Medical Office Feasibility Study in Alabama

Alabama medical offices: cancellation is the headline

Medical office lending in Alabama looks typical in size and unusual in cancellations. The $350,000 median is 1.02x the nationwide figure, with the central half stretching between $150,000 and $756,350. SBA approved 51 loans across FY2017 to FY2026 worth $32.3 million, ranking the state 30 of 53, and the class holds 10 of 39 among Alabama industries. A location quotient of 0.91x puts physician offices just under their national weight. Nothing clears the distinctness margin, so cancellations at 23.3% matter most for readers. Because the class is not otherwise unusual, a reader can borrow the state and national pages for color on practice economics, then turn to this page for what the cancellation record means for timing and for the cost of a failed closing.

Alabama shows a cancellation floor of 23.3% through FY2024, with the ceiling identical. A lender sizing a medical office pipeline should expect real attrition between approval and closing, where physician recruitment, build-out bids and landlord approvals often move. A sponsor should treat approval as a step and not a closing.

Development companies and 504

Under 7(a) fall 34 loans and under 504 fall 17, a substantial real estate share. Southern Development Council holds 8 loans and $8.1 million, and Birmingham Citywide Local Development Company holds 6 loans and $9.9 million, a larger ticket per loan. Franchising is 0.00%.

Jefferson County has 8 loans, Madison and Shelby 6 each, Mobile 5 and Montgomery 4. FY2020 produced 10 loans worth $8.9 million and FY2021 produced 8 worth $10.5 million, after which counts dropped to 2 in FY2022. FY2024 brought 10 loans worth $3.0 million. Alabama's disbursed group is below 30, so no loss rate appears.

Diligence for an Alabama practice

A study should first confirm the physician arrangement: employed, partner or tenant, and what happens if the doctor leaves. Demand means patient base, referral ties and payer contracts in a state with many rural counties. Cost covers shell, exam rooms and equipment. Coverage should be modeled on collections with a ramp. The appraisal should value the building for other medical or office users, because a lender relying on a single practice carries concentration risk.