Medical Office Feasibility Study in the San Francisco-Oakland-Fremont, CA Metro Area

Bay Area physician offices: heavier loans and a large 504 share

Medical office (physicians) lending in the San Francisco-Oakland area totals 96 loans and $88.6 million for FY2017 to FY2026, 19 of 488 areas for the class and eleventh of 39 locally. The location quotient is 0.93x, near the national share. The median loan is $536,000, 1.57x the national class median; quartiles run $281,250 to $1.3 million. Franchised practices are 5.2% of loans.

Real estate lending is prominent

Programs divide the 96 loans into 67 on 7(a) and 29 on 504, a large real-estate share. The Mortgage Capital Development Corporation holds 16 504 loans worth $16.8 million and Bay Area Employment Development Company 8 worth $7.0 million. In 7(a), 11 loans each sit with U.S. Bank, National Association ($11.9 million) and with Wells Fargo Bank National Association ($7.5 million), and JPMorgan Chase Bank, National Association holds 7 worth $2.9 million. SBA's record names who holds a loan; it is silent on any lender's policy.

Cancellation with no gap, and where the loans are

Cancellation after approval is 13.5% for FY2017 to FY2024 approved loans, and the upper bound is also 13.5%, so there is no ambiguity about the cancelled share. The charge-off percentage is withheld and is not zero. Contra Costa County has 35 loans, San Francisco 26, Alameda 19, Marin 10 and San Mateo 6. Yearly counts range from 5 loans in FY2019 to 16 loans in FY2025, with the dollar peak of $15.6 million in both FY2021 and FY2025.

What a study has to test

In this part of California, a physician-office study has to take the cost of space seriously. It should test the supply of physicians and referral sources in the sub-market, payer mix, the lease or purchase price of the suite against loans near the median, tenant-improvement and equipment cost, how cash flow after rent supports repayment, and a valuation that keeps the medical building apart from the practice. The area consists of whichever counties the 2023 metro map lists under matching names, so a site in a county outside that list is not covered by these figures.