Replacement Cost as it pertains to valuing property

[Michael K.]

Seems like different Investors have different uses for replacement cost in terms of valuing potential investments.
The way I understand it, in general, when replacement cost is above the cost of acquiring an equivalent existing property, you can charge less rent with your existing property acquisition and still achieve the same return as the Developer who must charge a higher rent on his newly-developed building, so you stand a better chance of getting tenants. Therefore, generally speaking, when acquisition cost of existing property is greater than replacement cost, you are better off developing a new building. This all assumes land costs are equal and all else being equal. I know that this also depends on the product-type you are building - class A, B, etc.
What are your thoughts on replacement cost as a measure of evaluating an investment deal?