Warehouse development finance
Funding for big-box and multi-let warehouse and industrial schemes.
Funding warehouses development
Warehousing has been one of the strongest commercial sectors of the past decade, driven by the growth of online retail and the restructuring of supply chains. Occupier demand for modern, well-located space remains robust, vacancy in prime markets is low, and institutional investors actively chase the completed product. That demand picture gives lenders confidence to fund both speculative and pre-let schemes.
We arrange finance for big-box distribution units, multi-let industrial estates and smaller trade and urban-industrial schemes. A pre-let to a strong covenant transforms the terms available. Even without one, a well-located scheme in a low-vacancy market with a clear institutional exit is among the more straightforward commercial developments to fund.
Scheme types we fund
- Big-box distribution warehouses
- Multi-let industrial estates
- Speculative and pre-let units
- Trade-counter and urban-industrial schemes
Indicative terms
- Loan to costUp to 65 to 70% senior
- Loan to GDVUp to 60 to 65%
- Key testsLocation, vacancy, covenant, exit
- BoostPre-let to a strong covenant
Indicative only. Terms vary by lender, scheme and borrower and are not an offer of finance.
How we fund a warehouse scheme
Warehouse development is funded on senior debt against cost and the completed investment value, with leverage reflecting the strength of demand and any pre-let. Because build programmes are short and the product is in demand, lenders are comfortable funding well-located schemes at competitive leverage, and a pre-let to a strong covenant supports stretch senior or mezzanine to reduce the equity required.
Lender appetite for warehouses
Appetite is broad and competitive across banks, challenger banks and debt funds, reflecting low vacancy and deep institutional demand for the completed asset. Lenders favour prime locations near the strategic road network with good power and access. A pre-let to a strong covenant attracts the keenest terms, while speculative schemes in tight markets remain fundable at slightly lower leverage.
The exit
The exit is typically an investment sale to an institution or a refinance onto investment debt once let, with strong buyer demand for modern, well-located units. Where a unit completes ahead of letting, development exit finance can hold it on cheaper money until a tenant or buyer is secured.
Finance structures that suit this sector
- Senior development financeCore facility for land and build.
- Stretch senior financeHigher leverage on pre-let or prime schemes.
- Mezzanine financeReduces equity on larger multi-let estates.
- JV equityFunds the equity on portfolio or strategic schemes.
Fund a warehouses scheme
A view on fundability within one working day.
What underpins warehouse scheme economics
Warehouse value is set by rent per square foot and the keen yields institutional buyers pay for modern, well-located units. Short build programmes and low vacancy keep risk contained, so lenders model GDV from market or pre-let rent, test it against cost, and treat strong occupier demand and a clear institutional exit as the core of the appraisal.
Indicative warehouse finance rates and leverage
We arrange senior development finance for warehouse schemes to 65 to 70 percent of cost and 60 to 65 percent of GDV, with competitive pricing reflecting the sector's low vacancy and deep buyer demand. A pre-let to a strong covenant supports stretch senior or mezzanine and keener terms.
Frequently asked questions
Can I fund a speculative warehouse scheme?
In a low-vacancy prime market, yes. Lenders will back speculative sheds where the location and occupier demand are strong, usually at slightly lower leverage than a pre-let scheme.
What improves the terms on a warehouse development?
A pre-let to a strong tenant covenant is the single biggest factor. A prime location near motorway or urban distribution networks and a clear institutional exit also materially help.
How quickly can a warehouse scheme be funded?
Warehouse build programmes are short and the product is well understood, so once terms are agreed, valuation and legals tend to move quickly. We shortlist the lenders most active in the sector to keep pace.
How much can I borrow against a warehouse development?
Senior debt typically funds 65 to 70 percent of cost, capped around 60 to 65 percent of value, with stretch senior or mezzanine taking that higher on a pre-let or prime scheme.
Funding a warehouses scheme?
Tell us about your development and we will come back with a view on fundability and likely terms.