Like the Black Knight in the classic “Monty Python and the Holy Grail” film after both of his arms are cut off, the commercial real estate market endured multiple economic blows in March, but it shrugged them off as if they were “just a flesh wound.”

Even though values continue to bump along the bottom, the market’s tenor was tested and came through remarkably calm, given all the reasons to be volatile.

Perhaps the best indication of this trend is found in the commercial mortgage-backed securities market, which ended the first quarter with about $8.7 billion of new offerings.

At that level, commercial mortgage-backed securities volume so far this year is on par with 2000 and 2002. In those years, annual volume in the U.S. amounted to $46.9 billion and $52.1 billion, respectively.

The strong start has many market participants believing that commercial mortgage-backed securities can reach $40 billion in volume this year, which would be almost four times what was offered in 2010.

Yet even at that huge increase, it is important to keep in mind that $40 billion would represent only a fraction of what was offered in 2007, when commercial mortgage-backed securities volume peaked at $228.5 billion, according to data from Commercial Mortgage Alert.

While volume was quite encouraging in the first quarter, what about rates?

Despite a pullback during the month while events unfolded across the globe, rates actually ended the month about where they started, and they ended the first quarter lower than where they stood on Jan. 1.

The five-year and 10-year commercial mortgage rates now are about 0.25 percentage point lower than at the beginning of the year, according to the John B. Levy & Co. Commercial Mortgage Survey.

The rates are in the 4.75 percent to 5.65 percent range for stabilized properties at a leverage level of about 65 percent to 75 percent, the survey found. While lower leverage transactions price more aggressively, loans that represent 80 percent of a property’s value are available again, but at higher rates.

Other good news can be found in another major part of commercial real estate lending.

The default rate for commercial real estate mortgages held by U.S. banks fell to 4.28 percent in 2010’s fourth quarter from 4.36 percent in the third quarter, according to Real Capital Analytics, a New York-based commercial real estate research firm.

This is the first quarter-over-quarter default-rate drop in the past 17 quarters dating to the second quarter of 2006, when the default rate was a paltry 0.58 percent.

Interestingly, the highest default rates are on the books of the country’s largest banks — those with more than $10 billion in assets — probably because they can afford the write-downs.

Default rates as reported by the smallest banks — those with less than $1 billion in assets — generally are lower. Since smaller banks are much more highly concentrated in commercial real estate, it appears they are putting off inevitable write-downs.

The strategy of putting off a write-down would actually be a good one if values were rising.

However, according to Moody’s CPPI index, which measures value trends by tracking multiple sales of the same property, we are clearly bouncing along the bottom.

Recently released data for January indicates that values are down about 4.3 percent compared with the prior 12 months and down 42.8 percent since the peak in October 2007.

The trouble for lenders in the Richmond area and other secondary and tertiary markets is that real estate values in smaller markets are not increasing as much as they are in primary markets.

Real Capital Analytics’ study indicates that recovery rates on liquidated loans in secondary and tertiary markets are much lower than on loans in primary markets.

But like Monty Python’s Black Knight, many community banks are muddling through this mess, now with no arms or legs but continuing to fight.