SBA 7(a) Flex Space Feasibility Study in New York

A small-loan market that fades after FY2023

New York's flex, office and retail investor buildings have a distinctive profile under SBA 7(a): loans are small and recent years are nearly empty. The median of $200,000 is merely 0.34x the nationwide level for the class, and the middle half falls from $100,000 to $560,000. SBA approved 49 loans here across FY2017 to FY2026, for $28.7 million, which makes New York 10 among states, while the class holds 20 of 39 places in New York. Counts begin with 9 loans in FY2017 and 9 again in FY2023, but FY2024 shows 2 loans and $1.1 million, FY2025 shows 2 and $250,000, and FY2026 shows 0 and $0.

Why the recent years look empty

The data for this class nearly stops from FY2024, a break tied to the way SBA's records treat investor-owned lessor buildings. In our reading, that means the empty recent years are a feature of the source and should not be taken as proof that no New York borrower sought such a loan. The coding offers no way to split flex buildings from office or retail lessors, and banquet hall rental shares the code as well, so the class describes landlords, not the businesses that rent from them. It is a poor guide to a project whose value depends on a specific tenant's trade.

Counties and the holder of record

Nassau County has 6 loans, Monroe 5, and Queens, Suffolk and Wyoming 4 each, so this is as much an upstate and Long Island story as a New York City one. Erie has 3, and Albany, Herkimer, Onondaga and Orange 2 each. Only one lender is listed: Manufacturers and Traders Trust Company, 13 loans, $3.1 million, a listing of the holder as SBA now shows it, which carries no inference about underwriting. Cancellations run at least 10.6% for New York approvals up to FY2024, and 10.6% is also the ceiling. Loss experience is not printed for New York flex buildings, as the early disbursed loans are too few, and that is not a zero.

What a New York flex building study has to test

Small loans here point to small buildings, so the study should rest on actual rents and vacancy for similar space in the same submarket, not on metropolitan averages. It must test the tenant mix, lease terms and rollover dates, and show a case where the largest tenant leaves. Operating costs, taxes and insurance in New York can be heavy, so income left after those costs has to be built line by line, since it alone services the debt. If the borrower will occupy part of the building, the study should separate owner-occupied area from rented area. The appraisal should be tied to income, and a lender will check that any conversion or fit-out cost is recoverable through rent.