Investors searching office building loans, medical office financing, and office conversion bridge need underwriting that respects vacancy, WALT, and takeout reality — not 2019 office comps.
Jaken Finance Group finances office and medical-office bridge nationwide — all 50 states. Rates: 8.99%–13.5% interest-only, terms 12–24 months, close in 7–10 business days on a complete file. The published ceiling is up to 90% of purchase on qualified files. The tables below discuss tighter leverage, because office vacancy and takeout are harder than on apartments or warehouses.
See the commercial property type matrix · industrial warehouse loans · mixed-use bridge
Office subtypes and bridge fit
| Type | Demand driver | Bridge fit |
|---|---|---|
| Medical office (MOB) | Physician credit, outpatient growth | Stronger than general office |
| Suburban class B/C | Local professional tenants | Moderate — TI heavy |
| CBD tower floors | Credit tenants, long WALT | Selective |
| Flex / creative office | Hybrid industrial adjacency | Overlaps industrial |
| Conversion candidate | Entitled residential / life science | Specialty — CapEx heavy |
Context on conversion economics: DC office-to-residential wave
Purchase vs. value-add vs. conversion
| Scenario | Underwriting basis | Typical leverage |
|---|---|---|
| Stabilized MOB / office | In-place NOI, WALT, tenant credit | 60%–65% LTV |
| Vacancy lease-up + TI | Pro forma rent + TI budget | 58%–63% LTC |
| Floor-by-floor re-tenant | Rollover schedule + CapEx | 55%–62% LTC |
| Office → residential (entitled) | Cost stack + as-completed value | 55%–60% LTC |
Unentitled conversion without a permit path exceeds most 24-month bridge calendars — review when not to use commercial bridge debt on the property-type matrix before you fund demolition.
What lenders review on office bridge
| Input | Why it matters | Red flag |
|---|---|---|
| Occupancy & WALT | Near-term rollover risk | >40% rolling in 18 months |
| Tenant credit / industry | Default probability | Speculative startups only |
| TI / leasing commissions | Cash needed to stabilize | Underfunded lease-up budget |
| Parking ratio | Tenant requirement | Overparked basis, underparked demand |
| Cap rate vs permanent market | Refi math | Negative leverage on day-one refi |
Worked example — suburban medical office lease-up
Sunbelt MSA — 22,000 sf MOB, 62% occupied after specialist departure:
| Line | Amount |
|---|---|
| Purchase | $3,400,000 |
| TI + leasing commissions | $520,000 |
| Interest / carry reserve | $190,000 |
| Total cost | $4,110,000 |
| Bridge at 62% LTC | $2,548,200 |
| Sponsor equity | $1,561,800 |
| Rate | 11.0% IO · 18-month term |
| Lease-up | Two medical tenants · 14 months → 91% occ |
| Stabilized NOI | ~$295,000/yr |
| Exit | Regional bank at 65% LTV on ~$4.0M value |
Physician credit and executed LOIs before the second TI draw keep the file on schedule.
Permanent exits
| Exit | Fit |
|---|---|
| Community / regional bank | Smaller MOB and suburban office |
| Debt fund / private credit | Higher leverage or transitional |
| CMBS | Larger stabilized pools with credit tenants |
| Conversion construction loan | After entitlements — separate product path |
Risks unique to office bridge
- Structural vacancy that lease-up budgets cannot cure
- Work-from-home pressure on general office (less so on MOB)
- TI cost inflation on older HVAC and restrooms
- Conversion entitlement delays past maturity
- Thin buyer pool if exit is a sale in soft MSAs
Medical office vs. general office — why spreads differ
| Medical office | General office | |
|---|---|---|
| Demand | Outpatient / physician sticky | Hybrid work sensitive |
| Tenant improvements | Exam rooms, plumbing, HVAC | Cubes / open plan |
| Typical WALT | Longer when physician-owned | Shorter SME leases |
| Bridge appetite | Stronger | Selective |
MOB files still need parking, elevator, and ADA diligence — but takeout lenders generally prefer physician credit over speculative tech tenancy.
Conversion gate — entitlement before CapEx
Office-to-residential or life-science conversions fail when sponsors fund demolition before permits:
| Gate | Required before major CapEx draws |
|---|---|
| Rezoning / adaptive reuse approval | Yes |
| Building permit for change of use | Yes |
| As-completed appraisal engagement | Yes |
| GC guaranteed max or firm bids | Preferred |
Unentitled “vision” packages belong in equity conversations first — commercial bridge is for defined calendars.
TI budget components lenders expect
| Line | Notes |
|---|---|
| Hard TI | Walls, HVAC zones, restrooms |
| Soft TI | Design, permits |
| Leasing commissions | Per executed leases |
| Free rent / abatement | Model in lease-up cash flow |
| Contingency | 10%+ on older base buildings |
Underwriting mistakes sponsors make
- Using pre-pandemic rent comps without absorbing vacancy
- Skipping rollover schedule analysis on WALT
- Funding conversion CapEx before rezoning / building permits
- Assuming industrial-style 70%–75% LTV will clear on office
- Ignoring capital stack for lobby, elevator, and facade that tenants will not fund
Soft office markets — stress tests lenders run
| Stress | Why |
|---|---|
| +5% vacancy | Absorb one unexpected move-out |
| −10% market rent on renewals | Mark-to-market on rollover |
| +15% TI cost | Labor / material overrun |
| 6-month lease-up slip | Extra IO carry at 8.99%–13.5% |
If the permanent DSCR fails under those stresses, cut purchase price or increase equity before locking the bridge.
Published bridge terms versus the office tables
The office leverage tables above use a tighter band than apartments. That is an underwriting discussion, not the program ceiling. Jaken Finance Group’s published bridge loan goes to 90% of purchase on a qualified file. The rate is 8.99%–13.5% interest-only. The term is 12–24 months. A complete file closes in 7–10 business days. Office deals often land below the ceiling because the takeout lender will not use last decade’s occupancy. Ask for the lower proceeds up front. Do not plan a capital call in month sixteen.
A permanent rental loan is a different product. DSCR terms, when the property is residential rental rather than an office, run 5.75%–10.5% and close in about 14 business days. Do not paste the 7–10 day bridge clock onto that refi.
Illustration: eighteen months of interest-only carry
Example only. Not the medical-office lease-up table above, and not a quote.
A sponsor borrows $1,800,000 on a suburban office at 10% interest-only. Monthly interest is $15,000. That is $1,800,000 times 0.10 divided by 12. An 18-month term, with no principal paydown, costs $270,000 in interest if the full balance stays out the whole time. A six-month slip past the lease-up plan adds $90,000. That is six times $15,000. If the reserve was sized only for the base case, the slip becomes a cash call.
Ten percent sits inside the 8.99%–13.5% band. Your file may price higher or lower. The point of the illustration is the calendar. Every month the suite stays dark is a full interest payment, not a partial one.
Why a 504 loan is the wrong takeout for a rental office
Some sponsors ask whether an SBA 504 loan can replace the bridge once the building is leased to third parties. The SBA 504 page says the maximum 504 loan is $5.5 million. The same page says a 504 loan cannot be used for speculation or investment in rental real estate. It also cannot be used for working capital or inventory. A pure investment office, held to collect rent, is outside that use. An operating business that will occupy the building is a different question for a Certified Development Company. Do not underwrite the bridge exit as a 504 refi unless the occupant and the use match the program. This is a reading of the SBA page, not a determination for your entity.
Repricing tenant improvements
Construction materials are more expensive than a year ago. The producer price index was 375.908 in August 2026 and 341.458 in August 2025, 10.1% higher. See FRED WPUSI012011. The index covers materials, not the architect, the leasing commission, or the free-rent concession.
Example: a $200,000 materials allowance inside a larger TI budget. If that allowance alone moved with the index, the change is about $20,200. Do not mark the entire TI budget up 10.1% and treat the result as a measured fact. Labor, permits, and furniture are separate lines. Refresh the materials quote before the second draw. The stress table above already adds 15% to TI cost as a test. The index explains why that test is not theoretical.
National shelter inflation is still positive even when office demand is soft. Owners’ equivalent rent was 443.713 in August 2026, up 3.1% from 430.5 a year earlier, per FRED CUSR0000SEHC. That series is housing, not office rent. It matters when the conversion plan turns floors into apartments. Apartment rent support and office rent support are different exits. Price them on separate appraisals.
The conforming 30-year fixed average was 7.28% for the week of October 1, 2026, and 7.03% the week of September 24, per FRED MORTGAGE30US. A condo buyer in a converted building lives in that mortgage market. Your bridge does not. If the conversion exit depends on retail unit sales, this weekly rate belongs in the absorption memo.
Takeout checklist before you waive contingencies
| Item | What “done” means |
|---|---|
| Rollover schedule | Every lease end date inside 24 months, with rent and square feet |
| TI sources | Cash, loan holdback, or tenant allowance, each named |
| Materials quote | Dated after you saw the latest bid, not last year’s allowance |
| Exit letter | Bank, debt fund, or sale, with a rate assumption you can stress |
| Occupancy path | Signed leases or LOIs tied to draw releases |
| Use test | If someone mentions SBA 504, confirm it is not a rental-investment hold |
Bring the rent roll and the TI budget to commercial financing or call (833) 264-7776. Jaken Finance Group will size the bridge to the takeout you can actually close, not to a 2019 cap rate.
Related financing guides
- Mixed-use property bridge loans
- Industrial warehouse property loans
- Retail strip center loans
- Special-use commercial property loans
- Commercial property loans by asset class
Get approved · Commercial real estate financing · Submit scenario · Commercial property calculator · (833) 264-7776
Rates, terms and conditions offered only to qualified borrowers and are subject to change at any time without notice. All loans are subject to full underwriting for loan approvals. Jaken Finance Group only finances non-owner occupied investment properties.