Broker's Guide to Financing Industrial in 2025
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Industrial real estate has become one of the most sought-after asset classes in CRE, thanks to e-commerce, reshoring, and a relentless demand for logistics and storage space. But not all industrial assets are created equal in the eyes of a lender.
This guide, part of our longer series on every type of commercial property, helps brokers understand how to position different industrial subtypes for successful financing.
Why Industrial Keeps Winning
Industrial deals continue to attract capital thanks to their perceived stability, long-term leases, and alignment with macroeconomic trends like online retail and supply chain localization. But investor interest has also driven cap rates down, and lenders are increasingly selective about tenant quality, location, and asset function.
What Counts as Industrial?
Industrial properties are typically used for storage, logistics, light manufacturing, or specialized operations. Most leases are NNN (triple-net), meaning tenants cover property taxes, insurance, and maintenance, reducing landlord risk.
Key Subtypes Brokers Should Know
Warehouse / Distribution
These "big box" properties are the workhorses of the sector. Lenders favor modern facilities with high clear heights, deep truck courts, and strong logistics connectivity. Credit-tenant NNN leases (e.g., Amazon, FedEx) are a major plus.
Cold Storage
Purpose-built for temperature-controlled goods like food or pharmaceuticals, these assets are highly specialized. Because of their expensive buildouts and operational complexity, lenders focus heavily on operator experience and long-term tenant commitment.
Flex Space
A hybrid of office and warehouse space, flex properties serve small businesses that need both functions. Banks and credit unions are common lenders here, but they underwrite conservatively, especially in tertiary markets.
Industrial Land
Land for future development or outdoor storage. Financing is very limited and typically comes from local banks, private lenders, or seller financing. Entitlements and zoning are critical.
RV and Boat Storage
Often grouped with industrial, these assets can be profitable and stable, especially in growth markets. Financing depends on location, tenant demand, and facility type (covered, uncovered, climate-controlled).
Self Storage
While technically a separate asset class, it shares many characteristics with industrial. Most lenders view self storage favorably due to its granular rent roll and recession resistance. Banks, CMBS, and even the SBA play here.
Financing Sources for Industrial Assets
Life Companies
Top choice for Class A warehouses in primary markets, especially with long-term credit tenants. Expect low leverage (65% or less) and very conservative underwriting. Great for borrowers seeking long-term, fixed-rate, nonrecourse debt.
Banks & Credit Unions
Ideal for smaller, transitional, or flex space deals. These lenders offer relationship-driven financing but often require recourse. Prepayment flexibility is typically strong.
CMBS
A good fit for stabilized properties with strong tenants and longer lease terms. CMBS loans are nonrecourse and often offer higher leverage but come with complex servicing and defeasance structures.
Debt Funds
Commonly used for spec development, lease-up, or value-add projects. Debt funds are more expensive but flexible and fast-moving. Often used when banks or life companies won’t play.
SBA Loans
For owner-users or smaller flex/warehouse properties. SBA 504 and 7(a) loans can offer favorable terms and low down payments for qualifying businesses — but note that the owner will need to occupy at least 51% of the property to qualify.
What Lenders Watch Closely
- Tenant Credit: One of the biggest drivers of lender interest. Investment-grade tenants on long-term leases make the deal.
- Building Functionality: Ceiling height, loading doors, and modern specs matter—especially for distribution facilities.
- Location and Access: Proximity to highways, ports, or urban centers boosts value.
- Environmental Risk: Former industrial uses may create contamination risk. Phase I (and sometimes Phase II) environmental assessments are required.
- Single-Tenant Risk: If a building goes dark, the property could sit vacant for a long time. Diversified rent rolls are easier to finance.
Positioning Your Industrial Deal to Win
If you’re financing:
- A large, stabilized warehouse with an Amazon lease: Life co or CMBS debt may offer the best terms.
- A flex space for a local HVAC company: Bank loan with some recourse is more likely.
- A speculative cold storage build in a Tier 2 market: Debt fund or JV equity partner needed.
Every deal is a puzzle. The more clearly you can articulate tenant credit, building specs, and business plan, the more confident a lender will feel. Industrial may be red-hot—but to close, the financing must still make sense.