"The market continues to be a battleground between privateinvestors, condominium converters, pension funds, and to a lesserextent, REITs," Appraisal Research Counselor notes. Marcus &Millichap reports prices surged 14% last year to $66,547 per unit,and shows no sign of abating.

"Transaction velocity appears to be accelerating in 2004 asinvestors are being lured to the Chicago market by significantprice appreciation," according to Marcus & Millichap's "ChicagoApartment Research Report." "The greatest appreciation is in thecity, where anxious condo converters are bidding up prices forapartments."

Robert Gecht, chairman and president of Albany Bank & TrustCo., told a Commercial Forum crowd this week that condominiumconverters are driving prices beyond the point where deals work."It's very hard to buy an apartment building today in any areawhere there's a condominium conversion premium," Gecht says.