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Increasing occupancies and other positive fundamentals could be signs of amplified activity in the industrial market. More lenders are reentering the sector every day, so look for increased volume and leverage as the year rolls on.

Rates on an industrial deal will typically fall between 4.75% and 6.25%, depending on LTV and DSC. Loans will go up to 75% LTV with five-, 10- and 20-year terms and 25- to 30-year amortization schedules. The sector shouldn't see one particular dominant player, as pretty much every type of lender wants to get involved, from conduits to community banks. National banks such as Wells Fargo, JP Morgan Chase and BofA will aggressively pursue SBA industrial deals, while LCs such as Northwestern Mutual Life, Thrivent Financial and Principal Real Estate Investors will be more than willing to lend on top-class assets. When assessing an industrial deal, Northwestern Managing Director Greg Walz will focus on the borrower's DSC, refinance rate and desired LTV.

Southern California should be a hotbed of industrial lending activity in the months to come. Softer markets are presenting buyers with many opportunities to pick up industrial properties at a solid value, so don't be surprised if there are a decent amount of acquisition deals in the works. Very few lenders are willing to do construction loans for the time being.

Lenders are currently on the lookout for experienced, financially sound borrowers with a net worth of one to two times the loan amount. Strength of the borrower is typically the biggest factor in an industrial deal, but conservative LTVs will motivate many lenders today, especially banks. Lenders will also hone in on the property's location, design and tenancy. Many prefer working with bigger box space industrial properties, while shying away from special-use properties, non-credit single tenant deals or those involving properties with a high percentage of office space.

One positive change anticipated for the sector down the road is the completion of the widening of the Panama Canal in 2014. As a result, the canal will be able to accommodate larger ships and allow for an increased volume of industrial imports and exports, which should boost port activity for East Coast and Gulf states. But, don't expect demand to get back to where it was in the height until there is a pick up in property acquisitions and new construction.

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