By Trevor Damyan, Commercial Mortgage Broker at Commercial Lending Solutions
A $5 million cold storage construction loan in Phoenix typically finances a small to mid-size refrigerated warehouse facility (15,000 to 30,000 square feet) at construction cost of $200 to $400 per square foot. Phoenix has emerged as a top cold storage development market driven by Sun Belt food production growth, distribution to California through the I-10 corridor, and a chronic shortage of refrigerated capacity in the Southwest. Most $5M cold storage construction projects fund through SBA 504 for owner-users or specialty industrial banks for investors.
Get a Quote on Your $5M Deal →$5M cold storage construction loans typically combine SBA 504 for owner-users (90 percent LTC at fixed rate) or specialty bank construction for investors (65 to 75 percent LTC floating rate).
Pricing reflects active CLS CRE quote pipeline as of April 2026. Specific deal pricing depends on sponsor, property, and structure.
Typical $5M Phoenix cold storage construction sponsors are mid-market food distributors and processors using SBA 504 for owner-user, or institutional cold storage developers using specialty bank construction. Sponsor experience with cold-chain operations is important. Owner-user sponsors typically have $1M to $5M of net worth supported by their operating business cash flow.
On a $5.4M ground-up cold storage construction in suburban Phoenix, the sponsor was a regional food distributor with 14 years of operating history seeking to vertically integrate cold storage capacity. The 22,000 square foot facility included 18,000 square feet of refrigerated space (35 to 38 degrees F) and 4,000 square feet of dry storage. SBA 504 financed at 80 percent LTC (special-purpose 20 percent down) structured as a 50 percent bank first mortgage at 7.15 percent fixed and a 30 percent CDC second lien at 5.85 percent fixed 25-year. The borrower equity of $1.1M was funded from retained earnings of the operating business. Construction completed in 11 months.
Anonymized. All deal references protect borrower and lender identity.
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