IMO and experience the 50% rule is overly conservative - - I use 30% of GSI as a boundary to determine if the property is being managed properly - - lower indicates inaccurate data and higher indicates obsolete fixtures and equipment.

I disagree with Will, however, that this even matters...Both @Joe Fairless and @John Cohen say they underwrite to IRR. 50% is an income-driven concept, which renders it obsolete when underwriting to IRR.

If your physical vacancy is 12.5%, your economic vacancy will be greater, perhaps even double depending on the tenant population, the neighbourhood and the rate of decline of the business.You need to understand the customer, and how the business arrived in its present state, before you can determine whether the pay-back on 50K of CapEx - not to mention the initial purchase - is sufficient.As others have posted here, it sounds like the Vendor has milked all of the equity out of the building - leaving the building with significant deferred maintenance; perhaps even obsolete.  

Every time I see or hear the word "FLEX" involved with a commercial property it seems like it's an obsolete building that's laid out all wrong on the property, that was specifically built to manufacture something like steam powered typewriters.It will have low ceilings, loading docks unable to accommodate modern tractor trailers, and two phase electric.Even if the building is modern, It'll be built for some kind of business that was put out by some kind of big box retailer.

Now, smartphones come with mapping apps that make paper maps almost obsolete.

It's a 3 bed, 1.5 bath with a good sized fenced in yard. 1.5 baths is functionally obsolete.

When a laborer was in the attic removing the obsolete chimney, cracks showed up everywhere... we eventually tore out all the living room ceilings and (per Consultation) put in new 16' 2x10s to support the load.

The technology will wear out or become obsolete before it will catch a leak that could pay for itself.A huge cost of water is the delivery system.

The brand new connector from the 91 Fwy to the 60 Fwy literally JUST opened and already it is obsolete, with southbound traffic backing up all the way to downtown Riverside from Moreno Valley. 

What if your forms became obsolete in the last year or 2?