SBA 7(a) Flex Space Feasibility Study in Utah

A low-cancellation flex cell

Utah flex space under SBA 7(a) stands out for how few approvals failed to close. Only 3.3% of the early vintages were cancelled, and the ceiling, once loans not yet disbursed are added, is 6.7%; both are low for a lessor class. The file holds 31 approvals from FY2017 to FY2026 worth $23.5 million. Mountain America FCU is the one holder named, with 5 loans and $2.1 million. The median loan of $594,000 is 0.99x, almost level with the class elsewhere.

Size, rank and place

The central half spans $208,050 to $799,750. Utah is 19 among states by count, and flex space takes 17 of 39 on the state list. Franchise brands are absent, at 0.00%. Salt Lake County leads with 14 loans, then Utah and Weber with 4 each, Summit with 3 and Washington with 2. Volume was steady through FY2022 and has dwindled: 2 loans in FY2023 for $172,200, then 2 in FY2024, none in FY2025 and one in FY2026.

The FY2024 lessor change

The code gives flex buildings no separate line from office and retail lessors, and the whole class nearly stops from FY2024. The recent counts therefore describe how SBA handles lessors of property, not a retreat by Utah tenants. The charge-off rate is withheld, as too few early loans funded, and is not zero.

What a Utah flex study must test

Flex buildings serve a mix of light industrial, showroom and office users, so the study must identify the tenants: the businesses in Salt Lake County's growth areas or along the Wasatch corridor that want bays with office frontage, and the rents they pay. It should list competing buildings and their vacancy, then price tenant improvements and leasing commissions. Since owner-users sometimes occupy part of a building, the study should separate owner space from rented space and show the payment covered by leases alone when the owner's share is excluded. Lease terms, rollover dates and tenant credit should be tabulated. A request near $594,000 should be reconciled with building size and cost per square foot. Valuation will turn on market rent and vacancy for comparable flex product, so the study should supply both.