Crocker also expects there will be fewer single-family home buyers in 2001 as the economy slows. Meanwhile, he bases his prediction of a decline in multifamily construction starts on tougher lending standards, including increased equity requirements.

"It will become increasingly more difficult to justify new developments as yields on successful projects are barely more than yields on acquisitions," Crocker says. "Our development activity will be focused on unique situations such as in-fill locations and high-barrier markets."

Crocker predicted during a recent conference call the REIT's strongest markets in 2001 will be Boston, Northern Virginia, Southern California's Inland Empire, Los Angeles, Denver and San Francisco. Rent increases of 18.4% and 21.4% were seen in the Boston and San Francisco markets, respectively, while a 25% increase in net operating income growth was seen in the Bay Area. In the fourth quarter, NOI growth shot up 35.4% in San Francisco, Crocker says. "I've never seen a number like that in all my years in real estate," he adds.

Meanwhile, Crocker foresees the bottom markets to be Kansas City; Raleigh-Durham, NC; Tulsa, OK; Memphis, TN; Birmingham, AL and Orlando. Rents fell 4.8% in Tulsa last year, Crocker says, while dipping 4.3% in Kansas City, 3.6% in Birmingham and 2.2% in Memphis. NOI fell 8.6% in Memphis, Crocker reports, compared to 8% in Tulsa, 6.2% in Houston and 1.4% in Raleigh-Durham.

In Chicago, "the market maintained positive momentum" despite a slowdown in employment, Crocker says, but notes the city and state are aggressively pursuing policies aimed at retaining jobs. Meanwhile, the west suburban Aurora-Naperville area is seeing building while office buildings Downtown are becoming either multifamily apartments or condominiums, he adds. "The Downtown market will have to be watched very closely," Crocker says.

Equity Residential owns or has investments in 1,103 properties in 36 states consisting of 227,082 units. It bought 69 properties in 2000 with 9,782 units, most of them in Grove Properties Trust's portfolio, for $362.7 million and at an average capitalization rate of 7.5%. It sold 23 properties consisting of 5,476 units for $650.6 million, and an average cap rate of 8.9%.