Flex Space Feasibility Study in Michigan

Michigan flex space: lending that has nearly stopped

Flex space lending in Michigan is a record of the past more than a market of the present. SBA approved 39 nonresidential lessor loans between FY2017 and FY2026, worth $30.8 million, but the yearly counts end with 2 loans in FY2024 and nothing recorded for the two years after. The page carries the FY2024 lessor note: SBA lending to passive lessors nearly stops from FY2024, so recent years read low and the earlier years are the useful ones. The figures describe a closed chapter and not a live pipeline.

In the state ranking Michigan stands 14 of 51, while the class sits 21 of 39 among local industries. The location quotient is 0.67x, and the $415,000 median is 0.69x the nationwide figure. Half of loans fall between $244,350 and $1.1 million. Programs split 37 to 2 in favor of 7(a), with 504 the thin side, and franchising reaches 17.9%. Nothing here clears the distinctness margin except the cancellation record.

A 23.1% cancellation floor

Michigan flex approvals up to FY2024 show cancellation at 23.1% or more, with the ceiling equal. Such a rate is high, and it fits a class where the borrower is often an investor buying a building with a tenant plan that can change. A lender should note that a flex building approval is conditional on lease-up and occupancy, and these can fall apart before closing.

Huntington National Bank alone is named, holding 9 loans and $3.6 million. Wayne County has 11 loans, Oakland 5, Kent 4 and Genesee 3, so Detroit and its suburbs dominate. The peak year was FY2022 with 11 loans worth $5.6 million. No Michigan loss rate is published, as the disbursed group stays below the line.

What a Michigan flex study has to prove

Because SBA lending to this class has nearly stopped, a study must first confirm that financing is available at all, and must plan for conventional capital. Demand means tenants for small-bay industrial, office and showroom space, with rents and vacancy drawn from the submarket and not from statewide averages. Cost covers acquisition, tenant improvements and leasing commissions. Coverage should be tested with a vacancy allowance and rollover. The appraisal needs comparable sales and a clear view of how flex space differs from pure office or retail. The category cannot separate flex from office or retail lessors, so the data blends building types.