"Over our 15 years as a public company, we have achieved our highest returns during economic downturns," says President and CEO John Gates. "CenterPoint is well-positioned to repeat this during the current period as well."

CenterPoint has cash to take advantage of opportunities, officials say, with a 4.2-1 debt coverage ratio and $286.5 million available in lines of credit.. During the first quarter, the REIT's acquisitions were at a capitalization rate of 12.2% while its new developments offered a 13.1% initial rate of return.

"We are beginning to see some interesting opportunities from corporations seeking to liquidate assets," says Chief Operating Officer Mike Mullen. "Due to our liquidity and deep penetration of this huge and diverse market,CenterPoint can purchase and redevelop these buildings into state-of-the-artfacilities. In turn, we can make them available at below market rents at atime when value is paramount in the minds of our customers."

However, potential tenants and buyers are taking a more cautious approach on their investments, often suffering a case of "indecisionitis," Gates says. "There are a lot of tire kickers, but very few decisions being made," he adds. "The feeling today is one of value. The people who are out there are more price conscious than they've been in the past. This is a value market in every way, shape and form."

It didn't help first-quarter results that four leases for more than 100,000 sf each expired Feb. 28, in the middle of one of the market's harshest winters. However, CenterPoint's average rental rate for properties up for lease renewal was $3.47 per sf in the first quarter, chief investment officer Paul Ahern says, which is "still below market." Also, most tenants are electing to stay put given the costs of moving can be two or three months rent, Ahern adds.

"Looking forward, it is becoming clear that much of the market's current vacancy is in high-end speculative space," Mullen says. "Tenants simply will not pay the rent necessary to make many of these projects economically viable. Therefore, we expect a significant curtailment of new speculative construction for at least the balance of 2001."

At the same time, CenterPoint's pipeline includes the $58.4-million Chicago International Produce Market, part of a $131-million development pipeline that is 99% pre-leased or pre-sold.

CenterPoint sold $30.6 million in properties in the first quarter, which company officials say is ahead of plan. The company has observed users and private investors, particularly those seeking to participate in 1031 exchanges, enter the market to a greater degree to institutional investors.