Demising a dead 12,200 sf junior anchor into four small units, the numbers are ugly

Run it as an incremental yield on incremental cost rather than as a rent comparison. Gross lift of $146k isn't what lands in NOI. Four small tenants generate more turnover, more leasing commission, more downtime, and more management time than one junior anchor, and small local operators recover CAM less reliably. Haircut to something like $115k to $125k of durable NOI, then compare against the $1.1M. At a 7% cap that increment supports roughly $1.6M to $1.8M of value, so the spread is real, and it's the timing that decides whether you'd do it. Model lease-up where two of four units sit empty for 24 months and you're carrying taxes, insurance, and unrecovered CAM on that vacancy. If that scenario still clears your cost of capital, the deal survives.

Food service is where budgets break. Grease interceptor, makeup air, rooftop exhaust penetrations, and a floor drain layout can push that unit's landlord work well past $60/sf, and in many jurisdictions the health department review runs on its own timeline regardless of your construction schedule. Price that unit separately instead of averaging it in.

@marlow's point deserves a real answer. Two 6,000 sf units cut hard cost substantially, and if there's genuine demand at that size it's the better risk-adjusted move. The reason people go to four is that the sub-3,500 sf demand pool is deep right now and the 6,000 sf pool in most secondary trade areas is thin.

One thing I'd resolve before spending money on drawings. If this box sits in a center with an anchor, the anchor lease and any reciprocal easement agreement likely give that tenant approval rights over site plan changes and carry exclusive use and prohibited use lists. Nail salons and food uses show up on those lists constantly. Pull the REA and every existing lease's exclusive before your agent signs anyone up.