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CHICAGO-The latest, and perhaps last new project for a while, got mixed reviews Thursday at RealShare Chicago. Houston-based Hines has a contract to buy a site at the southeast corner of Dearborn and Madison streets, where it will build a 40-story tower.

Sidley Austin Brown & Wood LLP will move across Dearborn Street from Bank One Plaza, leasing 500,000 sf, more than half of the 820,000-sf building.

“Three idiots are building 4.5 million sf of office space in Chicago,” quipped Equity Office Properties Trust chairman Sam Zell, referring to the John Buck Co. and Pritzker Realty, building office towers at 111 and 71 S. Wacker Dr., respectively, in addition to Hines’ plans at 1 S. Dearborn St.

John Buck Co. principal Kent A. Swanson politely begged to differ during a subsequent discussion on foreign investment, which has helped fuel Downtown office building sales volume of $2.6 billion last year and nearly $1 billion already in 2003.

“If last year was the year of construction for the bank, this year will be the year of the transaction,” said LaSalle Bank EVP Breck Hanson, whose parent company, ABN AMRO, is also building a 1.3-million-sf office complex just west of the Ogilvie Transportation Center.

However, the new construction here represents nearly 20% of the total for the entire US, Zell noted. And the new space is being added to a market that is not seeing job growth, added Prudential VP of acquisitions Zeb Bradford.

Although the latest developers have done a significant amount of pre-leasing, the result will likely be a zero-sum game of musical chairs, brokers warn. For instance, anchor tenants such as Deloitte & Touche (Prudential Plaza) will exit Mayer Brown Rowe & Maw (190 S. LaSalle St.) will leave behind large blocks of space in buildings to the east.

Fifield bets the space vacated by Sidley Austin Brown & Wood will ultimately be taken by Bank One, but that likely will come at the expense of Prime Group Realty Trust, developer of the recently opened Bank One Corporate Center at 131 S. Dearborn St.

Owners of buildings faced with an onslaught of shadow space may worth talking to, suggested Beitler Co. CIO Donald Shapiro. Those properties represent opportunities to buyers who believe they can fill the building with new tenants, he said.

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