The lending market may be starting to thaw.

The number of loan applications has risen over recent weeks, which is a hopeful sign closings could increase toward the end of the year, according to the latest research from CBRE.

Another sign that the market may be starting to move: alternative lenders, which includes REITs, finance companies and debt funds, accounted for 34% of loan volume in Q3 2020, according to CBRE. These capital sources, which did minimal lending in Q2, closed a variety of multifamily and retail bridge and construction deals during Q3 2020.

“We’re seeing green shoots with the way that debt funds are becoming active again,” Brian Stoffers, global president of Debt and Structured Finance for Capital Markets at CBRE, told “We have more debt fund activity where we’re doing business in product sectors that are struggling, like hotels. We just funded a large hotel loan with a debt fund, for instance. We’re seeing international capital come back, particularly from the banks. So those are all good indicators.”

Stoffers says CBRE has closed business with more than 300 lending sources this year, which shows the market’s depth.

“There are some new people on that list,” Stoffers told “There are some old names as well. It’s partially due to the fact that we had a search further and wider for the money.”

In Q2 2020, banks captured more than 70% of loan originations in the previous quarter, according to CBRE. In Q3, they still led non-agency lending groups by capturing 39% of loan closings. They funded mostly five-to seven-year permanent loans concentrated in the multifamily and industrial sectors, with a few select office and retail deals. While many large money-center banks continue to assess their existing portfolios, bank lending has primarily been focused on smaller, local and regional banks and credit unions. 

Life companies accounted for 22.5% of non-agency loan closings in Q3 2020, consistent with recent quarters. They focused on low-leverage at approximately 50% average loan-to-value (LTV) for office, multifamily and single-tenant retail assets.

CMBS closings slowed in Q3, with issuance at $10.4 billion in Q3 2020. Year-to-date CMBS closings were at $40.4 billion at the end of Q3 compared with $58.7 billion for the same period last year.

Underwriting was more conservative for the second consecutive quarter in Q3. The average debt service coverage ratio (DSCR) was 1.59 in Q3 2020, an increase from 1.38 a year ago, according to CBRE. The average LTV was 61.5%, a decline from 67.2% in Q3 2019.

The CBRE Lending Momentum Index, which tracks the pace of commercial loan closings in the US, fell to a value of 160 in September, down 17.6% from June. As of September 2020, the index was down 39.4% from a year ago.

But the revival of certain lenders is a sign that things might be improving.

“We see definite green shoots, and it’s really continued since this report was issued,” Stoffers told “Now we’re more than halfway through the fourth quarter. I think the positive momentum [from Q3] continues.”