Is danger ahead in 2017 for the commercial property sector? According to a recent article by the WSJ, defaults are rising in a key corner of the commercial real-estate debt market just as borrowing costs are set to jump, raising the likelihood of a slowdown of the $11 trillion United States commercial property sector in 2017.

The article indicates that a “financial crisis-era regulation is about to take effect.” According to analysts, commercial real-estate borrowing is more expensive and complicated. “At the same time, interest rates have increased since the election of Donald Trump as the nation’s 45th president last week and seem poised for a sustained rise from recent historic lows, which would further squeeze an industry built on borrowed money.”

As the commercial property market enters its eighth year of expansion, there are “worries” present. In larger markets across the United States, it was noted that landlords are battling a slowdown in sales and rising vacancy rates. According to Real Capital Analytics, commercial property sales volume was down 8.6 percent in the first nine months of 2016 to $345.4 billion.

Real Capital Analytics  indicates that sales of commercial properties slipped 43 percent year-over-year in October. The new edition of US Capital Trends shows that for the first 10 months of 2016 total transaction volume is 12 percent off the levels seen through the same period in 2015. “The decline in October is in part a reaction to the heavy portfolio and entity-level transaction activity of 2015, with volume for such deals down 64 percent YOY, while the pace of megadeal activity in October 2016 is on par with the average monthly pace for Octobers in 2012, 2013 and 2014.” It was also indicated that deal activity was down in October for single asset market as well, though at 27 percent YOY not as sharply as megadeals. For the year to date, single asset deal volume is still only 2 percent off the levels seen through the same period in 2015.

Moody’s reported that more than 5.6 percent  of some $390 billion worth of commercial property mortgages that have been packaged into securities was more than 60 days late in payment in September, up from a 4.6% delinquency rate earlier this year. And adding to the market’s worries, the WSJ also writes that there are new rules that go into effect on Christmas Eve under the Dodd-Frank regulatory overhaul requiring issuers of commercial mortgage-backed securities to keep at least 5 percent of the securities they create.

“You couldn’t have planned worse timing,” stated Tad Philipp, director of commercial real-estate research at Moody’s. More than half of the bonds issued in 2005 and 2006 for New York properties were refinanced by such lenders, according to a report earlier this year by CrediFi, a real-estate data and analysis firm.