It’s hard to say that Chicago is a landlord’s or tenant’s market, Connelly said. “It’s really based on the submarket. If you’re a large block user and looking for nice space in the West Loop, that’s a landlord’s market,” he said.

There’s no such bifurcation of who leads the industrial market, said David Bercu, principal of Colliers International. He said that while the deals in the industrial market “are abysmal,” there is activity. “We’re starting to see some equilibrium, but I think the tenant market is going to last several years. Fortunately, there’s no new construction.”

The panelists said that the CMBS players are back in the game, doing $50 billion in deals already this year, up sharply from the $3 billion in 2009. “We’re calling it CMBS 2.0,” said Sue Blumberg, SVP and managing director with NorthMarq Capital. “They’re competing where they probably shouldn’t, they want to grab trophy properties to seed portfolios.”

Michael Reschke, chairman and CEO of the Prime Group Inc., said with development non-existent, his company is busy with maximizing value of current holdings and doing conversions, such as hotels replacing bottom floors of class B office towers. There won’t be new office development for at least five years, as development costs are about $450 per square foot, and lenders will only cooperate if a potentially property is at least 65% pre-occupied and 60% loan-to-value. “No one is going to put up the $200 million to $250 million equity for a 500,000-square-foot building, or twice that for a one million square foot building,” Reschke said.

He said while apartments are the best market right now, it would be a big risk to join in now. “The wave of new apartment buildings are already happening. If you’re going to develop, at least make them luxury units that can be converted to condo when the cycle turns over,” he said.

Manos said he sees three trends in particular that are taking shape this year, including increasing activity in triple net, single tenant properties and focusing on core CBD trophy properties. “Also, we think we’re going to see activity as the major retail owners, such as Simon, Westfield, GGP and Macerich are looking to offload as many as 75 class B malls later this year. This hasn’t ever happened all together like this, all at the same time, we think that will affect pricing and allow a strong buyer to pick and choose properties.” He said BentleyForbes would be then interested in redeveloping the properties into mixed-use.

At the conference Office Focus panel, Matt Carolan, managing director with Jones Lang LaSalle said while the competition for trophy properties is intense, with prices up to peak levels again, tenants needing 10,000 square feet to 40,000 square feet can find some awesome opportunities. “I agree with Reschke, we’re not going to see new office development, not because of lack of tenant demand but because the financing just doesn’t work yet.”

Jeffrey Bramson, senior managing director with HFF, said institutions are looking at investing in Chicago office property because prices on the coasts have already shot up high, with a lot of competition. “Chicago has better yields, and better buildings, than in coast cities such as New York City. As long as the coasts stay expensive, Chicago should benefit,” he said.

Patrick Kearney, managing director with Tishman Speyer, said there also wasn’t the massive drop in rents during the downturn in Chicago. “You only saw a 10-15% drop in Chicago, compared with up to 50% decline in New York City,” Kearney said.

This interest is contrasted with REITs snubbing the city for multifamily investment, said Mark Stern, SVP with Waterton Residential. “I think it’s good that REITs don’t want to play here, there’s less competition for deals,” he said. Stern participated in the multifamily panel, who all agreed that while being involved in multifamily is exciting, there’s also a lot more due diligence on every deal than there was before the downturn.

“I remember one deal we did with California Teachers, the purchase of Presidential Towers in 2007, we sent them an email to do a conference call and they got on the call and said they hadn’t even read our memo,” Stern said. “Compare that to today, much smaller deals we’re doing four-hour conference calls.”

He said his biggest concern today is the potential increase in interest rates. “We’ve got about 500,000 new units on track to be delivered in 2013-14, compared to an annual average of 300,000. It could get choppy in 2013,” Stern said.

The last panel at the conference was a discussion of distress in the Chicago area. Steven Chaben, SVP and managing director at Marcus & Millichap, said he pegs the start of the distress market around August 2007.

“I’ve learned a few things in my 30 years of dealing with these cycles,” Chaben says. “One, we get into downturns when we start seeing deals done that don’t make economic sense. Then we say, ‘We’ve learned our lesson.” Then, it doesn’t take much time before we start doing deals again that don’t make economic sense.”

Most players in the distress market expected a repeat of the RTC days of massive, quick sales, but that didn’t happen this cycle. The panel debated whether the “extend and pretend” worked, and in some cases it’s clear that it has, said Mitchell Kahn, principal of Frontline Real Estate Partners. However, he said that this practice is likely near its end.“I think the banks are starting to lose patience with borrowers, and are starting to take action,” he said.

William Serritella Jr., a partner at Aronberg, Goldgehn, Davis and Garmisa, said it’s likely the lenders have taken this long to build up their workout departments. “They’re now ready to either listen to proposals or move into foreclosures over the next 12-18 months,” he said.

Now what’s happening is that some investment groups are looking to buy out the banks themselves. But the panel agreed that most of the nation’s distress is going to be worked out slowly, one property at a time, and that borrowers need to realize how they act will have a great impact on the process.

“Borrowers who push for communication with their lenders, who raise the tough issues, they’ll build confidence and will likely stay in place,” Kahn said. “The instant the lender loses confidence, that’s when you’re in trouble.”