Opinions on smaller commercial warehouses (e.g. 25,000 sq ft)?
Warehouse investing seems to be all the rage these days, but most info I find online about warehouse investing focuses on larger, modern warehouses that are used by large corporations like Amazon.

I live in an area with an older city and surrounding towns with 100+ year old brick warehouses that are rapidly being redeveloped into luxury apartments, retail spaces, and offices. But there are still some operating as proper warehouses. These are usually 2 or 3 story units with 1-4 loading docks, wooden floors and beams, etc., and they're often listed around an 8-9 CAP when leased.

I am very green with warehouse investing, but multifamily sells at 4-6 CAP around here, so these numbers seem pretty great to me.

Has anyone here been successful with investing in these sorts of properties? Are there particular things I should watch out for or run away from? All advice, guidance, and ridicule is welcome.
[{"id": "ft13g9i", "text": "Smaller warehouses are great for owner-users and single tenant industrial users. Flex buildings are common in that size range too, with 10-15% devoted to office space. There's certainly upside to a 25k/sf building, especially in growing industrial areas. \n\nThe major concern for older buildings will be the roof, power, and environmental concerns. Most older buildings will have lackluster power as well as roofs in shoddy condition. I've just listed a 20k/sf building that has some serious environmental red flags. Make sure you / your broker does serious due diligence on these things.", "replies": [{"id": "ft3y8jc", "text": "Environmental concerns?", "replies": [{"id": "fteeifu", "text": "Environmental concerns are big with warehouse product. You'll want to know what line of business previous tenants were involved in. They could have been dumping waste, etc.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ft16a4c", "text": "I was a tenant in a warehouse property that was about that size up until last year. It was tilt up concrete warehouse. The roof always leaked, we had 60 amps when the landlord promised 200. And it was damn near impossible to get the landlord to do anything. \n\nFrom an operators perspective, they were controlling costs, maintaining close to 100% occupancy, and had 3% rent inflation built into every lease. The 25,000 square feet was demised into about twenty (20) 1,000-2,500sf units. Most units leased to small businesses (general contractors, landscapers, light distributor, small brewery, clothing sewing), some units were glorified garages for rich guys with boats and he was charging \u201cabove market\u201d rent when compared to what Amazon pays.", "replies": [{"id": "ft2cu2m", "text": "Didnt really answer the question but entertaining anecdote tbh", "replies": [{"id": "ft4isy8", "text": "Haha. Sorry I had to cut it short. The point is, if you think you can control costs, and charge more than the market warehouse rate, you can be successful. If you can build a portfolio of these properties and employ a maintenance guy to do the odd jobs or flip units, that would be ideal.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ft18bpa", "text": "So it really varies. Industrial assets have performed well and will continue to do so even among Covid as online sales continue to increase. For tenants like Amazon, you're going to have to pay a much lower cap rate since the credit quality is good. Higher cap rate warehouses are due to higher risk tenants. If these tenants leave, vacancy could remain for awhile. Cap rates are a metric of perceived risk of the investment. We own hotels due to higher cap rates, but can effectively control our risk through proper management. However, for warehouses and retail, if the tenant goes vacant, it will take some time before we can re-lease that space.", "replies": [], "depth": 1}, {"id": "ft19mag", "text": "They're generally a good bet, not least because of those conversions that you're talking about.  It makes no sense to build infill industrial anymore, the rents don't justify it, so although big, modern warehouses are what's getting built and the overall Industrial market is growing, there's still plenty of demand for infill warehouse and the existing stock is falling.  Plus you're seeing all that information about big, modern warehouses because that's what institutional investors go for.  You'll be flying below that radar with a small property.\n\nIt sounds like you can go in at a decent cap.  My bet is that there's decent amount of deferred maintenance in a lot of those options, and you're not going to have a modern building which will probably limit tenant options if you need to backfill.  But you have that redevelopment option if you'd rather go that route.", "replies": [], "depth": 1}, {"id": "ft1cim1", "text": "i\u2019m no expert on warehouses but i do know that in times of crisis (may 2020);\nThe industrial niche of real estate was most successful in rent collection. followed closely behind by manufactured housing communities. \n\ni would think its all about your tenant, but again i\u2019m no expert.", "replies": [{"id": "ft1sz68", "text": "\"Manufactured housing communities\" lol", "replies": [{"id": "ft1ue60", "text": "... or trailer parks haha. call them whatever, but a great investment &amp; one of the last affordable housing options in the states. largest &amp; highest class communities are trading @ 3% caps atm", "replies": [{"id": "ft1uhz8", "text": "I agree but still \ud83e\udd23", "replies": [], "depth": 4}, {"id": "ft2sl5o", "text": "Trailers are worth less as time goes on, compared to a house appreciating in value. Are you saying mobile homes increase over time, or investment in the park pays off?", "replies": [{"id": "ft38hms", "text": "The latter", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "ft1v4b7", "text": "Edit.", "replies": [], "depth": 2}, {"id": "ft4il7d", "text": "According to costar or one of the big research houses (forgot which), multi was slightly better. 90s vs mid 80s.", "replies": [], "depth": 2}], "depth": 1}, {"id": "ft1jlfq", "text": "The properties that you are describing don\u2019t fall in the same category as the space that amazon would lease. Those are 200K+ SQFT with a 36 foot clear and hundreds of bay doors with excess land.\n\nIf you are interested in buying an old class C muli tenant industrial building your most important things are gonna be: 1) environmental study, and the 2) PCA, 3) and THEN the RR. After that figure out why a smarter more well capitalized group didn\u2019t reposition the asset earlier. \n\nIt could be a good yield play, but know what you\u2019re getting yourself into.", "replies": [{"id": "i3kyvlu", "text": "Pca, rr?", "replies": [{"id": "i3kzrf1", "text": "Property condition assessment\u2026I\u2019ve seen a few deals where the soil is contaminated with oil or dry cleaning solvents so it\u2019s a no go.\n\nRR=rent roll", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ft1vjvp", "text": "i believe it! 70% in retail is definitely unfortunate but honestly i would have thought worse. best of luck!", "replies": [], "depth": 1}, {"id": "ft8043s", "text": "Where in the states do warehouses trade at 8-9 caps. I live in Los Angeles and it\u2019s usually selling at 4-6 caps.", "replies": [], "depth": 1}]