A logistics hub is not just a large shed.
The distinction matters when you approach a lender. These properties combine warehouse space, office facilities, loading bays, hardstand areas for trucks, and sometimes cold storage or specialised equipment. Each element affects how lenders assess the property, the loan amount they'll approve, and the collateral requirements they'll apply. Understanding this before you make an offer can change which properties you pursue and how you structure your purchase.
How Lenders Value Mixed-Use Industrial Properties
Commercial property valuation for logistics facilities considers income potential, zoning flexibility, and tenant quality separately from standard warehouse space. A 2,000 square metre facility in Geelong's northern industrial precinct might be valued differently than an identical building closer to the Port of Geelong, purely based on access to freight routes and proximity to the Ring Road.
Consider a buyer who found a logistics hub listed at $3.2 million in the Bellarine Peninsula's industrial zone. The property included 1,800 square metres of warehouse space, 200 square metres of office area, and hardstand for eight B-double trucks. The buyer assumed a commercial LVR of 70% would apply, expecting to borrow $2.24 million with a $960,000 deposit. The lender's valuer separated the components: the warehouse at $1.8 million, the office fitout at $400,000, and the hardstand at $1 million. They then applied different lending ratios to each component because office fitouts can become obsolete and hardstand areas require ongoing maintenance that affects resale value. The actual loan offer came in at $2.08 million, requiring an additional $160,000 in equity the buyer hadn't prepared for.
Loan Structure for Properties With Tenant Improvements
When a logistics hub comes with existing tenants or requires modifications for a specific operator, your loan structure becomes more complex than a standard commercial property loan. Lenders distinguish between the base property value and tenant-specific improvements.
If you're purchasing a facility already fitted with refrigeration systems, racking, or specialised loading equipment, the lender will want to know whether those assets are removable or fixed, and whether they hold value for a future tenant if your current operator leaves. Removable equipment typically attracts lower loan amounts because it doesn't enhance the property's base value. Fixed improvements may increase the valuation but can also narrow the pool of potential tenants, which some lenders view as added risk.
This affects your deposit size and whether you'll need mezzanine financing to cover the gap between what the property costs and what the lender will advance against its assessed value.
Variable Interest Rate Versus Fixed for Industrial Holdings
Most commercial finance for logistics properties settles on either a variable interest rate or a fixed term of three to five years. The choice depends less on rate predictions and more on your business plans for the facility.
A variable rate with redraw keeps your options open if you plan to add infrastructure, expand the building, or refinance within a few years. Many lenders structure industrial property loans with progressive drawdown options, which let you access additional funds as you complete improvements without needing to refinance the entire loan. If you're buying the property as a long-term hold with an established tenant on a five-year lease, a fixed interest rate aligns your loan cost with your income certainty.
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Why Ocean Grove Buyers Look at Geelong's Industrial Zones
Ocean Grove's commercial property market centres on retail and professional services. Residents running logistics, distribution, or manufacturing operations typically look toward Geelong, Corio, or Lara for warehouse space and industrial land. The distance matters less than the zoning and transport access, but it adds complexity to your finance application if you're borrowing as an individual rather than through a company structure.
Lenders assess owner-occupied commercial properties differently from investment holdings. If you live in Ocean Grove and operate a business from a logistics hub 20 kilometres away in North Geelong, some lenders will classify this as an investment, affecting your loan amount and the interest rate applied. Others recognise it as business property finance if the facility is essential to your operations, which can improve your borrowing terms. The distinction hinges on how you present the purchase and whether your business structure supports the classification.
Land Acquisition Versus Established Facilities
Buying commercial land to build a purpose-designed logistics hub follows a different lending path than purchasing an established facility. Land acquisition loans typically require a larger deposit, often 40% to 50%, because undeveloped land generates no income and lenders can't assess tenant quality or rental yield.
If you're considering a build-to-suit option, you'll likely need both a land acquisition loan and a separate construction loan with staged payments tied to building progress. Some lenders offer combined facilities, but the structure remains sequential: land purchase first, then construction finance as works begin. Each stage requires separate valuations and loan approvals, which extends your timeline and increases your upfront capital requirement compared to buying an operating facility with tenants already in place.
Flexible Repayment Options That Match Seasonal Cash Flow
Logistics and distribution businesses often experience seasonal revenue swings. A facility serving retail clients may see peak activity from August through December, then quieter months in the first quarter. Loan structures that allow flexible repayment options, such as interest-only periods or the ability to make additional repayments without penalty, help align your loan commitments with your business cycle.
A revolving line of credit attached to your commercial mortgage lets you access equity for working capital needs, such as buying new equipment or upgrading existing equipment during expansion phases. Not all lenders offer this on industrial property loans, and those that do typically require a loan-to-value ratio below 60% before they'll attach a credit line. If this flexibility matters to your business, it should influence which lenders you approach before you sign a contract on the property.
What Kardinia Finance Brings to Industrial Property Purchases
We access commercial loan options from banks and lenders across Australia, which matters when you're buying a property type that doesn't fit standard lending criteria. A logistics hub with multiple tenants, specialised infrastructure, or a location outside metropolitan centres often needs a lender who understands industrial property and writes loans based on the asset's operational value, not just its bricks and mortar.
We work with Ocean Grove clients who need commercial real estate financing for facilities across the Geelong region, and we structure applications to match how you'll use the property and how your business generates income. That preparation makes the difference between a loan offer that works and one that forces you to renegotiate your purchase terms.
Call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
How do lenders value a logistics hub differently from a standard warehouse?
Lenders separate a logistics hub into components such as warehouse space, office areas, and hardstand, then apply different lending ratios to each based on income potential and resale flexibility. Tenant-specific improvements like refrigeration or racking may attract lower loan amounts if they don't add broad market value.
What deposit do I need for a logistics hub purchase?
Most lenders require 30% to 40% deposit for established logistics facilities with tenants in place, though the exact amount depends on the property's location, tenant quality, and how the valuer assesses mixed-use components. Undeveloped industrial land typically requires 40% to 50% deposit.
Should I choose a variable or fixed interest rate for industrial property?
Variable rates suit buyers planning property improvements or refinancing within a few years, often with redraw or progressive drawdown options. Fixed rates work better for long-term holds with established tenants where income and loan costs can be aligned over three to five years.
Can I buy a logistics hub in Geelong if I live in Ocean Grove?
Yes, though lenders may classify the purchase as an investment property if you don't operate the business from the facility, which affects your loan amount and interest rate. Presenting it as business property finance through the right loan structure can improve your borrowing terms.
What is mezzanine financing and when is it used for logistics properties?
Mezzanine financing is a secondary loan that covers the gap between the primary lender's loan amount and the purchase price when the property's valuation doesn't support the full borrowing required. It's common when a logistics hub includes tenant-specific improvements or equipment that lenders value differently from the base property.
