The Intermediary – August 2026 - Flipbook - Page 50
BRIDGING
Opinion
Industrial
property behind
the headlines
T
he past decade
of UK industrial
property has had one
dominant narrative:
large logistics units,
e-commerce demand,
and institutional capital pursuing
scale distribution. That story is
accurate. It is also incomplete, and
the part it leaves out is where most
broker enquiries in this asset class
actually sit.
The sub-100,000 sq segment,
covering workshops, trade counters
and small distribution facilities,
supports over 2.1 million jobs
in industries that contribute an
estimated £124bn GVA to the
UK economy.
In most UK regions, occupier
demand for this type of stock has
consistently outpaced available supply.
The investor opportunity is therefore
rarely to develop from scratch. It is
to acquire an existing asset where
pricing, vacancy or physical condition
has created a short-term dislocation.
The asset has demand. It needs capital
to make it fit for purpose.
That distinction maers to a broker,
because it changes what the client
requires. In practice, these enquiries
arrive in two forms: an investor with
a vacant or part-let unit and a plan for
it, or a trading business that has been
renting its own premises for years.
A requirement running from
acquisition to stabilisation is not a
term lending requirement, whatever
the client’s eventual intention.
Two scenarios account for most of
these cases.
Repositioning
A significant proportion of existing
smaller industrial stock carries
Energy Performance Certificate (EPC)
D or E ratings. As minimum energy
48
The Intermediary | August 2026
performance requirements tighten,
assets below the threshold cannot be
let without improvement works.
For an investor who can identify
a structurally sound unit in that
position, the refurbishment cost is
oen modest relative to the value
created by returning it to a compliant,
leable condition.
The idea is straightforward: acquire
using short-term finance, carry out
the works, establish a rental income,
then refinance onto a term.
A client describing that plan is
describing a situation that requires a
bridging loan, even if the conversation
opens with a question about a
commercial mortgage.
Owner-occupiers
The second scenario involves a trading
business buying premises it already
occupies. The commercial case is
usually clear to the client and to the
broker. The financing route is not.
Mainstream commercial lenders
typically require a trading history
from the property being financed, and
at the point of acquisition that history
does not exist. The business needs to
own the asset before it can evidence
what the lender wants to see.
Short-term finance closes that
circle: acquire, trade from the
premises, build the record, refinance.
Where an OpCo/PropCo structure
is being adopted, bridging funds the
purchase into the holding vehicle
until the income profile supports a
mainstream refinance.
Sourcing funding
Criteria built for stabilised assets and
established income do what they are
designed to do. Vacant units, assets
requiring refurbishment, owneroccupiers with limited trading history
and newly formed holding structures
JONATHAN CARTIER
is director at Lakeshield
fall outside them. That is how credit
risk is managed at scale, not a flaw in
the mainstream market.
It does mean the gap is structural
rather than occasional. It follows from
the shape of the case, not from how
well the case is presented.
Commercial bridging provides a
route where mainstream criteria do
not reach: it funds the acquisition and
the works, and it allows the time to
build the trading record a term lender
needs to see.
Appetite still varies between
bridging lenders, and the reason is
usually funding. Lenders drawing on
institutional lines can carry allocation
limits on how much commercial
exposure they can hold, whatever the
merits of the individual case.
Lakeshield is funded by private
capital, so an industrial case is read
on the asset and the exit rather than
against a quota.
For a broker, the value sits in
recognising the specifics of the case
early. Where the property and the
client support it, mainstream funding
is the cleaner route.
Where the plan runs from
acquisition through works or trading
to a refinance, knowing which
bridging lenders have real appetite
for industrial is what turns a credible
opportunity into a completed
purchase. ●
