"I didn't feel any richer when my portfolio was up. And I don't feel poorer when it went down," says Scardino, who has yet to see signs of serious weakness in the Chicago retail market.

In fact, Scardino says, car dealers tell him sales are up, and "I get calls from builders all the time."

But that may be about to change, counters Neil D. Freeman, president of Chicago-based Aries Capital. "Everything in the economy is inter-related," he says.

A year ago, high-flying tech companies justified their lofty stock prices without earnings, but with "how many eyeballs were looking at their web site. That dog don't hunt any more," he notes. Instead, there is an emphasis on profits.

However, companies that are unable to increase revenues are taking the only other tack available--reduce expenses. "f you lay off people, you cut expenses," Freeman says, and the less space needed for employees translates into less expenditures on real estate.

Locally, Motorola is on a payroll-cutting binge, but so far the pink slips have yet to result in a sale of a building or sublease space. But Freeman looks east and west and sees vacancy rates in the tech-heavy Cambridge, MA and San Francisco markets jumping from 2% to 10% within the past month. "In Chicago, it'll have an effect as well," Freeman says.

Besides needing less space, companies electing to cut business travel will affect hotel vacancy rates, adds Freeman, whose company's efforts to arrange commercial mortgage financing includes those on hotels.

"The softness in the stock market has been a positive thing in our business because interest rates have come down," says Freeman, who looks forward to further cuts in short-term rates.

Although real estate may appear to be an attractive investment alternative to equities, Freeman adds a reminder about asset allocation practiced by institutional investors, such as pension funds. A drop in the stock market may cause real estate to be over-allocated in a portfolio even if its value remains constant.

If the economy does take a downturn, Freeman sees real estate in the best shape it's been entering one in his 25 years of watching the market. "It's the first downturn where real estate hasn't been overbuilt or overhyped," Freeman says. "The reason is the lending community hasn't believed the numbers at the peak, and we're expecting a downturn at some point. You won't see the wholesale defaults. Values may drop 5% or 10%, but not the 20%, 30% or 40% like the early '90s. And I think that's very positive. Real estate may be a bit more favored by those afraid of the stock market."