Depending on the shell, it may be more time & cost effective for builders to start anew versus retrofitting existing structures.

Such as law that protects other tenants being effected by 2nd hand smoke?

It is a super easy sell on the transaction side (or can be)--think: no major update (floors, fixtures, paint, etc), no vacant time to fix or sale, no marketing costs or time (like realtor fees or 6 mos on market )...So you may be able to shave some off on that, giving seller easier time of it (but maybe not 20-30%)..Best of luck..

Everything I have read or heard, including my business law classes, says that the lease is still in effect.

This was very effective for the constantly damp basement floor of one of my daughters homes.good luck  

But above comment is probably right about tragedy of the commons effect on "everyone's laundry area" which can be a cleaning and utility cost issue and even vagrant or misuse issues..

I will keep you posted on my San Diego transactions.

Being a young guy out of Cleveland, with more than 1,000+ RE SFR & Multi transactions, in numerous capacities completed, my track record is vast and knowledge capacity is wide.

It can be profitable but you need to do your due diligence and know as much as possible about what is happening in the transaction.

Although I see why you are curious about its effects, inflation adjusted IRRs are not generally used in a commercial real estate analysis (especially given the current low-inflation environment).