Commercial real estate lending volume finished the year on a strong note as loan closings surged in November and December, according to the latest research from CBRE.

Despite concerns throughout the year regarding the direction of the global economy, U.S. capital markets remained favorable to borrowers in the fourth quarter (Q4) of 2016 due to low relative rates and abundant capital.

The CBRE Lending Momentum Index, which tracks the pace of U.S. commercial loan closings, reached a value of 266 in Q4 2016—the highest level on record. This represented a 37 percent increase from the Q3 2016 level, as well as from the prior year.

Life insurance companies led all other major lenders in Q4 2016 and increased their share of loans closed by CBRE Capital Markets, accounting for more than 34 percent of nonagency commercial loan closings. This is up from 25 percent in Q3 2016 and above the 23 percent share recorded in Q4 2015.

After a strong start during the first half of the year, bank lending continued to cool. Banks accounted for 27.7 percent of loan volume in Q4 2016, compared with a 42.7 percent share a year earlier. Many key bank interest rates and spreads have not been materially affected by the recent increases in Treasury rates. However, bank construction lending remains limited and banks are still affected by stiff regulatory oversight.

“The commercial real estate lending market has shown its resilience throughout the course of the year, which made for a stellar end of 2016. Life companies and several other capital sources have stepped in as attractive options for borrowers as banks continue to tighten their underwriting standards. We expect this momentum to carry into the early part of 2017 as we wait to learn more about the policies put in place by the new administration,” said Brian Stoffers, global president, debt and structured finance, capital markets, CBRE.

While commercial mortgage–backed securities (CMBS) conduit lenders increased their closings in Q4 2016, they continued to lag other major lending groups by a considerable margin. CMBS lenders accounted for 13.5 percent of nonagency lending volume in Q4, up slightly from their 11.5 percent share recorded a year earlier. Overall industry-wide, CMBS production was down in 2016 as issuers grappled with a poor spread environment early in the year and with ongoing regulatory issues, including risk retention.

The “other” lender category, which includes real estate investment trusts (REITs), private lenders, pension funds, and finance companies, continues to provide a significant amount of bridge, permanent loan, and construction financing, filling the gap left by banks. They accounted for 24 percent of nonagency lending volume in Q4 2016, up from 14.5 percent in Q3 2016.