"Chicago has a substantial number of condominiums underconstruction in the Downtown market," Crocker says. "In addition,there are enough high-rise rental buildings under construction tomeet the demand in good times. With sluggish job growth andeconomic worries, condominiums will not be sold and may be put backin the rental pool."

Equity Residential's Chicago portfolio includes 3,780 units ineight communities. Just one, Cobbler Square loft development in theNear North neighborhood, is in Chicago. The others are inBloomingdale, Glendale Heights, Lisle, Naperville--where it hasthree projects--and Palatine. For now, it is offering rentconcessions of $250 to $2,000 to prospective tenants at thesuburban properties, but just $50 for a free appliance at CobblerSquare. However, Crocker's view suggests other Downtown propertyowners may be forced to dish out heftier incentives to lure tenantsbeginning next year.

"This overhang, coupled with a market that will produce too manyhigh-rise rental buildings, will continue to create a very softmarket across 2002 and 2003," Crocker says.

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