For real estate developers raising capital to develop an office building or mixed use facility, Mid-market list has a large database of commercial real estate lenders to screen in order to create a short list of the firms that are able and willing to fund your project. In addition, we have worked with many of the lenders on our list and know what has expertise in each region and with each asset type. In addition, there are firms that are very conservative and firms that aim to get a higher return and are willing to take on more risk.
If you are a qualified borrower and are raising capital for an office building construction project, fill out the form below and we will shop your deal around to the firms that are most likely to be able to finance the deal.
The interest rates on warehouse and industrial loans are typically slightly lower than they would be for many other real estate development projects (apartment, office, etc.) However, many lenders don’t work with projects in the industry because the returns are lower than with other asset classes. The majority of private money loans that are made for lodging projects and placed with qualified development teams that have a track record of success.
Private money lenders have become popular amongst developers who want to get funded quickly and those that have been denied by traditional banks. However, private money loans are almost always made at a higher interest rates and for shorter terms than loans from traditional financial institutions. This is so that the investors that are behind the loan can still make a suitable return on the project that is in-line with the risk that they are assuming.
Loans made to develop office buildings and mixed use facilities will only be made after the lending institution conducts significant due diligence on the borrower, the project, the location and the region. Their are firms that specialize in loans of various risks and various sizes. Office buildings are historically the most risky type of real estate construction. This is because when business is bad, they are often left vacant at a higher rate than other real estate assets.
There are a handful of construction lenders that specialize in lending for the development of office space.
When selecting a lending company to work with for office building construction, the borrower will likely need to decide how they want to secure the loan and approach companies that work with that type of collateral. The majority of developers that opt to work with private money lenders do so because they will have the ability to sign a non-recourse loan. This means that they don’t have to pledge their house or any other personal property as collateral.
In addition to being comfortable with real estate development as an asset class and more specifically office buildings and mixed use facilities, many lenders will only lend for projects in specific geographic regions or for projects that have certain risk-return metrics that meet their criteria. If you have specifications on your project, share them on the above form and we will find the best lender for you to work with.
While lenders typically elect to lend to seasoned real estate development teams, it is not impossible for novice developers to obtain financing. Newbie sponsors will have to put a higher level of cash into the deal however. This helps the lender mitigate risk as they will then be lending a lower percentage of the projects overall value.
For more general information on commercial real estate development lending, non-recourse debt and loan terms, read our how to get a construction loan article.