Commercial Lenders – Getting in on the Distribution Craze

Distribution centers seem to be popping up in just about every town and along every highway. Learn a little about this growing segment of CRE and how you can find a commercial lender in order to get in on the latest craze.

You are probably aware of the newest generation’s love of all things online—including shopping. While it may not be the only reason for brick and mortar’s decline, it certainly has contributed. In 2016, online sales of goods accounted for 360.3 billion dollars. By 2021, this figure is expected to rise to 603.4 billion. And, as you know, all these online shops, stores and discounted goods are going to need a home as they crisscross the country—delivery warehouses and distribution centers.

There are various logistics to consider when creating an online presence. While Macy’s is looking to close about 100 stores, their online sales are taking the lead and, while stores are closing, distribution centers are being born. In 2015, it moved into what was once Campbell Soup’s south Sacramento plant, making this location an internet fulfillment center. With Macy’s bringing about 175 warehouse jobs with its presence, Sacramento gave something back in return—a sales tax reimbursement of up to 50 percent. Just two years earlier, Macy’s built a massive 1.3 million-square-foot distribution center near Martinsburg, West Virginia. Commercial lenders are taking notice.

So, what are the different facilities that these online mega-stores require? They need distribution centers which deliver goods to stores and online fulfillment centers which complete online orders—two very different environments. Easy access to the interstate is critical to these facilities as well as a strong labor pool. And while on the subject of a labor pool, another consideration is ease of public transportation for employees as well as affordable housing. So just where are they finding these mega centers?

Warehouses have become the new retail—increasing available capital from commercial lenders.

Real-estate brokerage CBRE pointed out the increase in regional hubs as retailers “bring their supply chains closer to the final mile of distribution.” These locations are determined by their customer’s locations who live within a few hundred miles of these warehouses. Emerging hubs, as determined by CBRE, include Indianapolis, Phoenix, Reno, Central Florida, South Central Pennsylvania, Cincinnati and Bakersfield. It must be very near a hub or major mode of transportation. Some require close proximity to ports. Other important considerations include the impact on the environment.

Warehouses have shown surprising growth and return on investment these last few years, although not too surprising to those in CRE. The Urban Land Institute placed the industrial category at the top for CRE investments in 2016.

So, what’s holding you back? For some, it’s the required capital and a history of being turned down by traditional commercial lenders. If you’re looking to get into this booming segment of CRE, don’t let the past stop you. Call us at Level 4 Funding. We offer loans up to $50 million for warehouses, industrial and distribution centers. Acceptance is based predominantly on collateral, making those with not quite perfect credit scores often pleasantly surprised. In addition, funding can occur in as little as a few days, making it possible to place a quick bid on that property that just came on the market that’s aching to be a fulfillment center. Call us for a no-obligation quote.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.