If you listen to the media, you would think that commercial real estate lending is dead in the water. That is what the politicians in Washington are saying and is conventional wisdom in some quarters.

But it is not true. Lending is still going on, the only real sector of commercial real estate lending that has died on the vine is the commercial mortgage based securities. But when it comes to banks and insurance companies making commercial loans, they are going full steam.

So don’t let the hyperbole coming out of Washington get to you, instead if you see a great deal on a commercial property, head down to your local bank. Odds are the loan officer will be very happy to talk to you.

The only commercial credit market that is frozen right now is the commercial mortgage-backed securities (CMBS) market, which represents about 25% of the entire commercial real estate debt market, according to research analyst Richard Parkus at Deutsche Bank:

Banks and thrifts account for 50 percent and insurance companies comprise the remaining 25 percent of the lending, Parkus said.

So are the banks lending? Surprise, they are:

Bank lending for commercial projects in the first half of 2009 is on track to hit about $25 billion, according to Matt Anderson at research firm Foresight Analytics in Oakland, Calif.

By way of comparison, commercial loan origination was at pace of $33 billion a quarter at the peak of the market.

Yes, at $25 billion for the first half of 2009, bank lending for commercial real estate is low compared to the peak year. But we are not at the peak of the market, are we? And, according to the New York Fed, demand for commercial real estate loans is at a all-time low: Deal Junkie

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3. Federal Reserve Offers TALF To Commercial Lending
4. John Hancock Tower Sale Scares Commercial Real Estate Market
5. Commercial Real-Estate Sales Plummet in July, 2009