SBA 7(a) Flex Space Feasibility Study in Washington

Larger loans than flex space elsewhere

Washington flex space stands out for size. Under SBA 7(a), 49 approvals from FY2017 to FY2026 total $61.9 million, and the median of $951,300 reaches 1.59x against lessors elsewhere, a strikingly high reading. Half of loans run from $450,000 to $1.9 million. By count Washington is 10 among states, the class takes 18 of 39 at home, and franchise brands account for 6.1%.

Lenders, counties and the FY2024 cutoff

In Washington's lender table, Enterprise Bank & Trust accounts for 10 loans and $15.0 million, Columbia Bank for 8 and $5.4 million, and Sound Credit Union for 5 and $4.4 million. Pierce and King counties lead with 10 and 9 loans, followed by Clark and Kitsap at 5 each. Volume was 10 loans in FY2017 and fell to 3 in FY2024, then none in FY2025 and one in FY2026, because the flex space class nearly stops from FY2024. That lessor shift is a feature of the data, so a recent decline here should not be read as weak demand for flex buildings.

Outcomes

Cancellation reached 12.5% of approvals from FY2017 to FY2024. Of 30 funded early loans, none had been charged off to date or within five years: both measures read 0.00% and 0.00%, as floors. Both are floors, since open loans may yet default, and the cohort sits at the bare minimum for a rate to be printed.

Scope

The code groups flex, office, retail and banquet hall lessors, so a flex building is shown beside neighbors with a different tenant base.

Testing a Washington flex project

Flex buildings serve light industrial users, showrooms and offices in one structure, so the study must prove the tenant mix: which businesses want bays with office frontage, at what rent, in what submarket along the Puget Sound or in the Inland Northwest. It should compare construction or purchase cost to rent, include tenant improvement and leasing costs, and show how coverage holds during lease-up. A higher ticket than the national pattern calls for evidence that the market pays for it. Appraisal will rest on market rent and vacancy, which the study should document by comparable, with the cost of tenant improvements and the leasing commissions a landlord pays for new tenants set out line by line so that the valuation is not left to the appraiser to infer.