In fact, CBRE says life insurance companies led all other major lender classes in Q1, while also increasing their share of loans closed by CBRE Capital Markets. They accounted for more than 37% of non-agency commercial loan closings in in the first three months of this year, up from 34% in Q4 2016, and up substantially from their 27% share recorded in the first three months of last year.

Conversely, although banks maintained their ranking as the second most popular lending group in Q1, their market share slipped substantially on a year-over-year basis to 25.5% of loan volume compared to 43.3% in Q1 '16. CBRE notes that many key bank interest rates and spreads have not been materially affected by the recent increases in Treasury rates; with that said, bank construction lending remains limited and banks are selective in granting loans.

CMBS lenders over the past year have incrementally improved their share of closings, with CBRE noting that the loan pricing environment has become more favorable and issuers have created structures to satisfy risk-retention requirements. Yet securitized mortgages continue to lag other major lending groups by a considerable margin; CMBS lenders accounted for 15.8% of non-agency lending volume in Q1, up slightly from 11.7% a year earlier.

The “other” lender category—including REITS, private lenders, pension funds and finance companies—continues to play a significant role in providing a variety of bridge, permanent loan and construction financing, says CBRE. However, while CMBS has picked up a little market share, the miscellaneous lending groups lost some ground, accounting for 20.7% of non-agency volume in Q1, down slightly from 24.1% in last year's fourth quarter.

LOS ANGELES—From a high-altitude view, the CBRE Lending Momentum Index of commercial loan closings withstood a 14.3% decline in the first quarter. Take a closer look, though, and a number of more favorable indicators emerge.

For one thing, CBRE notes that although there has been a “fairly dramatic” increase in long-term interest rates over the past couple of quarters, the impact on commercial real estate markets hasn't been extensive, especially in view of the more recent decline in 10-year Treasury rates. For another thing, while the Q1 index showed a decline, the quarter ended with a 25.2% increase in lending volume for March compared to the year-ago period.

“Borrowers generally are optimistic as the US commercial real estate lending market remains favorable despite the Fed's policy of raising short-term interest rates and the possibility that long-term rates will resume their climb after leveling off in recent weeks,” says Brian Stoffers, global president, debt & structured finance, CBRE Capital Markets. Looking at specific debt sources, Stoffers says, “Life company, agency and non-bank lenders are active in the market and have new allocations to place mortgages in 2017.

“CMBS lenders have successfully tested new risk-retention deal structures with the promise of providing needed liquidity to the marketplace, and private equity funds have raised record amounts of 'dry powder' capital to deploy for equity restructuring, new construction and bridge deals,” he continues. “And credit spreads remain tight, allowing borrowers to take advantage of low all-in mortgage rates.”