This interview originally appeared in Debt & Equity Journal. Erika Morphy is editor.

It's no secret the real estate markets have been absorbing unprecedented levels of liquidity during the past few years. Just about every lender has his or her own personal story about deals that stretched the limits or pushed boundaries previously held sacrosanct. Joseph George is no exception. George is a senior vice president with Calabasas, CA-based Countrywide Commercial Real Estate Finance, an aggressive commercial lender. For a competitive transaction, he says, the institution will lend all the way up the capital structure. Overall, the lending environment is still healthy for financiers, he reports, but the liquidity continues to prompt borrowers to raise leverage to increasingly greater levels. George spoke recently about some of the latest manifestations of this ongoing trend in the office sector.

Q: What are borrowers asking for--and getting--these days?

George: In the major markets, such as New York City; Washington, DC; and San Francisco, most borrowers are financing office buildings for the entire term of the loan at interest only. This has been happening during the past six months, not for every deal, but for most long-term loans. In addition, properties in certain markets, especially at the sub-market level, are trading at much higher levels compared to even a short time ago. This is a function of the liquidity, but it's also an example of loan dollars pushed much higher. Last year, for example, we closed on a loan that was in the low $100s per sf for a portfolio of properties in Silicon Valley. A few weeks ago, we saw four requests within that same submarket for trades at $250 per sf. Another change is that demand for smaller buildings is becoming much greater, at least in Silicon Valley. Buildings in the 50,000-sf range are in demand by such disciplines as biotech and high-tech. They want to take advantage of property values and lock in occupancy costs.