Commercial Property Loans in Tucson, Arizona

Economy in Review

Tucson, Arizona has a diverse economy with major industries including healthcare, education, and government. The city has experienced steady job growth over the past few years, with the unemployment rate remaining below the national average. The Bureau of Labor Statistics reports that the leisure and hospitality industry has seen the largest job growth in recent years, followed by education and health services.

Multifamily Market

Tucson's multifamily market has remained strong in recent years, with steady demand for rental units. The city's population growth and low homeownership rates have contributed to the demand for rental properties. According to the U.S. Census Bureau, the median gross rent in Tucson is below the national average, making it an affordable option for renters.

Office Market

Tucson's office market has seen some fluctuations in recent years, with vacancy rates increasing slightly. However, the market remains stable overall with new construction projects underway. The city's downtown area has seen significant redevelopment efforts in recent years, attracting new businesses and tenants.

Industrial Market

Tucson's industrial market has experienced steady growth in recent years, with a focus on aerospace and defense industries. The city's proximity to Mexico and major transportation routes make it an attractive location for logistics and distribution companies. The industrial vacancy rate remains low, indicating a strong demand for industrial properties.

Retail Market

Tucson's retail market has seen some challenges in recent years, with the rise of e-commerce impacting brick-and-mortar stores. However, the city's population growth and tourism industry continue to support the retail market. The U.S. Census Bureau reports that Tucson's retail sales have increased in recent years, indicating a resilient market.

Self-Storage Market

Tucson's self-storage market has remained strong in recent years, with a growing demand for storage units. The city's population growth and high number of renters contribute to the demand for self-storage properties. The market remains competitive, with new construction projects underway.

Hospitality Market

Tucson's hospitality market has experienced steady growth in recent years, with a focus on tourism and conventions. The city's warm climate and natural attractions make it an attractive destination for visitors. The U.S. Census Bureau reports that Tucson's accommodation and food services industry has seen steady job growth in recent years. In conclusion, Tucson, Arizona's diverse economy and growing population make it an attractive location for commercial property investment. While each market has its own unique challenges and opportunities, the overall outlook remains positive. Commercial property loans are available for investors looking to capitalize on Tucson's growing economy and real estate market.

Commercial Real Estate Loans by Purpose

There are many types of loans available for commercial properties in Tucson, and the best fit for you depends on your investment strategy. Here are some broad categories of financing available.

Permanent Financing

Permanent financing is a type of loan that remains in place for an extended period of time. It's commonly used to finance the acquisition of commercial properties or to refinance existing debt. Types of permanent financing include bank loans, loans from government-sponsored entities like Fannie Mae and Freddie Mac, HUD loans, credit union loans, loans from life insurance companies, commercial mortgage backed securities (CMBS) loans, and other types of loans depending on the specifics of the commercial property.

Refinancing a Commercial Real Estate Property in Tucson

I wouldn't quite call this a separate type of loan, but I have to mention refinancing in here. These are typically permanent loans (but not always) used to pay down an existing, partially amortizing or interest-only loan.

Often you may be able to time a refinance to happen after an interest rate drop — an ideal solution — but if your loan is maturing during a period of higher rates, you shouldn't stress too much about this. We'll work with you to find the best loan terms for your commercial property by reaching out to potentially thousands of lenders. Just complete the form below, and we'll get to it.

Construction Financing

Construction financing, also known as interim financing, is used to finance the cost of construction for commercial properties. It is usually a short-term loan that covers the cost of land development and building construction. Once construction is completed, the borrower can typically convert this into a permanent loan or pay it off with a new loan.

Bridge Loans

Bridge loans are a type of short-term loan that can be used to cover costs in the interim period between the end of one loan and the beginning of another. They are typically used in commercial real estate to finance the transition between construction financing and permanent financing. Bridge loans generally have higher costs than most other financing options and are often interest-only and non-recourse.

Commercial Real Estate Loans by Type

Depending on the purpose of your loan, you will have several financing options available to meet your investment goals. Read below to learn more about specific loan types.

Bank Loans

Bank loans are a common financing option for commercial real estate in Tucson. They can offer competitive interest rates and flexible terms, but the specifics can vary greatly from bank to bank. While they may not always be the best fit for larger, more complex projects, they can be an excellent option for smaller, simpler properties.

Life Company Loans

Life company loans are typically used to finance high-quality assets in major markets. They generally have lower loan-to-value ratios than most other loan types but offer competitive interest rates and long terms. However, they may not be suitable for riskier projects or properties in less established markets.

Agency Loans

Agency loans, offered by government-sponsored entities like Fannie Mae and Freddie Mac, are typically used for properties that are mostly multifamily. They offer attractive loan terms, low, fixed interest rates, and are non-recourse. However, there are restrictions on the amount of income that can come from other commercial uses.

HUD Loans

HUD multifamily loans are government-backed loans that are primarily used for the construction, substantial rehabilitation, purchase, and refinancing of multifamily properties. These loans offer long-term, non-recourse financing with competitive interest rates but have extensive requirements for qualification.

CMBS Loans

Commercial Mortgage Backed Securities (CMBS) loans are a type of mortgage-backed security backed by commercial real estate loans. Lenders focus more on the strength of the property than the borrower's credit, making them a good option for properties with strong cash flow.

SBA Loans

Small Business Administration (SBA) loans, such as the SBA 7(a) and SBA 504, offer attractive financing options for small businesses. However, the maximum amount for an SBA 7(a) loan is $5 million, while SBA 504 loans can go up to $20 million. They cannot be used for multifamily properties and are only available for properties that the business owner occupies.

Mezzanine Loans

Mezzanine financing is a hybrid form of financing that combines elements of debt financing and equity investment. It is typically used in commercial real estate to fill a funding gap between the primary loan and the total cost of a project.

Commercial Property Insurance in Tucson

This part isn't about loans, but it's just as important to your investment's success. Let's talk (quickly) about insurance.

Insurance premiums have skyrocketed in the past few years, as I'm sure you know. While multifamily gets a lot of the attention, rates for insuring anything from office buildings to shopping centers have jumped significantly.

Janover Insurance Group is dedicated to finding the best insurance solutions for your commercial real estate assets in Tucson. Click to get a free insurance quote for your property — no obligation.