Medical Office Feasibility Study in the Houston-Pasadena-The Woodlands, TX Metro Area

Sixth of 488 areas, yet only eighth locally

Houston-Pasadena-The Woodlands ranks 6 of 488 areas for physician-office loans, while the class sits eighth of 39 inside the area. Over FY2017 to FY2026 SBA approved 255 loans worth $197.3 million. The location quotient is 1.63x: the local weight of medical practices in SBA lending clearly exceeds the national weight. Harris County has 150 of the loans, Fort Bend County 46, Montgomery County 25, Brazoria County 18 and Galveston County 9.

The median loan of $412,700 is 1.21x the national class median, and the inner half of loans spans $150,000 to $918,500. Franchise flags are rare, at 2.7% of loans, so independent practices dominate. The program split is 235 SBA 7(a) loans to 20 SBA 504, a pattern that points to practice acquisitions, equipment and working capital far more often than to purchases of real estate.

Who holds the Houston physician loans

The list that follows names the current holder of each loan in SBA's records. The Huntington National Bank is shown with 28 loans worth $13.0 million. Behind it come JPMorgan Chase Bank, National Association (25 loans, $16.5 million), PNC Bank, National Association (23, $9.9 million), Wells Fargo Bank National Association (17, $15.0 million) and Newtek Bank, National Association (12, $4.8 million). The one 504 holder to reach the list, Capital Certified Development Corporation, has 5 loans worth $6.2 million. Holding a loan is not the same as setting the terms for the next one.

Cancellation wiped out 14.1% or more of approvals made in FY2017 to FY2024. Houston's cancellation ceiling and its five-year loss rate are both suppressed; they are blank, not zero. In the group of 108 loans disbursed across FY2017 to FY2021, 8.3% or more stand charged off to date. Approvals peaked at 38 in FY2025, worth $23.4 million, after 20 in FY2020 and in FY2023.

Testing a Houston medical-office project

A study begins with the physician: specialty, panel size, referral relationships and whether the practice is new or being purchased. It then sizes the market by looking at the population near the site, the hospital systems in the trade area and the other practices in the same specialty. Cost includes buildout to clinical standards, exam-room count and diagnostic equipment, and Gulf Coast flood exposure is a site issue that belongs in the review of the building. Debt service coverage must allow for the months before billing begins. In the appraisal, special-purpose medical space has a narrower pool of buyers than general office. Whether a Houston loan reaches the area count turns on its project county appearing in the July 2023 list, which leaves counts too low if anything.