Florida is a state with a diverse economy, driven by industries such as tourism, agriculture, and aerospace. The state's population has been growing steadily, with a current estimate of over 21 million residents. This growth has led to a strong demand for commercial real estate, particularly in the multifamily, office, industrial, retail, self-storage, and hospitality sectors.

For investors looking to finance commercial properties in Florida, there are a variety of options available. Traditional banks and credit unions offer commercial real estate loans, as do private lenders and online lenders. The terms and requirements for these loans can vary widely depending on the lender and the type of property being financed.

Economy in Review

Florida's economy has been steadily growing in recent years, with a gross domestic product (GDP) of $1.1 trillion in 2019. The state's unemployment rate was 3.5% in February 2020, according to the Bureau of Labor Statistics. The state's top industries include tourism, agriculture, aerospace, and manufacturing.

The COVID-19 pandemic has had a significant impact on Florida's economy, particularly in the tourism industry. However, the state has been working to reopen businesses and attractions safely, and many industries are beginning to recover.

Multifamily Market

The multifamily market in Florida has been strong in recent years, with high demand for rental properties in many areas. According to the U.S. Census Bureau, the state's population grew by over 14% between 2010 and 2019, which has contributed to the demand for rental housing.

Financing options for multifamily properties in Florida include traditional commercial real estate loans, as well as government-backed loans such as those offered by the Federal Housing Administration (FHA) and the U.S. Department of Agriculture (USDA).

Office Market

The office market in Florida has been impacted by the COVID-19 pandemic, with many businesses transitioning to remote work. However, there is still demand for office space in many areas, particularly in urban centers.

Financing options for office properties in Florida include traditional commercial real estate loans, as well as Small Business Administration (SBA) loans and commercial mortgage-backed securities (CMBS).

Industrial Market

The industrial market in Florida has been strong in recent years, with high demand for warehouse and distribution space. The state's location and transportation infrastructure make it an attractive location for logistics and manufacturing companies.

Financing options for industrial properties in Florida include traditional commercial real estate loans, as well as SBA loans and CMBS.

Retail Market

The retail market in Florida has been impacted by the COVID-19 pandemic, with many businesses closing or transitioning to online sales. However, there is still demand for retail space in many areas, particularly in high-traffic locations.

Financing options for retail properties in Florida include traditional commercial real estate loans, as well as SBA loans and CMBS.

Self-Storage Market

The self-storage market in Florida has been strong in recent years, with high demand for storage space due to the state's population growth and high number of seasonal residents. According to the Self Storage Association, Florida has the third-highest number of self-storage facilities in the country.

Financing options for self-storage properties in Florida include traditional commercial real estate loans, as well as SBA loans and CMBS.

Hospitality Market

The hospitality market in Florida has been impacted significantly by the COVID-19 pandemic, with many hotels and resorts closing or operating at reduced capacity. However, the state's tourism industry is beginning to recover as businesses reopen and travelers return.

Financing options for hospitality properties in Florida include traditional commercial real estate loans, as well as SBA loans and CMBS.

Commercial Real Estate Loans by Purpose

There are many types of loans available for commercial properties in Florida, 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 Florida

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 Florida. 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 Florida

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 Florida. Click to get a free insurance quote for your property — no obligation.

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