If so, it has WAY too many red flags and you’d literally have to tear it down and start over to get it conforming.

If the Property Manager did it for free they'd be in red.

It will be a lot of red tape and paperwork but if it was easy everyone would do it.

There should be a ton of growth around it where you know national tenants will pay a premium per sq ft to make it pencil with development land,construction,legal,labor, and loan costs.Sometimes I will look at that range for an acre but it is the (money shot) right in front of a new Costco at the hard pin corner red light with high traffic counts.

Would the pros who have been hunting investment deals for clients gone this far, or were there red flags that I should have seen as deal breakers? 

No big red flags that warrants a change at this time.

QuestionsShould the range of price per sq. ft. be a red flag or be understandable/commonplace given the smaller size of these spaces?

Anytime anything involves government authority there is usually a mountain of red tape one must trudge through in order to get the desired outcome.

Plus there is the added benefit of not having any of the red tape that accompanies an FHA loan.

There could be other red flags that you are not even aware of.