SBA 7(a) Flex Space Feasibility Study in Texas

Texas investor buildings and a program that went quiet

Few state records look like Texas for nonresidential lessors, the group of flex, office and retail investor buildings: it is large and oddly shaped. Between FY2017 and FY2026 the 7(a) file shows 125 loans and $160.1 million in gross dollars, and only one state writes more such 7(a) loans than Texas, while the class ranks just 20 of 39 inside Texas itself. The distinctive metric is the median of $935,000, which is 1.57x the figure for the class nationwide: Texas investors borrow far more per building than lessors elsewhere. The middle half starts at $540,200 and ends at $1.7 million, and 12.0% of the loans are franchised, which for a lessor of buildings usually means a tenant brand tied to the property.

What happened after FY2023

The year-by-year counts tell an unusual story. Lending climbed to 35 loans and $45.4 million in FY2021, slipped to 11 in FY2022 and 13 in FY2023, and then nearly stopped: 2 loans in FY2024, 1 worth $350,000 in FY2025 and 2 worth $150,000 in FY2026. How much of the drop reflects changed program treatment of lessors and how much reflects Texas demand cannot be told from these counts, and anyone using the totals above should remember that most of the 125 loans date from before FY2024. A feasibility study for a project that would have used this route has to ask what financing structure now applies.

Holders and counties

The holder table lists whoever has each loan today in SBA's data. Enterprise Bank & Trust holds 14 loans and Wallis Bank 11. Randolph-Brooks FCU, Plains State Bank and Fifth Third Bank round out the table at 6 apiece. Harris County leads with 27 loans, Dallas has 17 and Bexar 16, then Tarrant with 9 and Collin with 6. The spread across the three largest metros and a tail of smaller counties such as Taylor, with 3, shows that these were not only big-city buildings.

Outcomes and what a study has to test

Texas lessor loans approved FY2017 to FY2024 lost 11.5% or more to cancellation, and the ceiling matches that. The cohort of 84 loans funded between FY2017 and FY2021 shows a charge-off floor of 0.00% to date and within five years; that is a floor on older loans, with newer ones still seasoning. A lessor study in Texas has to prove tenant demand for the specific building type, using rents and vacancy observed in the submarket, never the sponsor's own projection. It must show the share of space the owner will occupy, if any, test cost against a ticket near $935,000, and examine how the building would re-let if the first tenant left. The data cannot isolate flex buildings from office or retail ones, since a single industry code also takes in banquet hall rental, so every figure above describes a blend.