Flex Space Feasibility Study in Washington

Large investor-building loans in Washington

Washington's flex space lending is a story of large tickets in a class that SBA has largely stopped serving. Between FY2017 and FY2026 the agency approved 50 loans for nonresidential lessors, a group covering flex, office and retail investor buildings, worth $62.4 million. The median of $943,150 is 1.57x the class's national median, and the location quotient is 1.20x. Washington ranks 11 of 51 on volume, while the class is placed 20 of 39 within Washington. No single metric in this cell stands apart, so the larger median is a tendency across a small group of loans rather than a proven difference.

The FY2024 lessor note

Lessor loans changed after FY2024, and the change matters more than any ratio here. The yearly record shows 10 loans in FY2017 and 9 in FY2018, then only 3 in FY2024, 0 loans and $0 in FY2025, and 1 loan of $50,000 in FY2026. SBA classes most lessors as passive businesses that are ineligible from FY2024, so recent approvals are not a guide to what a new flex project can obtain. A sponsor planning an investor-owned building should treat the historical totals as evidence of past access, not of present availability, and should ask a lender early whether the structure qualifies at all. Flex owners share an industry code with landlords of offices, shops and event halls, so the class cannot be isolated.

Lenders, programs and places

The central half of loans runs from $442,500 to $1.9 million. SBA 7(a) accounts for 49 of the loans and SBA 504 for only 1, which is unusual for real estate and reflects how few lessor loans SBA now accepts. Franchising reaches 6.0% of loans. Enterprise Bank & Trust leads with 10 loans worth $15.0 million, Columbia Bank has 8 worth $5.4 million and Sound Credit Union has 5 worth $4.4 million. King and Pierce counties each have 10 loans, Clark and Kitsap 5, and Snohomish 4.

Outcomes and the study's job

For the Washington approvals of FY2017 to FY2024 the cancellation floor is 14.3%, and an identical ceiling. The cohort behind the charge-off rate holds 30 loans, just enough to publish, and neither the to-date nor the five-year rate has risen above 0.00%; open loans can still fail, so treat that as a floor. A feasibility study for a Washington flex building has to test tenant demand and lease-up for small industrial and office users, rents against construction or acquisition cost, debt service coverage with vacancy, and an appraisal on stabilised net income. With the lessor channel nearly closed, the study should also present conventional financing alternatives and show how the project survives without an SBA structure.