Cap rates have compressed even further since my initial post (Oct 13).  

As @Ben Leybovich mentions, if the assumption is cap rates will continue to compress, and most of that 15% relies on that happening, do you agree with the sponsor? 

With aggressively compressed cap rates, why do they think that in 5 years they will only move 50 bps? 

I am a full time commercial broker and we have seen coastal money come into the state as investors chase yield, but returns here are not nearly as compressed as what you will find in larger cities and CBD's.

Orlando’s vacancy rate of 6.9% is the lowest the market has seen in nearly 20 years and is expected to continue compressing over the next few years.

It won't take long before you are the expert in your market.You will soon be able to compress all the data: valuation the location, size, property features and market demand as well as other local comparisons pretty quickly with each new tenancy.  

Covid created the Mother-of-all-market-COMPRESSIONS.

from 92 to 2007 we were building 12k new doors a year. in 09 we pulled 700 permits yet people kept in migrating   same scenario. and price compression in the bad times for median only went down about 20% at the worst of it..

Returns on real estate will be more difficult in next few years because of interest rates and #1 aboveIf my profits are being compressed, it will be harder to make the preferred return and increasing the rate makes it even more difficult. 3.

He then proceeds to assume that the owner occupier portion is vacant, puts in high TI dollars, additional vacancy factor, to then compress my NOI, & hence the final valuation.