I don't know how many commercial properties you looked at? Is this the first one?
When I started residential and commercial investing, I looked at many properties in different areas. It's 50 to a hundred before I buy one. ROI is only one of the considerations. For commercial properties, there's even more considerations.
For residential, renters generally rent if they are within commuting distance, good schools. For commercial, especially retail, often, the location is vital. For a small property such as yours, it's suitable for an owner/user, so for a given group of users, it's worth more than the ROI, and in some cases, the ROI is irrelevant.
Take hairdressing as an example. Its customers are within a certain driving distance. People usually don't drive two hours to have their hair done. If the area is in need of a hair salon, there's no available sites nearby, then they'll either buy or rent the location. So a owner/user would pay more if the location is ideal for his business, so if it became successful, he wouldn't worry about exorbitant rent increases. This is often the case for the size property you're looking at.
To assess a good retail investment vs a mediocre one, you'll have to drive around the area to see how many other vacant stores there are, and if there's construction for more. There are areas where practically all stores are rented, and there are areas with a number of empty stores, especially downtown where in many areas, people drive longer distances to strip mall to do their errands.
My dad was in a retail type business, bought the property that his business was located in, and rented out another store on the site. He did it to protect his business. We're in NYC, a very competitive area, so if you have a thriving business, your lease is up, and the landlord knows your business is doing well, he can raise your rent substantially, and put you out of business, and then rent it to a competitor where all your former clients used to patronize.
After he became a commercial landlord, my dad kept close tabs of what's going on. Some favorite stores he went to, say small local chains called "Stevens", and "Times Square Stores" upon lease renewal, competing large chains like "PC Richards" would come in, offer three times the rent, or buy the building, take over the business . A fish store he patronized, was at that location 40 years, moved across the street when I was a little kid, and I couldn't understand why. Turned out the fish store owner had the foresight to buy the building 20 years back, so when his landlord chased him out, he had a place across the street to move to, and kept his customers. So for "PC Richards", the fish store owner, ROI is the last thing. It's "location, location, location". The fish store owner could find an empty store, miles away, and start his business from scratch if he didn't have a place to move to. At this point, the ROI for his store is totally irrelevant.
When you do commercial real estate, you only look at ROI on the property, you're only at a half or a third of the total picture.
