The percentage of loans that are defaulting has decreased, but there are a larger number of loans, meaning that the overall number of defaults is higher, Shapiro says. "The percentage is obviously much less than at the height seven or eight years ago," he says.

Retail has been hit with a flurry of companies filing for Chapter 11 and "in some cases, going completely out of business," Shapiro says. "Consumer spending is down (and) consumer optimism is way down," he says. People have had less disposable income, particularly with fuel prices increasing. "People are making some very, very difficult choices," Shapiro says. "And, many things retailers sell are wants, not needs." As people are spending less money on "wants," retailers and manufacturers are cutting back and laying people off. As major and big box retailers flounder, it has a type of rippling effect on the shopping centers where they are anchors or major tenants. "Many malls put them in at a loss to generate traffic," he says. One example of this is Steve & Barry's, "a very, very strong discount sports retailer," which may end up filing for Chapter 11 if they can not find $30 million in funding, Shapiro says. A number of media reports last week detailed the retailer's problems. A company official did not return a call for comment.

While hospitality was hit significantly after Sept. 11, 2001, the hotel industry has not seen the number of defaults as other areas of commercial real estate, Shapiro says. Hospitality as well as industrial "appears to have continued to weather the storm," he says. Industrial properties, "especially new buildings in central locations," are performing well, he says. Industrial buildings cost less to build as well as "less labor costs (and) less utility costs," leaving more wiggle room to create a profit, Shapiro says. The office sector did not initially appear to be impacted but there have been a significant number of job layoffs, Shapiro says. The office market is just starting to be hit with defaults, he says. Shapiro expects the number of defaults to increase for another 12 to 18 months, and possibly as much as 24 months.