Debbie Riley, managing director of GE Real Estate's Central Region, said her company's unit netted $850 million last year and expects to top $1 billion this year. Total loan volume is up 30%, she added, as the real estate unit looks to end June at $2.2 million, split between CMBS business and structured finance deals.

Likewise, Fremont Investment & Loan had a record year with $2.5 billion in commercial loans last year, reported vice president and regional manager Scott Manlin, and is on pace to match or top that. "There's an ever increasing need for real estate debt because the other asset classes aren't as attractive," says A.G. Siefert of David L. Babson & Co. "It's just logical that more assets would be allocated to real estate debt."

However, increased competition has cut into margins, forcing lenders to look to generate even more business. "As margins go down, people need to do more…to make the same amount," Riley added.

Smaller banks are among those getting more involved in the game, said US Bank senior vice president John Dragic. "Real estate is one of the few areas commercial banks can lend today," he said. Real estate returns offer "decent returns" and are relatively safe, Dragic said.

Manlin admits lenders are not as conservative underwriting deals as it has been, and value of the collateral has been driven up largely by historically low interest rates. "I think it's a pretty safe bet to say (capitalization) rates will be higher," he added. "Valuations could see some pressure."

That will affect Capital Lease Funding, LLC's business, indicated vice president Doug Chase. His company writes loans at a 1.0 debt-service-coverage ratio, he said, taking into account the real estate involved as well as the credit-worthiness of the tenants. "We don't really look at (loan-to-value) really," Chase said. "It all depends on where cap rates fall."