Please help me evaluate this retail center deal

[Shak Noor]

Hi All,

I'm new to commercial, have been wanting to get into either retail or multifamily value add.  I want to give you some info on a deal that was sent to me to get your thoughts and input.

Purchase Price: $1.25M
Total building SQFT: 12k, Built in 2001
Located in Houston, TX
90% Leased (80% is a national dollar store chain, 10% is a national pizza chain)
10% is vacant
Current Cap rate is 7.75% with taking into account the vacant area.
Dollar store has been there since building was built and lease expires 2022, with 3 and 5 year options
Pizza chain has been there since 2015 and lease expires in 2020, with 2 and 5 year options
Rents for both tenants have been the same since their lease inception with no increases.  The Dollar Store performs above average from a revenue standpoint (they have to report their sales as part of the lease agreement).
Brochure says the NOI is $98k.

I like that they are great tenants, mostly rented, only small space to get filled out.

I don't like the area it is in.  It's not super high income, less than $70k and the area would be considered outskirts of Houston, so growth in housing and development is going to be very slow.

I'm new to retail, but I want to buy something that I can increase the value on in the next 2-5 years.  The only way I see that I'm able to increase the property value here is to get the 10% vacancy occupied and increase rents for the dollar store.  They are paying $8.xx $/sqft per year, and I believe that rate was locked in from the initial lease signing.  So assuming I could raise their rents at renewal (2022) then I should be able to appreciate the property some more, but that's still quite some time away.  If I try to raise too high, they may leave, which would be a huge strain on the property.  I'd have to invest money to split up the space and rent out to individual tenants.  That would be good for the $/sqft/yr because the pizza place is paying around $17/sqft/yr for less than 2000 sqft.  So that would be another way to potentially increase rents.

What are your thoughts on this deal?  What am I missing or overlooking?  I'm in my early 30's, I'm not looking for capital preservation, but want to grow the property value over time.  

Thanks!