The market for bonds backed by commercial real estate recovered over the last 18 months but growth in the third quarter has stalled, said property market researchers Friday.

"There's been a little bit of a stumble in the third quarter," said Ben Thypin, director of market analysis for Real Capital Analytics, a commercial real estate research firm, in a presentation at the Appraisal Institute's annual fall conference in San Francisco.

He said he's expecting little growth in the issuance of commercial-mortgage-backed securities in the third quarter, and that total volume this year will likely end up around $35 billion. New CMBS issuance will likely remain at that rate through 2012, he said.

Still, that's a big improvement over a couple of years ago.

The dollar volume of CMBS deals in just the first half of 2011 was more than twice what it registered in 2010, increasing to $25.7 billion from $12.7 billion in all of 2010, according to Matt Anderson, managing director of Trepp, a provider of commercial mortgage information, analytics and technology.

"There were hopes that volume might reach $50 billion this year," he said, but those have been tempered by the shakiness of European economies and concerns that the U.S. could enter a double-dip recession.

Especially considering that commercial banks, which usually lend about half their capital for commercial real estate markets, are on the retreat, the CMBS market is a linchpin to CRE recovery, according to Anderson.

The number of banks with a concentration of investment in commercial real estate was more than 2,500 in the first quarter of 2007, but by the first quarter of this year had fallen to about 900 "and that's probably headed lower," he said.

Still, CRE markets are past the worst in terms of delinquencies and distressed properties, and the volume of properties in trouble has remained fairly steady over the last year or more, he said.

While CRE sales volume has fallen to less than half its level in 2007, all segments of the market have clocked gains over the past year, according to data from Real Capital Analytics.

Senior living properties saw more than a fourfold increase in sales volume in the first half compared with the first six months of 2010, followed by hotel and multifamily properties. About $23.1 billion in apartment properties in changed hands in the January-June period.

Apartments exist in a "parallel universe" from other CRE properties because of their access to Fannie Mae and Freddie Mac financing, said Thypin.

"The foreclosure crisis in the single-family market has helped the apartment market," he said.

Both Thypin and Anderson agreed that the state of the economy will be crucial in determining how the market moves in the coming months.

"We're looking at a fragile recovery in commercial real estate markets," said Anderson. "It's very much capital driven, not so much fundamentals-driven."

The market is going to be fairly rocky in the short term, but compared to other assets, commercial real estate is a good buy, he said.

Write to Liz Enochs.