SBA Lending is loosening up, but inventory is tight.
I read the latest SBA numbers this week, and one line practically jumped off the page:
“The SBA hit record highs in 2025.”
84,400 loans.
$44.8 billion deployed.
Starting in 2026, most SBA fees for manufacturers drop to 0%. This is the most business-friendly lending environment we’ve seen in years. And my immediate reaction, the part I actually said out loud, reading the article: “This is great for commercial real estate, and he only thing holding back a full owner-user boom is the lack of inventory.”
Give small businesses cheaper money, fewer fees, and faster approvals; they don’t renew leases; they look for buildings. This SBA lending surge in commercial real estate momentum is exactly why buyer demand feels so intense right now; the capital is ready, even if the inventory isn’t.
What the Inventory Actually Looks Like Right Now
There isn’t enough product. And the available product is scattered, inconsistent, and often priced as if sellers know exactly how much leverage they have. We have seen an uptick in Condo conversions in the Office sector.
Look at the Sacramento Region
You’ve got office condos in Roseville trading between $260–$425/SF, with several hovering comfortably north of $350/SF — and they still get activity because owner-users don’t have better choices. Medical Condos are typically in the high end of the range. There is a nice single-story building along Professional Drive with condo Units under 2,000 SF with asking prices around $300 per SF. I think this is excellent value for a small professional firm that doesn’t expect significant future expansion.
Campus Commons? Units pushing $385–$425/SF, moving because SBA math makes them accessible. There are other office condo projects just north of Howe Avenue that are hobbled by very high association fees, say $2500 a month for a 3,000 SF office condo.
Fair Oaks, Carmichael and Citrus Heights? A pool of older product priced at $150–$225/SF, much of it sitting on the market for a year or more, which tells you everything you need to know about functional obsolescence and buyer preference.
Midtown and Downtown?
Smaller office product under $300/SF is a unicorn. Sellers don’t have to blink when demand remains this strong and inventory remains this thin.
Bottom line:
This isn’t a market with depth.
It’s a market where a motivated owner-user feels lucky to have two viable options, let alone three.
Which is exactly why pricing is firm.
Supply hasn’t caught up with demand — and until it does, the SBA cycle is going to push values higher than people remember.
My Take
The SBA is setting the table for a major owner-user cycle.
We could easily see a real surge… if the inventory shows up.
And here’s where I think the next quiet wave of inventory could come from.:
Office-to-condo conversions.
When leasing velocity is slow, and a building doesn’t have a unique value proposition, you’re stuck competing for tenants who aren’t moving. But convert that same building into office condos? You instantly create a unique offering in a market starving for owner-user options.
Small businesses don’t want long-term leases right now—they want control, stability, and fixed payments. A condo conversion delivers all three.
“Owners learned a clever trick:
sell smaller pieces, sell them quick-
Why wait around for one big tenant
When the “golden goose” is rarely sent?
Buyers cheer when options grow.
(“Finally… something that isn’t sold!”).
So supply meets demand, at least a bit,
thanks to SBA fuel and some ownership grit.
If you’re selling, you’re doing just fine.
If you’re buying – get in line.
Opportunity’s knocking, keeping the beat—
Conversions may be the little cheat code we repeat.”
Bacon’s Got This.
For more detailed information about purchase options, or if you are thinking about how to fill an office building, call Bacon – (916-761-1202.