For the past five years, originators treated industrial and multifamily as interchangeable Tier 1 assets. Both asset classes had strong demand, both could access capital efficiently, and a clean deal in either category got the same attention from lenders. That parity is broken now.
The divergence is not about investor preference or sentiment. It comes down to a single structural difference: who absorbs rising operating costs.
The Expense Ledger That Decides Who Gets Quoted
Industrial leases are overwhelmingly triple net. The tenant pays taxes, insurance, and maintenance directly. The landlord’s income stays stable even as those costs rise around them. Multifamily runs on gross or modified gross structures instead. The owner absorbs insurance, taxes, and labor costs directly, and those are exactly the line items that have moved the most.
Multifamily insurance costs climbed from roughly $30 per unit per month before the pandemic to $65 per unit per month by late 2023, a 119 percent increase in four years, according to RealPage data. That cost does not get passed to the tenant the way it does on an industrial NNN lease. It hits the owner’s net operating income directly, and it hits the coverage ratio a lender is underwriting to along with it.
That single structural difference is why a clean, stabilized multifamily asset can show DSCR compression that an equally clean industrial asset does not, even when both have strong occupancy and a solid rent roll. When credit committees compare submissions across asset types, industrial packages are arriving with more predictable income trajectories. That makes them easier to approve.
Why are industrial packages moving through credit faster than multifamily right now?
Because industrial tenants on NNN leases absorb the expense increases that multifamily owners take directly to the income statement. When insurance and tax costs rise, the industrial landlord’s NOI does not change. The multifamily landlord’s NOI does. Credit committees are underwriting to that reality.
What a Multifamily Package Needs to Survive Committee
Treat a multifamily trailing 12-month statement with rising operating costs as the signal it actually is. You cannot lead with top-line revenue and hope the expense line does not get a second look. You have to get ahead of it.
The packages moving through committee are the ones that defend the expense ratio before anyone asks about it: current insurance binders, a realistic view of the next property tax reassessment, and an honest accounting of where labor and maintenance costs are trending. Show up without that, and the lender fills in the gap with their own, more conservative assumptions. Those assumptions are rarely in your favor.
The other adjustment that matters: stress-test your own DSCR before submission. Model a 10 to 15 percent increase in operating expenses across the primary cost lines and see where coverage lands. If the deal clears 1.25x under that scenario, the package survives committee scrutiny. If it does not, you need to know that before the lender finds out.
Where Industrial Still Has to Prove Itself
None of this means industrial is friction-free. The NNN structure protects the income statement, but it does not protect against environmental risk, and lenders are not skipping that step because the lease looks clean.
A property without a current Phase I Environmental Site Assessment turns what should be a fast execution into a weeks-long delay. Get that report initiated at intake, not after a lender asks for it. The industrial deals that move quickly are the ones where every piece of required documentation was already in the file before the first submission went out, the same submission discipline that multifamily packages need, just applied to a different set of risk factors.
Routing Them Differently
The teams handling this well are not treating industrial and multifamily as one target list. They are routing each one to the lenders who actually specialize in the risk that asset class carries.
For industrial, that means targeting lenders who are actively looking for supply-constrained infill product and understand the NNN lease structure. For multifamily, it means routing to lenders who are comfortable underwriting through the expense volatility rather than ones who will use it as a reason to pass. Sending a multifamily package to a lender who has been tightening on the asset class wastes the submission. Knowing which lenders are still active on which asset types, and at what price points, determines whether your quote yield goes up or stays flat.
LoanBase platform data tracks active lender appetite by asset type and geography in near real time. When lender appetite shifts, that shift shows up in the routing before it shows up in your rejection rate.
Route by where the risk actually sits, not by which asset class you prefer.
