A big bankruptcy in commercial real estate announced this week raises questions about the health of the sector and its related exchange traded funds (ETFs).

General Growth Properties (GGP), the second-largest operator of shopping malls, filed for Chapter 11 on Thursday. This makes it the biggest retail casualty of the recession, says Paul R. La Monica for CNNMoney.

This development could affect a number of other U.S. companies. One of the largest unsecured creditors of General Growth is Bank of New York Mellon, although the bank is listed as a trustee for other creditors.

But the big worry is that as this recession drags on, is General Growth an anomaly, or the start of a larger trend? One economist sees losses in commercial real estate rising across the financial sector throughout the year. The economist said banks have an estimated $1 trillion exposure to commercial real estate. While it’s half as large as exposure to residential loans, it’s a hurt few banks can afford to take on.

On the bright side is those who feel that commercial real estate won’t wind up in a freefall, because prices didn’t get as far our of whack with reality as residential real estate did. And General Growth’s bankruptcy is not out of the blue – the company has been struggling for months.

Other real estate investment trusts (REITs) have been doing better: Simon Property (SPG), Kimco Realty (KIM) and Equity One (EQY) took advantage of the stock market rally and sold new shares to the public.

• iShares FTSE NAREIT Industrial/Office (FIO): down 16.6% year-to-date

Tags: Commercial Real Estate, FIO, Real Estate, Sector ETFs