Crandall tells GlobeSt.com that he is seeing more construction debt available for multifamily product than for other product types, but is seeing construction debt starting to happen for other assets as well. “It is still very low leverage generally and often full recourse, but it is starting to return to the market again, for select deals and situations,” he says. “In areas where there is significant job creation, like the Bay Area [San Francisco], it is much easier to sell the story for construction financing, especially for adaptive re-use deals where older properties are being gutted and modernized, often with an anchor tenant in tow.”

According to William E. Hughes, senior vice president and managing director of Marcus & Millichap Capital Corp., based in Newport Beach, CA, there is a trend of a rise in multiple lending sources offering programs in the multifamily arena, the credit-tenant net-leased sector and to a smaller degree, in the hospitality sector. Construction dollars for office, retail and industrial are only available to best-of-class assets in major MSA with very strong sponsorship, he explains.

Gary Tenzer, principal and managing director at George Smith Partner’s office in L.A., points out that construction loans are almost always recourse or modified recourse and are floating rate tied to either the Libor or Prime rate indices. “While lenders are relatively aggressive on multifamily stretching to as much as 80% loans to cost for strong borrowers, loans on other commercial property types are less aggressive,” he explains.

Tenzer continues that bridge lenders are active in financing value-add transactions, repositions of existing assets, and discounted note payoffs and are being made by commercial banks and debt funds, are usually floating rate and may or may not carry a degree of recourse. “Interest rates range from 7% to 9%, or higher, depending upon the level of leverage and the perceived risk of the transaction.”

Other trends Hughes is seeing is that the CMBS market could be the big story in 2012. “But in 2011, CMBS lenders performed well but fell short of expectations, having issued $32.7 billion. Nonetheless, that was up from $11.6 billion in 2010.” Will 2012 be a break out year? According to Hughes, it depends on the secondary markets, and whether the economy continues to improve and investors remain confident in the CRE sector. “We would like to see CMBS be the big story this year. The first quarter performed as expected, but remained short of expectations. We anticipate that CMBS lenders will play catch up in the second quarter. At the end of the day, we think the CMBS market will contribute close to $50 billion to the CRE sector in 2012.”

In terms of investor demand, according to Crandall, the demand far outstrips the supply of quality deals. “I am hearing more investors talk about being outbid than about finding ‘home run’ deals.”

Hughes adds that “Demand has increased over the last three years, driven primarily by improving tenant demand, occupancies and rents. Investor demand is also positively impacted by a lack of other competitive investment opportunities,” he says. Generally speaking, equity markets continue to disappoint on a year-over-year basis, says Hughes. “CRE as a hard asset has been outperforming other investment vehicles.”

The phenomenon is investors moving off the sidelines and re-engaging in the market is a trend Hughes expects to continue. “Institutional investors, private investors, private partnerships, foreign capital and funds are active today.”