Yonatan says his company recently sold a 180-unit high-rise building on the city's lakefront for $110,000 per unit. "Average prices per unit have gone through the ceiling," says Yonatan, who predicted 7% overall capitalization rates in this market at the Real Estate Investment Association's/Society for Industrial and Office Realtors' Summit 2001. "In San Francisco or New York, those are not big numbers. But we've seen six-flats in Lakeview and Lincoln Park trading at $250,000 per unit."

Those North Side neighborhoods are seeing the largest number of condominium conversions, but multifamily sales activity for the first nine months of 2000 was heaviest further north in Rogers Park, Yonatan says. That neighborhood is along Lake Michigan in the northeast corner of the city, bordering the North Shore suburb of Evanston. The Northwest Side saw 32 transactions, Yonatan says, followed by 22 in the western Cook County suburbs and 18 in Uptown.

"It's becoming an extremely active area," Yonatan says of Uptown, another lakefront neighborhood between Lakeview and Rogers Park. "Those deals are trading at record numbers as investors try to create critical mass in the submarket."

One example of activity in west Cook County was a deal in Oak Park, which borders the city's West Side. An apartment building there recently sold in three days, plus another seven days for due diligence, at its full asking price, to a condominium developer.

Yonatan says recent layoffs by such companies as Motorola and Lucent Trchnologies are not likely to crimp the pent-up demand because the supply of rental units failed to keep up with the demand created by population and job growth for seven years before 2000. "We've caught up in 2000, but guess what? We still have pent-up demand," Yonatan says.

Despite some concerns from sales agents, demand for condominiums is not likely to falter because of the declining stock market, Yonatan insists. "People might've lost some of the money in the stock market that they were going to use as a down payment, but their monthly payments are lower now because interest rates are lower," Yonatan explains.

Yonatan repeated his REIA/SIOR forecast of 4% to 6% rent increases in the city, 3% to 5% in the suburbs, with vacancy rates in the 4% to 4.5% range. While the rent increases may seem tame in a rapidly appreciating market, Yonatan cautions that it still is above the historical average 3% increases seen in the market.

Although owners report fuel cost increases of up to 110% over last year, Yonatan says that cost usually is not a major percentage of a building's operating expenses. "It sounds severe, but don't overreact to it," Yonatan says.