>Small landlords (yes, even those with 6 buildings) are almost never min/maxing rent like this. They are optimizing for other things like time investment and hassle factor. And even doing the right thing.

Yup. Have a single residential in a otherwise commercial building in NYC. They pay ~50% market for a spacious 3 BR for a number of reasons; mainly because we have known them for a long time and they struggle with health issues so we never really raised them. Charging them market would put them on the street. They can afford the 50%, live nicely, and the commercial tenants pay market which pays for the building with a little leftover. If they ever move we will certainly charge more but I see no reason to gouge like others.