An 8.9 cap on a single-tenant industrial building nobody else can use

Take a deal that looks great on the yield line and worse the longer you sit with it. 34,000 sf, built 1978, 18 foot clear, one dock door and one drive-in, town of about 6,500 people, nearest interstate 22 miles out. Tenant is a plastics fabricator, six years left at 3.75 psf NNN with 2 percent bumps. Ask is 1.42M, so 8.9 going in. The problems stack up. An appraiser would likely need to reach 80 miles to find three sales, and two of those tend to be owner-user purchases rather than investment trades, which means the exit cap is a guess with a wide error bar. Lenders in this kind of deal are quoting 25 percent down on a 20 year amortization with a full recourse guarantee and a five year balloon, which means refinancing into whatever the building appraises for with three years of term left. The reshoring and data-center demand often cited as the industrial tailwind rarely shows up in a county this size, at least not in the absorption data. What matters most here is that the residual is the land and the slab. Eight acres of light industrial ground in that kind of county trades around 25k to 30k an acre, so call it 220k if the building goes dark and nobody wants 18 foot clear. That's a 15 cent recovery on the dollar in the bad case, which means the whole thing is a bet on one fabricator's order book for six years. The 8.9 starts to look like it's paid for exactly that and nothing more. Holding forever only works if the tenant stays forever, and that's a premise worth being skeptical of.