Evolving Lending Landscape
Given the strong investor appetite for logistics assets, traditional banks have become extremely active in the logistics market. There has also been shift in the market that has led to increased competition among alternative lenders, such as private debt funds, insurers, and institutional capital providers.
For borrowers, this evolving landscape presents an opportunity to partner with lenders who understand the nuances of the logistics sector and can provide bespoke financing solutions for site acquisitions, new build developments, and asset repositioning strategies.
Rates from 1.5% over base
Fixed Rates as low at 5.8%
Interest Only Structures
Leverages ranges from 50% - 75% LTV
Development lending interest rates from 3% Over Base
Having access to different structured debt facilities is extremely important and is a key way of delivering much high return on equity being deployed. Please see this case study here, £11.5m Industrial Business Park Refinance , which demonstrates how we delivered a higher leverage lending facility on interest only lending structure for our client.
Market Fundamentals Support Lending Confidence
The logistics market continues to benefit from strong occupational demand, particularly for high-specification units near urban centres and major transport links. In 2024, take-up totalled 39.3 million sq ft, driven by a resilient Midlands market and significant commitments from major occupiers such as Amazon, Frasers Group, and B&M. Rental growth remains positive, with prime rents forecast to rise by around 4% in 2025, supported by low vacancy rates and a measured development pipeline.
This robust demand provides lenders with confidence in underwriting logistics schemes, particularly in core locations such as the West Midlands, East Midlands, and key areas along the M1 and M62 corridors. Even with build cost pressures and longer planning timeframes, the fundamentals remain in place to support well-structured financing strategies.
Strategic Lending Considerations
To capitalise on opportunities in 2025, stakeholders in the logistics sector must adapt their approach to borrowing and funding. Below are four key strategic considerations when navigating today’s lending environment:
1. Accessing Broader and More Flexible Capital
With high-street lenders being conservative in their approach to leverage, alternative finance is no longer a niche - it’s a necessity. Challenger banks, private credit providers, pension funds, and insurers are actively seeking to deploy capital into logistics-backed real estate loans, particularly where they see strong rental potential and resilient locations.
2. Understanding Regional Supply and Demand
Each submarket has its own dynamic. Some regions face supply shortages and rising rents; others have seen more speculative development and may carry a higher letting risk. Lenders are increasingly selective, favouring schemes where demand is proven and planning risk is low. Investors who can clearly demonstrate occupier interest, or strong covenant pre-lets, will have a clear advantage when looking at their banking facilities.
3. Prioritising Future-Proofed Assets
Lenders are showing a clear preference for Grade A, sustainable logistics properties. Features like solar PV, BREEAM Excellent ratings, and EV infrastructure are not only attractive to occupiers but also form a key part of a lender’s risk assessment. Financing for outdated or energy-inefficient stock is becoming more difficult to secure - unless accompanied by a strong capex and repositioning plan.
4. Building Agility into Finance Structures
In today’s environment, flexibility is key. Whether it’s the ability to draw down funds in phases, refinance on stabilisation, or adapt exit strategies in response to interest rate changes, having a capital partner who can tailor the structure to your needs is crucial. Lenders are rewarding sponsors who take a proactive, data-led approach to asset management and delivery.
Partner with P10Financial
At P10 Financial, we specialise in sourcing and structuring tailored finance solutions across the logistics real estate market. From funding land acquisitions and forward funding developments to refinancing stabilised income-producing assets, we work with a wide network of institutional and alternative capital providers to secure competitive, creative lending packages.
We understand the operational drivers, planning nuances, and delivery timelines unique to the logistics sector - and we bring that insight to every funding solution we build.
Contact P10 Financial today to learn more about how we can help you understand the UK logistics market and maximise your investments.
