During which phase are bridge loans typically utilized in office transactions?

Bridge loans are commonly used in the pre-stabilization phase of office transactions, which occurs before leasing is complete. This financing option is specifically designed to provide short-term funding to cover immediate costs or to facilitate a project that is not yet fully operational or generating sufficient revenue.

During the pre-stabilization phase, properties may require capital to fund renovations, complete tenant build-outs, or cover operating expenses. Since the building may not yet have stable cash flows due to unleased space, traditional financing options are often unavailable, making bridge loans particularly attractive. They enable developers and property owners to address immediate financial needs while working towards leasing agreements that will stabilize the property.

This immediate liquidity allows stakeholders to execute their business strategies effectively, ensuring smooth transitions into stabilized operations where long-term financing becomes more viable after leasing is achieved.