tenants if the space becomes vacant.
Industrial loans for life sciences manufacturing properties in Philadelphia often require higher loan amounts due to construction costs that can exceed $200 per square foot for specialized lab and production space. Lenders may underwrite these deals with slightly more conservative LTVs (65% to 70%) but compensate with favorable rates given the strength of the tenant credit and lease terms.
What Should You Know About Philadelphia Industrial Rents and Vacancy Trends?
Philadelphia's industrial vacancy rested around 8% in December 2025, roughly flat from the start of the year. This stability came after a period of rising vacancy driven by elevated new supply, with the rate climbing toward 8.7% during Q3 before settling back down as absorption picked up in the fourth quarter.
Leasing activity tells a more positive story. The 23.5% year-over-year increase through Q3 and the strong Q4 finish demonstrate that tenant demand remains healthy, particularly for Class A space. Class A properties captured 40.9% of leasing volume despite representing just one-third of total inventory, signaling that tenants are willing to pay up for modern buildings with higher clear heights, wider column spacing, and greater power capacity.
Average lease rates in Philadelphia reached $8.60 per square foot in 2025, below the national average of $8.87 per square foot. While this relative affordability benefits tenants, it also means Philadelphia offers investors a value proposition compared to pricier Northeast markets like New Jersey's Exit 8A corridor or the Lehigh Valley. Industrial transaction prices in Philadelphia stood at approximately $130 per square foot, just below the national average.
Renewal tenants are facing significant rent escalation. A tenant leasing 25,000 square feet at $6 per square foot in 2019 could see annual rent jump from $150,000 to $235,000 at current market rates, a 57% increase in just five to six years. This rent growth supports strong NOI trajectories for existing landlords and underpins favorable underwriting for refinance transactions.
What Is the Step-by-Step Process for Getting a Philadelphia Industrial Loan?
Securing financing for a Philadelphia industrial property follows a structured process. While timelines vary by loan type, most transactions follow these steps:
The timeline for a conventional commercial mortgage is typically 45 to 60 days from application to closing. SBA 504 loans may take 60 to 90 days due to the dual-approval process. Bridge loans can close in as few as 14 to 21 days when speed is critical for a competitive acquisition.
Working with a lender who understands the Philadelphia industrial market, including submarket dynamics, PhilaPort-related demand drivers, environmental considerations for former industrial and port-adjacent sites, and the nuances of life sciences manufacturing tenants, can significantly streamline the process and improve your terms.
Frequently Asked Questions About Philadelphia Industrial Loans
What is the minimum down payment for a Philadelphia industrial loan?
Most conventional commercial mortgages require 25% to 30% down, resulting in a 70% to 75% loan-to-value ratio. SBA 504 loans allow as little as 10% down for owner-occupied industrial properties, making them an attractive option for manufacturers, distributors, and logistics companies purchasing their own Philadelphia-area facility. Bridge loans typically require 20% to 35% equity depending on property condition and business plan.
Can I finance a vacant industrial building in Philadelphia?
Yes, but your options will differ from a fully leased property. Vacant or below-market-occupancy industrial buildings are best suited for bridge loan programs that underwrite to the property's stabilized value rather than current income. With Philadelphia vacancy at roughly 8%, there is a meaningful pool of vacant or partially occupied buildings that represent value-add opportunities. Once you lease the space and achieve a stabilized DSCR, you can refinance into a lower-rate permanent loan.
How do environmental concerns affect industrial lending in Philadelphia?
Phase I Environmental Site Assessments (ESAs) are required for virtually all commercial loans. In Philadelphia, specific concerns include legacy industrial contamination from the city's manufacturing history, underground storage tanks, former petroleum and chemical facilities, and proximity to the Delaware River waterfront. Port-adjacent and Navy Yard properties may require more extensive Phase II testing with soil and groundwater sampling before lenders will proceed. Brownfield sites can access Pennsylvania's Land Recycling Program (Act 2) for liability protection.
What industrial property sizes are easiest to finance in Philadelphia?
Small to mid-size industrial properties between 10,000 and 100,000 square feet are generally the easiest to finance in the current market. These properties appeal to a broad tenant base and benefit from strong absorption patterns. Lenders are more cautious with speculative big-box warehouses over 200,000 square feet, particularly given that 76% of ongoing industrial construction in the region is speculative and more than 70% of projects over the past three years were built without secured tenants.
How does Philadelphia compare to other Mid-Atlantic industrial markets for investors?
Philadelphia offers a compelling value proposition. At $130 per square foot in transaction prices and $8.60 per square foot in average rents, it is more affordable than the Lehigh Valley, Central New Jersey, and the I-81/I-78 corridor markets. Yet it provides direct port access, Class I rail service, and proximity to major consumer markets that those inland locations cannot match. For lenders, this combination of relative affordability and strong infrastructure translates to more conservative underwriting assumptions and favorable risk-adjusted returns.
Do cold storage properties require different financing than standard warehouses?
Yes. Cold storage facilities cost $130 to $350 per square foot to build, two to three times more than standard warehouses, which means higher loan amounts and different appraisal methodologies. Lenders evaluate the specialized nature of the improvements, the tenant's creditworthiness, and the limited pool of replacement users. However, cold storage properties in Philadelphia command premium rents and benefit from PhilaPort's dominance in refrigerated cargo (64% of containerized imports), which supports strong DSCR metrics and favorable loan terms for well-located facilities.
Ready to Finance Your Philadelphia Industrial Property?
Philadelphia's industrial market offers compelling opportunities for investors and owner-occupants alike, from small-bay warehouses in Northeast Philadelphia to large-format distribution centers along the I-95 corridor and cutting-edge life sciences manufacturing at the Navy Yard. With PhilaPort setting container volume records, the Navy Yard attracting billions in investment, and the region's infrastructure supporting multimodal logistics at a price point below the national average, the fundamentals supporting industrial real estate in Greater Philadelphia remain strong heading into 2026.
Whether you are acquiring your first warehouse, expanding a manufacturing operation, or building a portfolio of industrial assets across the Philadelphia metro, securing the right financing is essential. Contact our team to discuss your Philadelphia industrial loan options and get a customized rate quote for your specific property and investment goals.