The effective support of 5G-Internet of Things (IoT) requires cellular service in deep coverage areas while providing long battery life for IoT devices which perform infrequent small data transmission towards the base station. Relaying is a promising solution to extend the coverage while at the same time meeting the battery life requirements of the IoT devices. Considering this, we analyze the suitability of layer-3 relaying over the 3GPP Release 16 NR-PC5 interface to support massive IoT applications. More precisely, we study the unicast connection establishment mechanism over the NR PC5 interface in a partial coverage scenario. Further, a set of optimizations on the Release 16 NR-PC5 procedure to effectively support massive IoT applications are proposed and analyzed. The obtained performance evaluation results which are presented in terms of data success probability, device power consumption, and signaling overhead, quantify how effectively the Release 16 NR-PC5 interface can support the requirement of IoT in the 5G and beyond era. The proposed sidelink small data transmission and frame-level access provides the largest gain overall and can reduce the device power consumption by an average of 68%, and signaling overhead by 15% while maintaining a data success probability of more than 90% in an IMT-2020 defined IoT traffic scenario.