SBA 7(a) Flex Space Feasibility Study in Oregon

Oregon flex buildings: large loans and no recent approvals

Flex space is a lessor class: the borrower typically holds a building and rents it to others. In Oregon the loans are large for the class, with a median of $880,550 that is 1.47x the nationwide one, the distinctive metric, and the central loans stretching from $580,000 to $1.6 million. SBA recorded 36 approvals worth $41.5 million. Cancellation after approval reaches a floor of 22.2% for approvals through FY2024, and the ceiling matches. Oregon ranks 15 among states by count, with the class at 18 of 39 inside the state, and franchise share is 0.00%.

Banks, counties and the dated series

SBA's file puts Enterprise Bank & Trust first on dollars at $14.1 million over 10 loans, followed by Wells Fargo Bank National Association at $8.1 million over 8 and Columbia Bank at $5.2 million over 7. Multnomah County has 11 loans, Marion 5, Clackamas and Lane 4 each, and Deschutes and Washington 3 each. The series reached 8 loans and $10.0 million in FY2019 and 8 loans and $6.9 million in FY2021, and it ends with no approvals in FY2024, FY2025 or FY2026.

The limitation attached to this class says lending nearly stops from FY2024. The empty final years are a consequence of that, not evidence about Oregon's flex market, and anyone setting recent years against earlier ones is setting unlike conditions side by side. The charge-off rate is also not printed, because too few early funded loans exist, and we do not call it zero.

Oregon: reading the code and testing the building

SBA's coding folds this class in with office and retail landlords and banquet halls that rent out space, so flex space cannot be told apart. For an Oregon property the study has to examine the tenant market: vacancy and rent levels for comparable space in the submarket, the likely tenant types, lease length and tenant improvement cost. If the owner moves into a portion, the analysis should show that rent on the remainder carries the debt. Purchase or construction cost per square foot, loading and clear height, parking and zoning all affect leasing. Lease-up should be modelled with a slow case, and the appraisal will lean on market rents, so the study must support them with evidence from signed comparable leases.