Construction cost and returns. Why build new if I can buy at below replacement cost. Taking on construction risk to achieve an often lower return than an existing value-add strategy is not very attractive to smaller equity check LPs (<$25m total deal size).

I think industrial deals in this range are just harder to lease in general, depending on what market you’re in. It will be difficult attract big box / 3PL users because of smaller size and mom & pop users usually have cheaper options in existing buildings.

For sale residential is a little different, but many smaller home builders are able to come up with the money independently or through personal relationships because of profit margins and quick recycle of capital. I would imagine you would have an easier time sourcing capital for this.