Last week's GlobeSt.com Feedback Poll showed a market in transition as industry investors switch their mindset away from reliance on cap rates and more toward basic real estate fundamentals as their sure-fire path to profitability. In fact the split showed that only a third--31%--are still clinging to cap rates while 66% are returning to the basics. Commentator Vorwaller says it all makes perfect sense.

"It's highly variable based on the market, the asset's location within the market and the quality of the asset. We continue to see a great deal of support for pricing for core trophy assets with strong rent rolls and some rollover.

"But we are seeing a shift on the part of investors wherein they may consider the yield advantage supplied by a secondary or tertiary market, but they're going to go into that market because there's positive momentum and because the underlying fundamentals would imply that they're benefiting from above-national average rates of economic, population, job and demand growth.

"Part of the market has been driven by the highly leveraged, private participants. But they have to deal with different players along the capital stack, whether its senior debt, mezz debt or preferred equity. Look at the flattening of the yield curve and the increase in10-year Treasuries from the beginning of the year--by about 50 basis points. What a difference 50 basis points makes. Lenders are saying show us the money. They're saying they need to know where a projected NOI is going to come from. And they want to make sure the expense base is solid.

"There's a bit more scrutiny on all of those things that make a productive P&L--more so than in the past because the margin for error is much less. The market doesn't have much forgiveness compared to where we were before."