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Pedestrians walk past the a vacant worksite for the proposed Waterview Tower hotel and condominium project April 1, 2010 in downtown Chicago, Ill. - 

Jeremy Hobson: It's no secret that the condo market isn't doing very well right now. And that's probably part of the reason why rent is rising in apartments around the country -- people who would be buying condos are looking for landlords instead.

Well, developers are taking notice, and you can see the evidence right in downtown Chicago, where a failed condo complex that's been sitting empty has a new lease on life. It's being turned into luxury apartments.

From WBEZ in Chicago, Susie An reports.

Susie An: Take a cruise along the Chicago River and you'll see some of the city's most notable architectural gems, like the Merchandise Mart and the iconic Marina Towers.

And then there's the 26-story building on West Wacker Drive -- really it's just an unfinished skeleton of a building. It was supposed to be a 90-story luxury hotel and condo complex. But the Waterview Tower has new plans.

Curt Bailey: Luxury rental apartments, about 500 units.

That's Curt Bailey, president of Related Midwest. His company recently bought the unfinished building. Why wouldn't Bailey just finish where the last condo developer left off?

Bailey: Financing, just frankly, isn't available to build condos.

Add to that the perceived risk of buying in this market.

Christopher Thornberg is with Beacon Economics. He says developers and investors are ready to cash in.

Christopher Thornberg: If you're sitting on a bunch of empty condos, and you're saying to yourself 'what am I going to do to get some cash flow running?' Clearly, you're going to look at the rental market.

Walter Molony with the National Association of Realtors says rents are likely to rise about 3.5 percent this year, and that means building more apartment complexes.

Walter Molony: We think because of this underlying demand, mostly on the apartment rental side, construction this year is going to be up 30 percent.

As for the potential apartment complex on Wacker Drive, Curt Bailey expects to get top-of-the-market rents for these luxury units.

In Chicago, I'm Susie An for Marketplace.