Commercial Property Loans in Minneapolis, Minnesota

Economy in Review

Minneapolis, Minnesota has a diverse economy with a mix of industries including healthcare, finance, and manufacturing. The city has a low unemployment rate and a high median household income compared to the national average. According to the Bureau of Labor Statistics, the unemployment rate in Minneapolis was below the national average at the end of 2020. Additionally, the U.S. Census Bureau reported that the median household income in Minneapolis was higher than the national average.

The COVID-19 pandemic has impacted the economy in Minneapolis, as it has across the country. However, the city has shown resilience and is expected to recover quickly. The city's strong healthcare industry and diverse economy have helped to mitigate some of the economic impacts of the pandemic.

Multifamily Market

The multifamily market in Minneapolis has remained strong despite the pandemic. According to a report by CBRE, the vacancy rate for multifamily properties in Minneapolis was below the national average at the end of 2020. Additionally, rent growth remained positive throughout the year. The demand for multifamily properties is expected to remain strong due to population growth and a limited supply of new construction.

Office Market

The office market in Minneapolis has been impacted by the pandemic as many companies have shifted to remote work. However, there is still demand for office space in certain areas of the city. According to a report by JLL, downtown Minneapolis has seen an increase in demand for office space from technology and healthcare companies. The overall vacancy rate for office space in Minneapolis increased slightly at the end of 2020 but is expected to stabilize as the economy recovers.

Industrial Market

The industrial market in Minneapolis has remained strong throughout the pandemic. According to a report by Colliers, the vacancy rate for industrial properties in Minneapolis was below the national average at the end of 2020. The demand for industrial properties has been driven by e-commerce and logistics companies. The city's central location and strong transportation infrastructure make it an attractive location for these types of businesses.

Retail Market

The retail market in Minneapolis has been impacted by the pandemic as many businesses have had to close or reduce their operations. However, there are still opportunities for retail properties in certain areas of the city. According to a report by Cushman & Wakefield, the demand for retail space in Minneapolis is expected to increase as the economy recovers. The city's strong population growth and diverse economy make it an attractive location for retailers.

Self-Storage Market

The self-storage market in Minneapolis has remained strong throughout the pandemic. According to a report by Marcus & Millichap, the vacancy rate for self-storage properties in Minneapolis was below the national average at the end of 2020. The demand for self-storage properties has been driven by population growth and a limited supply of new construction. The city's strong economy and diverse population make it an attractive location for self-storage investors.

Hospitality Market

The hospitality market in Minneapolis has been impacted significantly by the pandemic as travel restrictions and reduced demand have led to decreased occupancy rates and revenue. However, there are still opportunities for hospitality properties in certain areas of the city. According to a report by CBRE, the demand for hotels in Minneapolis is expected to increase as travel restrictions are lifted and the economy recovers. The city's strong tourism industry and diverse economy make it an attractive location for hospitality investors.

Commercial Real Estate Loans by Purpose

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

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 Minneapolis. 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 Minneapolis

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