Cap rates for same building differ for in/out of state investors?

[Christa S Rickard]

I was on the phone last night with a broker who informed me that the 8% cap rates in his market are for in-state investors. He said most out-of-state investors only get 6% cap rates on buildings. I had never heard of this before. I have yet to do a deal, but in all of my reading I thought the cap rate for a building was set based on market demand not the location of the investor. Am I missing something?

Unless he means the expenses for an out-of-state investor are usually higher, which lowers the rate of return? I've only been looking for deals for a couple of months, but I have never seen anything that lists 1 cap rate for in-state investors in 1 for out-of-state, so I'm just guessing at what he meant but it didn't quite make sense to me.