From a financing standpoint, as predicted, the lending market closed 2013 with a show of strength, up 34% from Q3, according to the MBA. In fact, the volume of loans originated during the fourth quarter was the highest since 2007 and pushed the 2013 yearly total to approximately $280 billion, 12% above 2012 levels. This strong performance year over year was enjoyed almost across the board with CMBS up 33%, banks up 32%, and insurance companies up 25%. Only the agencies, as expected and in fact mandated, saw a decrease in lending volumes, down 18% year over year. Q1 figures were just released and reflect a 0.4% increase in the level of commercial/multifamily debt outstanding over year-end figures, another record. This was led by a 1.8% increase at banks, followed by a 1.0% increase for the agencies, and a 0.7% increase for life insurance companies; CMBS experienced a decline in their holdings of 2.0%.

From a property standpoint, it's no surprise that multifamily remains the preferred property type, with loan originations growing at a faster rate than the other food groups. The apartment financing market is very healthy and lenders still can't seem to get enough of the product type. While apartment construction is booming in certain markets and some people are openly concerned about oversupply, it certainly seems to be a landlord's market and should remain so for some time given the demographics of today's renters.

Office continues to tread water in most markets although it is thriving in a select few coastal areas. In previous downturns, we have seen the office market recover much more quickly. That is stubbornly not the case this time around. This property type, more than any other, depends on job creation, which, as noted above, is just not happening. Until we start adding jobs at a much more rapid pace, this sector will continue to bump along. While rents are up in most markets and vacancy is down, the trends are much more sedate. Although construction is taking place in some MSAs, tenant demand generally remains strong so new supply should not be a problem in the near future.

From a retail standpoint, except for the most strategically located centers, this sector continues to be a challenge. It is the broadest property type with more question marks than the others. Consumer confidence is the key here since consumption makes up 70% of GDP. After bottoming out at -1.6% in 2009, the increase in consumer spending was 2% in 2010, 2.5% in 2011, 2.2% in 2012 and 2.3% in 2013. Projections for 2014 are between 2.5-3.0%. These figures are largely unremarkable and point to slow growth in this sector for the next few years at least.

Most life companies won't originate on anything that isn't grocery/drug anchored, so the fact that banks and conduits are so active is a good thing for this property type. E-commerce is always a threat to this sector, but construction remains in check. However, proceed with caution until we get a better read on the consumer and can determine if the recent increase in confidence is sustainable or fleeting.

Industrial is still industrial. They're quick and easy to build, so oversupply is never really a problem; that remains true in today's market, where construction is at an historic low. The problem the retail sector has with e-commerce is actually a benefit to industrial product from both a distribution and logistics standpoint. Lenders love industrial. The biggest problem they usually have is filling the appetite, since generally you need a portfolio of smaller properties to get to a loan amount that exceeds a lender's minimum. This is especially true for life companies.

The financing market remains healthy for all of these property types. We have seen banks pulling back some on their longer term non-recourse offerings but they are still very active, with 35.8% of the mortgage debt outstanding on their books. Thanks to the federal government, their cost of funds is basically zero. They are not requiring a depository relationship with new clients and, except for a select few, they're actually discouraging it. Despite this competition, life companies are off to a great start this year as well and first quarter figures show they increased their holdings by $2.4 billion.

Conduits are definitely back in force. My understanding is there are now 44 different conduits. That's a lot of mouths to feed and should bode well for keeping the financing market ultra-competitive this year. We've also seen a number of niche lenders who have done a fantastic job of filling the gap that exists between the outstanding balance on maturing loans underwritten during an aggressive time and the levels they could be refinanced at today. A few years ago, we all read the dire projections of how much debt was maturing over the next several years and wondered how we'd fill the void. The market has certainly stepped up and answered the challenge. Overall, real estate remains a superior investment from a relative value standpoint, so the fun should continue for the next few years!

Dennis Sidbury is SVP and director with NorthMarq Capital in San Francisco. He may be contacted at [email protected]. The views expressed here are the author's own.