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I like to break a cap rate down into its components - I think that's always made it easier for me to understand what drives cap rates. 

The equation for a cap rate goes something like this: Risk-Free Rate (10yr UST) + Liquidity Premium + Risk Premium - Growth. 

This is a theoretical equation and not really something where I can price out each specific component other than the RFR. The baseline return is the risk-free rate. So if I can put my money in a UST at a 4% yield, in theory I would not be willing to pay at cap rate lower than that (we'll get to an instance where you might). You then apply two premiums for liquidity and risk. Liquidity being, how liquid is this market and this asset class. NYC is always going to have more liquidity than say, Birmingham, AL, and multi will always have superior liquidity because of HUD/agencies. This explains why multifamily in NYC will trade for lower cap rates than retail in Minneapolis. The other premium is the risk premium. All real estate has some level of risk, but some obviously more than others. Hotel is riskier than multi, and shorter term leases are riskier than longer term. Last there is growth. Why were people paying sub-4% cap rates in 2021 for multi? Because they were anticipating driving NOI 15-20% in the first year. So if you have two properties that are roughly equal, but your growth expectations for one are higher than the other, you would be willing to pay a lower cap rate.