Economy in Review

Philadelphia, Pennsylvania is a bustling city with a diverse economy. The city is home to several Fortune 500 companies and has a strong presence in the healthcare, education, and financial services industries. The unemployment rate in Philadelphia has been steadily decreasing over the past few years, indicating a healthy job market.

The city's economy has also been boosted by an increase in population and a rise in median household income. These factors have contributed to a growing demand for commercial real estate, particularly in the multifamily market.

Multifamily Market

The multifamily market in Philadelphia has been thriving in recent years. The city's growing population and strong job market have led to an increase in demand for rental properties. According to the U.S. Census Bureau, the vacancy rate for rental properties in Philadelphia is lower than the national average.

Developers have responded to this demand by building new apartment complexes throughout the city. As a result, rental rates have increased, making Philadelphia an attractive market for investors looking to finance commercial property loans.

Office Market

The office market in Philadelphia has also seen growth in recent years. The city's strong presence in the financial services industry has led to an increase in demand for office space. Additionally, several large companies have relocated their headquarters to Philadelphia, further driving demand for office space.

Despite this growth, there is still ample opportunity for investors to finance commercial property loans for office buildings in Philadelphia. The city has several underutilized office buildings that could be renovated or repurposed to meet the growing demand for office space.

Industrial Market

The industrial market in Philadelphia has been steady over the past few years. The city's location on the East Coast makes it an attractive location for logistics and distribution companies. Additionally, the city has several large industrial parks that offer ample space for manufacturing and warehousing operations.

Investors looking to finance commercial property loans for industrial properties in Philadelphia should consider the city's proximity to major transportation hubs, including the Port of Philadelphia and Philadelphia International Airport.

Retail Market

The retail market in Philadelphia has seen some challenges in recent years, with several large retailers closing their doors. However, the city's strong tourism industry has helped to offset these losses. Philadelphia is home to several popular tourist attractions, including Independence Hall and the Liberty Bell.

Investors looking to finance commercial property loans for retail properties in Philadelphia should consider properties located near these tourist attractions, as well as in popular shopping districts like Rittenhouse Square and Chestnut Hill.

Self-Storage Market

The self-storage market in Philadelphia has been growing in recent years. The city's population growth has led to an increase in demand for storage space. Additionally, several large universities in the area have created a need for storage space for students during the summer months.

Investors looking to finance commercial property loans for self-storage facilities in Philadelphia should consider properties located near universities and residential areas with high population density.

Hospitality Market

The hospitality market in Philadelphia has been strong in recent years, thanks in part to the city's thriving tourism industry. The city is home to several large hotels and convention centers that cater to both business and leisure travelers.

Investors looking to finance commercial property loans for hospitality properties in Philadelphia should consider properties located near popular tourist attractions and convention centers.

Commercial Real Estate Loans by Purpose

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

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 Philadelphia. 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 Philadelphia

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