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CHICAGO-Despite ongoing discussion about the housing-market bubble, the real bubble to worry about, said Mesirow Financial senior managing director Diane Swonk, has little to do with condominiums, especially in Chicago. In her keynote address before more than 400 professionals at the RealShare Chicago conference Tuesday, Swonk also said President George W. Bush’s most important appointment is hardly one of the more contentious selections in his second term. The RealShare series of conferences is produced by Real Estate Media, publisher of Real Estate Forum and GlobeSt.com.

“The greatest risk today is oil prices,” Swonk commented. “But we have to walk away somewhat stunned and satisfied.” The chief economist for Mesirow Financial noted that oil is one commodity price that is not falling more because of psychological reasons. “It is a true bubble,” she said. “Fear has played a huge role ever since we’ve been in the Middle East.”

More so than federal judges and United Nations ambassador, Swonk suggested Alan Greenspan’s successor as Federal Reserve Bank chairman is a critical hire. “Without chairman Greenspan, it’s hard to say who’ll be our deficit hawk,” Swonk said, who takes issue with the view that “deficits don’t matter.”

Long-term bond rates are “too good to be true,” Swonk said, adding 10-year rates are likely to crack 5% during the next two years. “My concern is that after they hit 5%, they could run up rapidly.”

But demographics may be enough to inoculate at least two sectors from feared bursting of the bubble caused by rising interest rates, industry leaders said during the Town Hall meeting, which followed Swonk’s address.

Downtown’s multifamily boom is likely to continue, said MCL Cos. president and chief executive officer Daniel McLean, which in addition to new development, is increasingly including adaptive reuse of older office buildings to residential condominiums.

“You still have to keep your eye on demographics,” said Marcus & Millichap Real Estate Brokerage managing director Greg A. Moyer. The size of college graduating classes is increasing, he noted, which not only should help the multifamily rental sector, but office market as well, assuming jobs are created for their newly minted degrees.

While the predicted demise of office buildings as a result of telecommuting has failed to materialize, Staubach Co. Midwest division president Steve Stratton sees corporate outsourcing of jobs overseas remains a threat to the sector’s long-awaited recovery. “That is still a trend,” said Stratton, noting Accenture’s recent decision to take a three-million-sf building in India. “It’s a secret risk that could undermine the national recovery.”

On the other hand, CenterPoint Properties Trust president and chief executive officer Michael Mullen’s industrial REIT has found a trading partner in Australia, where that country’s mandatory retirement contributions has created a flood of capital seeking a home. “The US is their first place they want to put their money,” Mullen said. “We not only speak the same language, but we tend to look at real estate the same way…They’ve securitized just about everything that can be securitized over there.”

The same demographic trends driving the multifamily sector come into play in the retail arena, said LaSalle Bank group senior vice president Karen Case. “Retail is absolutely the thing to focus on right now,” she said, adding national retailers already are reconfiguring their stores for Downtown and infill locations.

For tenants, lease rates are becoming less of a factor, observed Trammell Crow Co. executive vice president George Kohl. “New buildings and efficiency are hot,” he said. “The West Loop continues to be hot.”

After the summer months are done, the conference series will fire up again with RealShare San Diego in September.

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