From ground-up development to value-add repositioning, our loans support commercial developers at every stage of their projects.
Commercial property development represents one of the most complex and capital-intensive endeavors in real estate. From ground-up construction of office buildings and retail centers to the repositioning of aging industrial properties for modern uses, commercial developers need financing partners who understand the intricacies of development projects and can provide the flexible capital necessary to see projects through to completion.
At Hard Money Lenders of Phoenix, we specialize in providing construction and development financing for experienced commercial developers throughout Arizona. Our lending team has deep expertise in commercial development projects across all asset classes, allowing us to structure financing that addresses the unique challenges and timelines that development projects present.
The Phoenix metropolitan area continues to experience robust commercial development activity, driven by strong population growth, business expansion, and evolving consumer preferences. Whether you're developing mixed-use projects in Phoenix's urban core, industrial facilities in Mesa to support the logistics boom, or retail centers in Scottsdale's affluent suburbs, we provide the capital foundation that makes ambitious development projects possible.
Service Applications
Commercial developers utilize our financing solutions across a spectrum of project types and development strategies, each requiring tailored approaches to capital structure and risk management.
Ground-Up Development
New construction projects represent the most capital-intensive development activities, requiring financing that accommodates extended timelines and staged funding requirements. Our ground-up development loans provide acquisition financing for development sites, horizontal construction costs for infrastructure and site preparation, and vertical construction funding for building structures. Interest reserves are structured into loans to manage carrying costs during construction.
Value-Add Repositioning
Many of today's most compelling commercial opportunities involve repositioning outdated properties for modern uses, converting obsolete office buildings to residential, updating industrial facilities for e-commerce distribution, or reimagining retail centers as mixed-use developments. These projects require acquisition financing coupled with substantial renovation capital, structured around renovation timelines that minimize downtime and maximize returns.
Speculative Development
For developers with strong market knowledge and pre-leasing capabilities, speculative development can generate exceptional returns. We provide financing for projects where tenant commitments may be pending or partial, evaluating projects based on market fundamentals, developer track record, and conservative underwriting of projected absorption rates.
Adaptive Reuse Projects
Converting historic buildings, industrial facilities, or other non-conforming properties to new commercial uses requires specialized financing that accommodates unique construction challenges, extended timelines, and complex entitlement processes. Our experience with these projects enables us to structure financing that supports the creative problem-solving these developments demand.
Infrastructure and Site Development
Developers often acquire entitled land and need financing to complete infrastructure improvements, roads, utilities, grading, and stormwater management, before selling finished lots or commencing vertical construction. Our land development loans support these activities with terms that align with the progression from raw land to buildable sites.
Challenges We Solve
Commercial developers face financing challenges that differ significantly from those encountered in residential investment, requiring lenders with specialized expertise and flexible capital structures.
Staged Capital Requirements: Development projects require capital delivered in phases aligned with construction milestones. Traditional lenders often struggle with draw administration and verification, causing delays that disrupt contractor schedules and extend project timelines unnecessarily.
Entitlement Risk: Commercial projects frequently face extended entitlement processes involving zoning changes, environmental approvals, and permitting. Traditional lenders view this uncertainty as unmanageable risk, while experienced hard money lenders understand how to structure financing that accommodates entitlement timelines.
Recourse and Guarantee Requirements: Conventional development lenders often demand extensive personal recourse and completion guarantees that expose developers to outsized personal risk. We structure financing based on project merits and developer experience rather than blanket personal guarantees.
Pre-Leasing Requirements: Banks typically require substantial pre-leasing before funding commercial development projects, effectively requiring developers to complete the hardest part of development, tenant procurement, without capital. Our approach evaluates market fundamentals and developer capability alongside existing leasing activity.
Our Approach
Our approach to commercial development financing emphasizes partnership over transaction, recognizing that successful developers need capital partners who understand development cycles and can adapt to changing project conditions.
Experienced Team Evaluation: We evaluate development teams based on demonstrated track records with similar projects, relevant market expertise, and contractor relationships. Strong teams with proven capabilities receive preferred terms and more flexible structures because experience significantly de-risks development projects.
Flexible Draw Administration: Our construction draw process is designed to keep projects moving. We process draw requests quickly, typically within 48 hours of submission, and work with developers to resolve documentation issues without stopping construction progress. This operational efficiency protects project timelines and budgets.
Entitlement Support: For projects in the entitlement phase, we structure financing that accommodates the uncertainty and extended timelines these processes involve. This may include interest reserves, extended terms, or staged funding triggers tied to approval milestones.
Exit Strategy Partnership: We work with developers to plan and execute exit strategies, whether that's lease-up and permanent financing, portfolio sale, or refinancing into long-term capital. Our relationships with permanent lenders and institutional capital sources can help facilitate smooth transitions from construction to stabilized financing.
Phoenix Market
The Phoenix metropolitan area presents exceptional opportunities for commercial development across all property types. As one of the fastest-growing regions in the United States, the Valley continues to demand new commercial space to serve expanding populations and evolving business needs.
Development opportunities are particularly strong in Phoenix's urban core, where adaptive reuse and infill projects transform underutilized properties into modern commercial assets. Suburban markets throughout Scottsdale, Tempe, Chandler, Mesa, Gilbert, and Glendale offer opportunities for retail, office, and industrial development serving established communities. The region's logistics and distribution sector continues to drive industrial development, particularly along transportation corridors connecting Phoenix to regional and national markets.
Our lending team maintains current market intelligence on development activity, zoning changes, and infrastructure investments throughout our service area, providing developers with valuable perspective as they evaluate opportunities and structure projects.
What experience do you require for commercial development financing?
We prefer developers with at least two completed projects of similar type and scale, though we evaluate each opportunity individually. First-time commercial developers may qualify with strong joint venture partners, experienced general contractors, or particularly compelling projects in strong markets. Your experience directly impacts loan terms, with proven developers receiving our most competitive rates and highest leverage.
How do construction draws work for commercial development projects?
Construction funds are held in escrow and released in draws based on completed work. You'll submit draw requests with supporting documentation including lien waivers, inspection reports, and progress photos. We typically process draws within 48 hours of receiving complete documentation. Monthly draws are standard, though we can accommodate accelerated schedules for fast-moving projects.
What loan-to-cost ratios do you offer for development projects?
We typically finance 65-75% of total project costs for commercial development, including land acquisition, hard costs, soft costs, and interest reserves. Exact leverage depends on project type, location, developer experience, and pre-leasing status. Highly experienced developers with strong track records may qualify for up to 80% loan-to-cost on exceptional projects.
Can you finance projects that haven"t secured full leasing commitments?
Yes, we regularly finance speculative development and projects with partial leasing. Our underwriting evaluates market fundamentals, absorption rates, comparable lease transactions, and the developer"s leasing capability rather than requiring pre-leasing commitments. However, projects with significant pre-leasing receive preferential terms reflecting reduced market risk.
What are typical terms for commercial development loans?
Our commercial development loans typically range from 12-36 months with interest rates of 11-14% and 2-4 points. Terms accommodate construction timelines plus lease-up periods before stabilization. Interest-only payments during construction are standard, with some loans structured to capitalize interest until project completion.
Financing solutions for Commercial Property Developers.
Share your goals and timeline. We will help map a financing route with clear decision points.