Delinquencies in the commercial mortgage-backed securities space fell incrementally in May, but experts say this is a sign the secondary market is improving. The CMBS delinquency rate fell five basis points from April to 9.6%, according to Trepp analytics firm which released the numbers Wednesday. In May 2010, 8.42% of CMBS loans were delinquent. Of all CMBS loans, .64% are 30-days delinquent, .50% are 60-days delinquent, 2.7% are 90-days delinquent and 1.84% are real estate-owned. Many of the delinquent loans (2.98%) are in foreclosure. Although the delinquency rate drop was incremental, analysts at Trepp claim it is a positive sign. May's decline was the largest in the last two years aside from October 2010 when the Extended Stay Hotels loan resolved. In addition, the drop rides on the largest monthly spike of the year. "(April's) increase took many CMBS pros by surprise as it came after three consecutive months of improving results," commented Manus Clancy, managing director of Trepp. "While there may be additional bumps along the way, we think the May numbers accurately reflect a leveling off in the market." The industrial and office sectors of CMBS experienced delinquency increases in May, while lodging, multifamily and retail spaces experienced decreases. Industrial property delinquencies spiked 120 bps during the month to nearly 12%, more than doubling the 5.34% rate one year ago. The office delinquency rate rose to 7.23% in May, also up from 6.86% in May 2010. Delinquencies for loans backed by lodging or hotel properties are down to 15.37%, dramatically lower than the 18.45% rate one year ago. Multifamily delinquencies hit 16.71% and retail delinquencies hit 7.94%. Standard & Poor's estimates a pick-up in the rate of CMBS issuance, with about $15 billion on the calendar in the next four months. "If all of these deals price as scheduled, the total through September would be about $27 billion," said S&P in a note to clients. "Annualizing this total gives $36 billion, close to our full-year projection of $35 billion." Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.