Commercial Construction Loans

Construction loans fund ground-up development and major renovation projects for commercial real estate. These short-term facilities typically feature 12 to 36-month terms with interest-only payments during the build period, funded through progressive draws as construction milestones are met. Lenders include banks, debt funds, and specialized construction lenders.

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Construction Loans at a Glance

Loan Amount
$1M - $100M+
Term
12 - 36 Months
Rates
6.23% - 13.04%
Ltc
Up to 85% LTC
Structure
Interest-Only, Progressive Draws
Recourse
Recourse Typical, Non-Recourse Available

Ground-Up Construction & Renovation Financing

Construction financing is inherently higher risk than permanent lending, which means lender selection and deal structuring are critical. Experienced borrowers with strong track records can access competitive bank construction loans, while more complex or speculative projects may require debt fund capital. Key considerations include loan-to-cost ratios, interest reserves, completion guarantees, and the exit strategy — whether that's a permanent loan take-out, sale, or refinance.

Lender Sources

  • Banks
  • Debt Funds
  • Private Lenders
  • Credit Unions
  • CDFI Lenders

Ideal For

  • Ground-up apartment developments
  • Industrial warehouse construction
  • Build-to-suit retail and office
  • Hotel development and rehabilitation
  • Fix-and-flip residential projects
  • Major property renovations and repositioning

Construction Loans Transactions

A selection of construction loans we have closed across the country.

Office Building - New York, NY
Construction
$65,000,000
Office Building
New York, NY
Construction financing for a Class A office development in Long Island City, Queens, catering to tech and media tenants seeking modern amenity-rich space with Manhattan skyline views and excellent transit access.
125-Unit Ground Up - Seattle, WA
Construction
$60,000,000
125-Unit Ground Up
Seattle, WA
Ground-up construction financing for a 125-unit luxury apartment development in Seattle's booming residential market.
Multifamily Apartments - Washington, DC
Construction
$55,000,000
Multifamily Apartments
Washington, DC
Construction financing for a 250-unit luxury apartment development in DC’s Navy Yard neighborhood, one of the District’s fastest-appreciating submarkets with a thriving waterfront dining and entertainment scene.
Multifamily Apartments - Miami, FL
Construction
$52,000,000
Multifamily Apartments
Miami, FL
Ground-up construction financing for a luxury 220-unit apartment tower in Miami’s Brickell corridor, one of the nation’s fastest-growing urban submarkets driven by corporate relocations and international capital inflows.
Single Tenant Net Lease - Fairfield, CA
Construction
$43,900,000
Single Tenant Net Lease
Fairfield, CA
Build-to-suit construction for a national credit tenant in Fairfield, combining development returns with investment-grade lease security.
Single Tenant Net Lease - Inglewood, CA
Construction
$43,400,000
Single Tenant Net Lease
Inglewood, CA
Major build-to-suit construction near SoFi Stadium in Inglewood, one of LA's most dynamic development corridors.

Related Property Types

Construction Loans are available for all major commercial property types. Explore financing by property category.

Related Insights

Construction Loans FAQ

Commercial construction loans are short-term facilities (12-36 months) that fund the development of new buildings or major renovations. The loan is drawn in stages as construction milestones are completed, with interest-only payments during the build period. Upon completion, the borrower refinances into permanent financing or sells the property.
Construction loans typically offer 65-80% of total project cost (loan-to-cost or LTC), depending on the lender, borrower experience, and project type. The remaining 20-35% must come from borrower equity, though mezzanine or preferred equity can fill part of the gap.
Most lenders require borrowers to demonstrate relevant development experience for construction loans. First-time developers may need to partner with an experienced co-sponsor or general contractor, or work with private lenders who are more flexible on experience requirements.
Construction loan rates typically range from 6.79% to 13.04%, depending on the lender type and project risk profile. Bank construction loans for experienced developers are at the lower end, while debt fund and private lender rates are higher but offer more flexibility.
A construction-to-permanent loan (or mini-perm) combines construction financing with a built-in permanent loan conversion upon project completion. This eliminates the need to refinance separately, saving time and closing costs, though terms may be less competitive than standalone permanent financing.
Construction loan draws are released based on completed work verified by an independent inspector. The borrower submits draw requests with supporting documentation, the lender's inspector verifies the work, and funds are released (typically within 5-10 business days). An interest reserve is usually built into the loan to cover debt service during construction.

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Contact CLS CRE for a free, no-obligation quote on construction loans. We respond within 24 hours.

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Or call us: 310.758.4042

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