Chicago Market Offers Few Fire Sales

RREEF vice president Timothy E. Ellsworth was pleased when his company was able to finance its $415-million acquisition of UBS Tower last year at 5.10%. More recently, though, RREEF financed a Twin Cities multifamily rental buy with 3.3% money. "You end up paying the seller with the benefit you get of financing," Ellsworth said.

Lenders also are benefiting, seeing increased volume. "The opportunities we see are partner buyouts," said LEM Mezzanine partner Jay Eisner. "It's a great time for operating partners to take out their partners."

GE Real Estate managing director Debbie Riley agreed. "There's not a lot of acquisitions out there," she added.

Fremont Investment & Loan regional manager Scott Manlin says his company is on track for a record year, with "capitalization clean-ups" and construction loans leading the way.

Beitler Co. CIO Donald Shapiro expected to see more foreclosures as interest rates go up, as some predict they will later this year. So far, though, double-digit vacancy rates have not pushed many owners over the edge. A growing number of institutional owners with deep pockets also is keeping blood off the streets, Ellsworth said.

Meanwhile, those who lack the patience of a shark have plenty of opportunities, panelists suggest.

"If this is the bottom, I can't wait until we see the top," said the Enterprise Cos. principal Ron Shipka. "Business is still pretty good."

The multifamily developer noted, however, prospects are looking at an average of 16 different projects before zeroing in on a top choice. Even then, it likely means another five looks before contracts are signed, he added.

While Shipka is bullish about the condominium side of the sector, others see storm clouds on the rental side. "We look every day for where the other shoe might fall," said LaSalle Bank EVP Breck Hanson. "We're looking really closely at our multifamily portfolio right now because of what effective rents really are."