The cap rate determines how much every dollar of NOI is worth. Drag the cap rate and watch the same building become worth twice as much — or half. NOI is fixed; the cap rate bends everything around it.
5.0%
$1,800,000
Asset value
—
Value per unit
—
Buildable budget / SF
—
Same building. Same NOI. The cap rate changes nothing about the physical structure — and everything about what you can afford to build.