As questions mount over whether commercial real estate is experiencing a boom or a bubble, some comfort has been taken in the fact that — unlike in the late 1980s — lenders have stayed away from high-leverage, high risk loans. By keeping safeguards in place, commercial real estate lenders have been the brake against any possible overbuilding.

That's why some people are getting nervous with the return of 100 percent financing to the sector.

Groups like Inland Mortgage Corp., a division of the Inland Real Estate Group of Cos., are now offering that product and rapidly growing their transaction volume. In 2004, the company did about $200 million in business. In 2005 the figure will be $300 million. And next year it wants to grow to $500 million. Its package includes everything — fees, transaction costs, etc.

“Our thinking is, if we would buy the property at a certain price, why wouldn't we provide a 100 percent loan on it,” says Leslie Lundin, executive vice president for Inland Mortgage.

Other companies are not going quite that far. Lenders are requiring less equity from buyers and covering construction or acquisition costs through blending of senior debt, mezzanine debt and preferred equity. Canyon Capital Realty Advisors, for example, can get up to 98.5 percent leverage through such a package — all at a rate that's not too steep. The first 75 percent of cost would be covered by a standard construction loan with a 10 percent interest rate, a mezzanine piece (in the 14 percent interest range) would cover 15 percent and the last 8.5 percent would be covered by preferred equity.