The activity is translating into richer pricing, according to Appraisal Research Counselors' most recent "Residential Benchmark Report." Last year's deals were at a projected capitalization rate of 6.41%, also a record, but the deals closed so far this year were at a 5.24% cap rate. Properties on the market or under contract are at a slightly higher 5.63% cap rate, according to the firm's report.

"Brokers report that private investors had been dominating the market, with pre-emptive bids on buildings before they officially hit the market," according to the report. "However, condo converters are now playing a dominant role within the market with strong bids and significant money put at risk in the bidding process."

One example of the dominance of condo converters was the bidding on 1400 N. Lake Shore Dr. All 12 bids were from converters, Appraisal Research Counselors says. "Pension funds are also becoming very aggressive, as they continue to get outbid by converters," the report adds. "We expect the condominium converter to be the dominant player in buying transactions during 2005."