Older commodity warehouse at a yield that pays, or newer space that leases itself, how would you weigh the two

It's a warning about both, and they show up at different times. Tenant demand shows up at your rollover in two years. Resale shows up whenever you sell, and in a small market that could be a long time with a thin buyer pool. The low nines on a 1985 box with two years of term is not really a nine, it's a nine until it isn't. I'd want to know what the flooring distributor's business looks like and whether there's anywhere else in that market they could go.

What's the land component on each? At $46 a foot on a 1985 building you may be buying dirt with a rent-paying shed on it, and that changes what the downside looks like. The 2019 building at $89 has almost none of its value in the land.

What's ESFR? I looked it up and got a sprinkler answer but I don't see why it matters in a price comparison.

Rigging, early suppression fast response sprinkler. It lets a tenant rack higher and store more without a separate in-rack system, so it widens who can use the building. Retrofitting one into a 1985 building means a new riser and probably a bigger water supply, with a fire pump possible on top. That work is never small once it gets priced. Hollow, that is the real gap between your two buildings. 22 foot clear plus ordinary sprinkler means the tenant pool is local users who need a box. 32 foot plus ESFR means you can also talk to regional distribution. In a market three hours from anything, it is not clear the second pool actually shows up, which may be why the 2019 building has been empty since it delivered.

That vacancy since delivery is the loudest fact in the post. A brand new building with good specs sitting empty in a small market is the market telling you the demand for those specs isn't there at that price. Somebody built for a tenant pool that doesn't live in that town. I'd want to know what the broker's actual leasing activity has been, how many tours, how many proposals out, and I'd want it from the owner rather than the listing broker.

Ask why the flooring distributor has no options left after eleven years. Either they didn't want them or the landlord didn't offer, and both tell you something.

The financing on these two will not look alike, and that may decide it for you. A lender looking at the 1985 building sees in-place income and two years of term, so you will likely hear about a shorter amortization or a reserve tied to the rollover. On the vacant 2019 building you are asking someone to lend against a leasing assumption in a market that has already declined to lease it, which usually means less proceeds or a bridge structure with a higher rate. Get both quoted in writing before you decide, since terms move and vary a lot by lender, and the difference in proceeds can swamp the cap rate spread you are agonizing over.

Two passes through this thread and the split seems to be between people worried about your rollover and people worried about whether the newer building is worth anything to anyone locally. Hollow, do you know what the flooring distributor pays per foot versus what the 2019 building is asking? If the spread is huge, your tenant will never move, and if it's small, they might.