Overview
Commercial Lending Solutions arranged $11,300,000 in construction financing for a speculative Class A industrial distribution facility in Orlando, Florida. The deal required underwriting ground-up, unleased industrial product in a market with a compelling growth story and real absorption risk at the same time. Getting a lender comfortable with both required a disciplined look at the actual lease-up data, not the numbers the sponsor wanted to believe.
The Deal
The sponsor was developing a Class A industrial facility in the Orlando metro, purpose-built to capture last-mile and e-commerce distribution demand along the I-4 logistics corridor. Orlando's consumer population is one of the fastest-expanding in Florida, and the demand drivers for last-mile industrial product in the region are legitimate. The borrower needed construction financing sized to cover hard costs, soft costs, and an interest reserve that would carry the project through completion and into lease-up. No anchor tenant was signed at closing. This was speculative in the true sense of the word.
The loan closed at $11,300,000 structured as a floating-rate construction facility with a term sized to cover the build period plus a realistic lease-up buffer. Loan-to-cost came in consistent with where regional construction lenders are pricing speculative industrial right now, in the range of 65 to 70 percent of total project cost, which forced the sponsor to bring meaningful equity to the table and kept the lender's basis at a level that made a stabilized takeout credible.
The Challenge
The growth story in Orlando industrial is real, but a compelling market narrative does not write the underwriting for you. Several things made this deal genuinely difficult.
First, the speculative profile. Financing a ground-up industrial box without a signed tenant means the lender is underwriting absorption risk on top of construction risk. Those are two separate risk layers, and most lenders who could write this loan size want at least one of them off the table before they engage seriously.
Second, the supply picture in Central Florida is not simple. Orange, Osceola, and Polk County all have speculative pipelines moving through, and industrial vacancy across the metro, while historically tight, is not immune to a wave of concurrent deliveries. The sponsor's pro forma assumed lease-up on a timeline that was optimistic relative to what comparable last-mile product in the submarket had actually achieved over the prior 24 months. Getting a lender to the finish line meant using the market's actual absorption data rather than the developer's preferred assumptions.
Third, Florida's property insurance environment has become a live underwriting issue even for industrial product. Hurricane exposure has driven binders in some cases to pricing that meaningfully affects a project's completion budget and operating pro forma. A mid-construction insurance shock, where a developer locks a budget based on early estimates and then faces materially higher binder costs closer to completion, can create a gap that stresses the loan structure at exactly the wrong moment.
Fourth, the lender universe for this deal was narrower than the sponsor initially expected. Life companies and CMBS conduits generally want stabilized, leased collateral. A speculative ground-up box in construction, regardless of the market quality, is outside their mandate. The deal needed a lender with an active construction book and the appetite to underwrite lease-up risk directly.
The Solution
The answer on absorption risk was to build the underwriting around what the market had actually done, not what the sponsor hoped it would do. We pulled comparable delivery and lease-up data from recent last-mile industrial completions across the Central Florida corridor and sized the interest reserve around a conservative lease-up timeline derived from those comps. That gave the lender a defensible position: if absorption tracks at or near market averages, the stabilized takeout executes within the construction term. The lender did not need to believe an optimistic story. They needed to believe a realistic one.
On the insurance question, we pushed the sponsor to lock a binder early in the process rather than treat it as a closing-week line item. Binder pricing obtained at commitment protected the completion budget from a mid-construction repricing event and removed that variable from the lender's risk conversation entirely.
The right capital source for this deal was a regional bank with an active construction lending book in Florida. That audience understood the market, had the mandate to underwrite speculative industrial at this loan size, and could evaluate the lease-up analysis on its merits rather than disqualifying the deal on profile alone.
The Outcome
The sponsor closed $11,300,000 in construction financing structured around a realistic project timeline, with an interest reserve calibrated to actual market absorption data and insurance costs locked before they became a budget problem. The lender got a deal where the risk assumptions were defensible. The borrower got a capital structure built to survive the lease-up period, not just the construction period. That distinction matters more than most sponsors appreciate until it is too late.