Industrial Real Estate Financing: Capitalizing on the Logistics Boom
Industrial real estate has been the strongest-performing commercial property sector for five consecutive years, and 2025 is proving no exception. Lender appetite for industrial assets remains robust, driven by e-commerce growth, nearshoring trends, and structural changes in supply chain management.
Market Fundamentals
Demand Drivers
E-Commerce: Online retail penetration continues to climb, requiring 3x the warehouse space of traditional retailNearshoring: Manufacturing reshoring to North America driving demand for production and distribution facilitiesCold Storage: Growing demand for temperature-controlled logistics from grocery delivery and pharmaceuticalsLast-Mile: Urban infill logistics facilities commanding premium rents and lender attentionSupply Dynamics
New Construction: Moderating from 2023 peaks but still above historical averagesVacancy Rates: National vacancy around 5.5%, well below the 15-year averageRent Growth: 5-8% annually in prime logistics corridorsAbsorption: Net absorption remains positive across most major marketsFinancing Options for Industrial Properties
Traditional Industrial (Warehouse/Distribution)
Agency: Limited — agencies focus primarily on multifamilyBanks: Active lenders, especially for owner-occupied facilitiesLife Companies: Preferred lender for Class A logistics with credit tenantsCMBS: Available for stabilized assets with strong lease profilesSpecialized Industrial
Cold Storage: Specialist lenders and select banks, 55-65% LTV typicalData Centers: Growing lender pool, though underwriting complexity remainsManufacturing: SBA and conventional bank financing, often with shorter termsFlex/R&D: Banks and select life companies for well-located assetsDevelopment Financing
Construction Loans: Banks remain primary source, 55-65% LTCBuild-to-Suit: Pre-leased facilities attract the most competitive termsSpeculative Development: More limited, requiring strong sponsorship and market fundamentalsForward Commitments: Life companies offering take-out commitments for pre-leased developmentTop Industrial Markets for Financing
Tier 1 — Deepest Lender Pools
Inland Empire, CA: Largest US logistics marketDallas-Fort Worth: Central location and infrastructure advantagesChicago: Major intermodal hub with diverse demand driversAtlanta: Southeast distribution hub with strong population growthNew Jersey: Gateway to the Northeast consumer marketTier 2 — Growing Lender Interest
Phoenix: Nearshoring and population-driven demandNashville: Central US location with favorable business climateColumbus, OH: Logistics hub with competitive land costsSavannah, GA: Port-driven demand and development pipelineKey Underwriting Considerations
Tenant Credit
Lenders heavily weight tenant creditworthiness in industrial underwriting:
Investment-Grade Tenants: Best terms and highest proceedsNational Operators: Amazon, FedEx, UPS command premium treatmentMulti-Tenant: Diversification benefit but requires occupancy track recordSingle-Tenant Risk: Longer leases and stronger credit mitigate concentration riskLease Structure
Triple-Net (NNN): Preferred by lenders — tenant covers taxes, insurance, and maintenanceLease Term: Minimum 5-7 years remaining for optimal financingEscalations: Built-in rent increases improve underwritingRenewal Options: Strengthen the long-term income projectionBSA Industrial Advisory
Barrow Street Advisors has arranged over $5 billion in industrial financing across all subtypes. Our platform provides access to lenders with specific industrial expertise and appetite, ensuring borrowers receive competitive terms tailored to their asset profile.
For industrial financing inquiries, contact Barrow Street Advisors.