A single-user office, automotive, warehouse, retail or light industrial building at or above 25,000 square feet of gross building area is Special Purpose under our SBC program, and Special Purpose property is ineligible collateral. The same building at the same size is financeable if it is genuinely multi-tenant: as of a change effective 07/10/2026, a multi-tenant property may exceed 25,000 SF, provided no individual tenant occupies 25,000 or more.
That second sentence is the part almost nobody has published. The threshold is not building size. It is tenant concentration. A 60,000 SF flex building with eight tenants is not disqualified by its footprint. A 26,000 SF warehouse leased end to end to one operator is disqualified, and it would be disqualified at 25,000 SF exactly.
This page explains where that line sits, what each phrase in the rule is doing, how the July 2026 carve-out changes the analysis for large multi-tenant industrial and flex assets, and the places where the guideline is silent so you know what still has to be decided by an underwriter rather than by you.
The rule as written
Two passages control. The first is in the eligible property type section, under the heading Special Purpose.
The second is the version control entry that added the carve-out:
Read them together and four things fall out.
It is a floor written with a greater-than-or-equal sign. Both the body text and the change log use an inclusive threshold — "≥25,000 SF" in one, "25,000 or more SF" in the other. A tenant at exactly 25,000 square feet is over the line, not on the safe side of it. There is no rounding allowance in the text and no tolerance band.
It applies to a named list of uses. Office, automotive, warehouse, retail and light industrial. Those five categories are the ones the rule enumerates. Multifamily, mixed-use and mobile home parks are not in the list, and the guideline does not extend the size test to them.
"Single User" is the trigger, not "large." The Special Purpose line does not say a big building is ineligible. It says a big single-user building is. The carve-out then confirms the reading from the other direction.
The change is retroactive. The version control table carries a footnote that the asterisked items, though published on August 3, 2026, "are effective 07/10/2026 and will be applied retroactively to all loans with applications dates prior to 07/10/2026." The multi-tenant carve-out is asterisked.
Why a single tenant is treated as the risk
The reasoning is in the definition of Special Purpose itself. The guideline describes Special Purpose as "a diminished utility due to the design, layout, construction material and/or other features that limit the property's use and/or marketability." Special use property is separately defined as property "that have limited utility and marketability other than their current use."
Both definitions are about what happens when the current occupant is gone. A building configured around one user at scale tends to be configured around that user — the clear height, the dock count, the office finish ratio, the power service, the bay depth. At 8,000 square feet those choices are cheap to undo. At 40,000 they are not, and the pool of replacement tenants who want exactly that configuration at that size in that submarket is small.
The guideline says this directly about classification: "For single-tenant properties with unique or specialized spaces, the classification will be based on the property's current use." Current use, not highest and best use, and not what a broker thinks it could become.
There is a second, more arithmetic reason, and it is the one borrowers underestimate. Our program requires 75% minimum occupancy and defines stabilization as follows:
In a single-tenant building, occupancy is a binary. It is 100% or it is zero. There is no state of the world where a one-tenant property sits at 74% and recovers. The day that lease ends the property fails the occupancy requirement outright, and it fails the 90-day trailing test for a full quarter after it is re-leased. Concentration is not a soft preference here; it is the difference between a loan that can survive one lease expiration and one that cannot.
Single-user versus multi-tenant, side by side
| Single user at or above 25,000 SF GBA | Multi-tenant, any total size, largest tenant under 25,000 SF | |
|---|---|---|
| Special Purpose treatment | Yes — falls into the Special Purpose definition | No, on the size and concentration test |
| Total building size limit | The 25,000 SF figure is the tenant's occupancy, not a separate building cap | Guideline states multi-tenant properties may exceed 25,000 SF |
| Occupancy behavior on a lease expiration | Drops to zero | Drops by that tenant's share |
| 75% occupancy requirement | Cannot be partially met | Can be met with vacancy present |
| Documentation | Leases and rent roll requirements still apply where the property is investor or multi-tenant owner occupied | Current rent roll required for investor property or multi-tenant owner occupied |
The second row is where people misread the rule. There is no stated maximum building size for a qualifying multi-tenant property. The guideline caps what any one tenant may occupy. Whether a 90,000 SF property is a fit turns on the other underwriting parameters — valuation, DSCR, market, loan size, which is capped at $100,000 to $2,500,000 with loans above $2,000,000 requiring senior management approval — not on a square footage ceiling that the text does not contain.
What this means for a large multi-tenant flex or industrial building
Practically, the analysis becomes a rent roll analysis rather than a building measurement.
Start with the largest tenant. If your biggest suite is under 25,000 SF of GBA, the size and concentration test is satisfied on its face and the property moves into ordinary underwriting. If your biggest tenant is at or above 25,000, the property is caught regardless of how many other tenants sit alongside it. A 100,000 SF building with one 30,000 SF anchor and fourteen small bays fails the individual-tenant test even though it is obviously not a single-user asset in any commercial sense. The rule is written as a hard per-tenant cap, and the text gives no proportional relief for buildings where the large tenant is a minority of the space.
Then work through what the Investor Property Review step actually looks at. Beyond the standard analysis, investor properties are "evaluated based on the overall quality and stability of the property's cash flow," considering "tenant financial strength, tenant tenure, historical occupancy, lease rollover risk, rental payment history, lease structure, and the quality of property management." A large multi-tenant building passes the concentration test and then gets judged on exactly those factors. Four tenants at 24,000 SF each will read very differently from twenty tenants at 4,800 SF each, even though both clear the cap.
GBA is the unit, and the guideline does not define it
This is the sharpest edge on the whole rule and it deserves plain treatment.
The rule is written in GBA — gross building area. The guideline's glossary defines GLA (Gross Leasable Area, "the summation of all rentable areas plus all common areas of a building"), NRA (Net Rentable Area, "the measurement of a building or suite upon which rent is calculated"), Net Rentable Space, and Loss Factor. It does not define GBA anywhere in the document.
That silence matters at the margin and only at the margin. Gross building area, net rentable area and gross leasable area for the same suite can differ by several percent depending on how common area, mechanical space, mezzanine and wall thickness are handled. A tenant at a measured 24,300 rentable square feet may or may not sit under 25,000 gross, depending on the standard applied.
If your largest tenant is anywhere near the line, do not assume the number on the lease is the number that governs. The lease states rentable area. The rule states gross building area. Ask before you spend money on third-party reports, and expect the appraisal's area conclusion to carry weight.
The other 25,000 in the same document
There is a second appearance of the number, and it is worth naming rather than smoothing over. In the property type definitions, light industrial is described this way: "Light industrial is characterized by a small size facility (under 25,000 square feet) where no heavy manufacturing or specialized industrial process takes place. Office space within light industrials ranges from 3% to 25% of the total area."
That is a definitional characteristic of the light industrial category, in a descriptive passage. The Special Purpose line is a per-tenant eligibility test in the program parameters, and the July 2026 change log entry that created the multi-tenant carve-out is the newer of the two texts. Read together, the newer and more specific language is the carve-out: multi-tenant properties may exceed 25,000 SF so long as no individual tenant is at or above it.
Where a large industrial or flex property sits between those two passages, the guideline says of its own standards that "the standards here are general; exceptions may be considered case-by-case with the approval of designated" credit staff, and that property type "may be updated when the leasable space is adaptable for alternative uses" at the discretion of the Operations Team. That is a real path, and it is discretionary. It is not a promise and should not be planned around as one.
Structures that do not get you around it
Splitting one user across two affiliated entities. The guideline treats a property "leased to a related entity that is majority owned or controlled by the Borrower" as owner occupancy, and it explicitly authorizes appraisers to classify a property as owner occupied "based on use, control, and economic benefit," particularly where "ownership is shared among related parties," the property "is operated by a family business," or "no arm's-length lease exists." Two leases to two entities under common control is a paper distinction the guideline already anticipates.
Leaning on a related-party lease for the second suite. If a borrower-affiliated business occupies 25% or more of rentable square footage or contributes 25% or more of rental income, we may require additional documentation, including a business profit and loss statement and business bank statements, to evaluate the operating business. The affiliated tenant gets looked at, not just counted.
Promising to demise the space after closing. Occupancy and stabilization are measured at application, over the preceding 90 days. A plan to subdivide later does not change what the rent roll showed during that window.
Subleases. The guideline defines sublease and notes that in most subleases the original tenant remains primarily liable to the landlord. It does not state whether a sub-lessee's footprint or the prime tenant's footprint governs the individual-tenant test. That is a genuine gap in the text. If your structure depends on the answer, get it confirmed in writing before you order reports.
The guideline thinks in concentration throughout
The 25,000 SF rule is not an isolated quirk. Several eligibility tests in the same document are concentration tests expressed as percentages.
To qualify as owner occupied, the borrower must utilize 50% or more of net rentable area. A property is an investor property if at least 50% of effective gross income comes from arm's-length third-party tenants. Affiliated occupancy at 25% or more of square footage or income triggers additional business documentation. And certain otherwise-ineligible uses are permitted as third-party tenants in a Tier II property only "when the income generated is ≤25% of the total property cash flow."
The 25,000 SF rule is the same instinct applied to a raw number instead of a ratio: no single occupant should be able to take the property's entire income with them.
What the file needs to show
For a large multi-tenant property, the eligibility question is answered by documents you probably already have.
| Document | When it applies |
|---|---|
| Current rent roll | Investor property, or multi-tenant owner occupied. Appraiser's rent roll analysis or a rent roll in the appraisal report is acceptable |
| Executed leases with all current addendums | Commercial tenants. If the appraisal includes the leases we will rely on those provided to the appraiser; incomplete sets will be conditioned for the entire document. Not required for No Doc Streamline; not required if the property is owner occupied |
| Two years of property operating statements or Schedule E plus YTD | Investor property or multi-tenant owner occupied. Not applicable on purchases or a newly formed entity; not required if no historical operating information exists |
| Capital expenditure schedule | Where capital improvements occurred in the last 12 months |
On purchases where the seller cannot produce a rent roll or operating statements, the guideline allows reliance on the appraiser's analysis. That is a real accommodation on acquisitions of larger multi-tenant properties, where sellers are often slow with the rent roll.
For the broader list of what is out regardless of size or tenancy, see [what property types commercial lenders will not finance](/blog/what-property-types-commercial-lenders-will-not-finance). For the separate question of whether a specialized building can be converted back to standard use, and the conversion timeline test that governs it, see [can you get a commercial loan on a special purpose property](/blog/can-you-get-a-commercial-loan-on-a-special-purpose-property).
What this page does not do
This is not an approval, a quote, a rate, or a commitment. Clearing the size and tenant-concentration test means one eligibility screen is satisfied; it says nothing about whether a specific property and borrower will be approved.
It does not cover the convertibility test for specialized buildings — the separate standard about whether a property can be readily converted to standard retail, warehouse or office space with limited cost and a reasonable timeline. That is a different rule with a different threshold and it has its own page.
It does not price anything. Pricing depends on program, property type, credit score, LTV, amortization term, loan amount and occupancy type, and it is set by the current pricing matrix rather than by this page.
It does not resolve the measurement of GBA. The guideline uses the term without defining it, and near the 25,000 line the area conclusion is an underwriting and appraisal determination.
It does not address the sublease question above, because the guideline does not address it.
And it does not answer legal, tax, zoning or permitting questions. Whether your building's use is permitted, how a lease should be drafted, and how a structure is taxed belong to your attorney, your accountant and your municipality, not to an underwriting page.
Guideline SBC 08/03/2026 · Reviewed August 31, 2026
Published August 31, 2026 · Updated August 31, 2026
How to use this guide
This article is educational guidance, not an offer or commitment to lend. Rules, property facts, credit, leverage, documentation, and full underwriting still control any actual scenario.