A few days ago, the Federal Reserve Board said that its most recent survey of bank lending officers showed an increased demand for commercial real estate loans over the past three months. Maybe that’s not surprising: Somebody, somewhere always has a scheme to make money on commercial real estate, if only they could get a loan.

But what was surprising to the Fed was that some banks across the nation were willing to ease up on “certain terms.” In a nutshell, that meant the banks were willing to impose higher loan limits, and many said they were actually bringing down the interest rate they were charging on CRE loans.

“The January results were the first in five years to find a net easing in some of the CRE loan terms,” the Fed reported.

The takeaway from this is that, nationally, banks have done two things. One is that they’ve begun recovering from their swoon over commercial real estate lending; the second is that they’ve realized that if they want to improve their bottom lines, it can’t all come from grinding consumers over checking account fees. Somewhere, they’ve got to start making some money from lending again.

Building Blocks

It’s not hard to find people griping about the inability to get bank financing for commercial mortgages. Show up at any gathering of commercial real estate brokers, business leaders and investors, and just hang around the coffee pot or the cocktail bar. Someone’s going to be spouting off about how they got shafted by a bank that wouldn’t fund their deal.

What’s interesting, though, is that in Massachusetts, the notion that banks have backed off commercial real estate lending is a myth. There has been no drought of money for CRE deals. Not this year. Not last year, and not for the last five years.

In fact, last year was a boom year for bank bucks flowing into commercial mortgages around here.

The heyday for commercial real estate lending was supposed to have been the mid-2000s. Certainly the overall trend for commercial mortgage backed securities saw a massive spike from 2003 through 2008, when the CMBS market collapsed to almost nothing. That’s the pain that big commercial borrowers felt.

But bank lending in Massachusetts didn’t follow the same pattern.

Commercial real estate loans at all Massachusetts financial institutions overseen by the FDIC grew steadily every year of the past decade, except one. In 2005, Bay State banks lent about $14 billion in this category, jumping up to a little more than $15 billion the next year. In 2007 – a year before the big economic collapse – banks in the commonwealth saw a sizeable decline in CRE loans, back to just under the $14 billion they’d lent two years before.

But then an interesting thing happened. As the rest of the economy collapsed, and as residential mortgage lending started its perilous plunge, banks around here started funneling more cash into commercial real estate deals.

In 2008, CRE lending by Massachusetts banks jumped to nearly $16.3 billion. It hasn’t stopped growing since. In 2009 and 2010, CRE loans here grew to $17 billion, and then to $17.3 billion. And last year? That’s when banker confidence really kicked in. Massachusetts banks grew their basic commercial real estate loan portfolios to a record high $18.6 billion in 2011.

And these numbers don’t even include the hot apartment market. Since 2005, multifamily residential lending has grown every year (with the exception of a very modest dip in 2007). At the mid-decade mark, Massachusetts banks had about $2.8 billion tied up in apartment building loans. Last year, the number was about $3.7 billion.

So what does that mean? It could mean that banks here are on the cusp of a major wave of new commercial real estate lending. If they have been able to steadily increase their lending even in this down market, as demand heats up (and the Fed says that’s happening) we’re likely to see a banner year for CRE loans in this state. Remember that, when you’re at the next gathering of brokers whining about busted deals. At least it’s not the banks’ fault.