“We remain cautiously optimistic regarding commercial real estate debt availability for the second half of 2017,” Stoffers says. “Debt is still attractive in terms of rates and spreads, while the yield curve has tightened significantly in the past six months.”

He adds that lenders continue to be comparatively strict on terms, with loan-to-value and debt service coverage ratios “in relatively conservative ranges compared with aggressive periods preceding significant downturns. Meanwhile, the supply/demand equilibrium is largely in check, with no massive overbuilding apparent in any sector.”

CBRE's Q2 Lending Momentum Index follows Tuesday's announcement from the Mortgage Bankers Association that commercial and multifamily mortgage loan originations were 20% higher in Q2 than during the same period last year and up 28% over Q1 of this year.

LOS ANGELES—With CMBS conduits more than doubling their market share compared to a year ago, CBRE's Lending Momentum Index for the second quarter is up 27% year over year, the firm said Wednesday. All major lending groups saw their volume improve as the pace of commercial loan closings picked up during Q2, notwithstanding the Federal Reserve's June increase in short-term interest rates.

CMBS in particular surged ahead during Q2, accounting for 36% of non-agency originations during the quarter, compared to a 16% share in the year-ago period. Year to date, CMBS issuance reached $38.8 billion as of June 30, well above the $30.7-billion tally this lending class had reached at the end of Q2 2016.

“The overall lending environment is well supplied with debt capital from all sources; CMBS, life companies, banks and alternative lenders are all actively issuing bridge and permanent financing quotes,” says Brian Stoffers, global president, debt & structured finance, CBRE Capital Markets. “The recent surge in CMBS mortgages demonstrated that these lenders are becoming increasingly comfortable with risk-retention rules that kicked in at the end of last year.”

This surge may have come at the expense of other lending groups. Although life insurance companies accounted for more than 24% of non-agency commercial loan closings in Q2, their share was down from 38% in Q1, although above the 20% slice that life companies took a year ago. Banks accounted for 18% of loan volume in Q2, compared with 26% in Q1 and nearly 50% in the year-ago period.

“We remain cautiously optimistic regarding commercial real estate debt availability for the second half of 2017,” Stoffers says. “Debt is still attractive in terms of rates and spreads, while the yield curve has tightened significantly in the past six months.”

He adds that lenders continue to be comparatively strict on terms, with loan-to-value and debt service coverage ratios “in relatively conservative ranges compared with aggressive periods preceding significant downturns. Meanwhile, the supply/demand equilibrium is largely in check, with no massive overbuilding apparent in any sector.”

CBRE's Q2 Lending Momentum Index follows Tuesday's announcement from the Mortgage Bankers Association that commercial and multifamily mortgage loan originations were 20% higher in Q2 than during the same period last year and up 28% over Q1 of this year.