Commercial lending is not limited to shopfronts and office suites. Farmland, warehouses, childcare centres, and residential blocks of five or more units can all serve as security for a commercial loan, though lenders treat each type very differently. Knowing where a property sits on that spectrum matters before signing a contract, because it directly shapes the deposit and the lender options available.
Standard commercial security: offices, retail, and warehouses
The most straightforward category covers office suites, retail shops, showrooms, and industrial warehouses. These are considered standard commercial security because they have broad appeal to future tenants and buyers, and most commercial lenders, including major banks and non-bank lenders, will finance them up to around 65% to 70% loan-to-value ratio.
Within this category, a well-located warehouse in an established industrial precinct or a retail unit in a busy strip typically attracts stronger lending terms than a niche fit-out in a secondary location. On a $1,000,000 warehouse, that difference in LVR can mean a deposit of $300,000 rather than $350,000, a gap worth understanding before making an offer.
Does strata-titled commercial space count?
Yes. A strata-titled office suite or retail unit within a larger building can still be used as security, and is generally assessed the same way as a standalone commercial property. Lenders will look at the strata plan, the body corporate’s financial position, and whether the building has any special levies pending, since a poorly managed strata scheme can affect the property’s resale value. Some lenders also cap how many lots within a scheme a single borrower can hold, so portfolio investors buying multiple units in the same building should check this before making an offer.
Multi-unit residential blocks
A block of five or more residential units on one title is generally treated as commercial security rather than residential, even though the underlying use is housing. This threshold catches a lot of investors off guard, since the same property type that qualifies for a standard home loan at four units switches to commercial lending criteria at five.
Multi-unit blocks are assessed on a mix of rental income and market value, similar to other commercial security, and typically sit in the 60% to 70% LVR range depending on the number of units, location, and condition. Older blocks needing significant capital works can attract more conservative terms than newer stock, and a lender may ask for a building report before approving finance.
Rural and farming property
Farmland, grazing property, and other agricultural land can secure a commercial loan, but it usually sits with specialist agribusiness lenders rather than standard commercial teams, since serviceability depends on farm income, which can be seasonal and variable in a way an office lease is not.
Lenders assessing rural security also weigh water rights, land use zoning, and the property’s productive capacity, not just its market value. LVRs for farming property are often more conservative than for standard commercial real estate, sometimes 50% to 60%, and lenders may want several years of farm income history before approving finance, especially where the land has changed use recently.
What about specialised commercial property?
Assets like childcare centres, service stations, pubs, and medical centres fall into a specialised category. These properties are purpose-built for one type of use, which makes them harder to re-let to a different tenant if things go wrong, so lenders view them as higher risk and typically cap lending lower, often 50% to 60% LVR, with fewer lenders willing to finance them at all.
A specialised property with a strong, long-term tenant on a solid lease can still attract competitive terms. Without that lease strength behind it, the deposit required tends to climb quickly, and the pool of willing lenders shrinks further.
What actually decides the deposit needed
Across every category, three things drive how much deposit a lender will want: how easily the asset could be sold or re-let to someone else, how stable and provable the income from it is, and how experienced the borrower is with that type of commercial property. A first-time buyer of a service station will usually face tighter terms than an experienced investor adding a fourth warehouse to an existing portfolio.
Because GST treatment, land tax, and depreciation rules vary significantly across commercial property types, borrowers should confirm the tax position with their accountant before settling on a structure or a commercial loan type.
Key Takeaways
- Standard commercial security, like offices, retail, and warehouses, typically supports up to 65% to 70% LVR.
- A residential block of five or more units is generally treated as commercial security, not residential.
- Farmland and agricultural property usually sit with specialist agribusiness lenders and attract more conservative LVRs.
- Specialised assets like childcare centres, service stations, and pubs are capped lower, often 50% to 60% LVR.
- The strength of the lease and tenant matters as much as the property type when a lender sets terms.
- GST, land tax, and depreciation rules vary by commercial property type, so confirm the tax position with an accountant.