The emerging trend of micro-apartment living is gaining steam in major markets across the United States. New York, Boston, Seattle, San Francisco and San Jose are just a handful of the cities adapting to the global urban housing shortage with smaller living spaces. Featuring 300sq ft or less of living space, these units are designed to appeal to students, young solo workers and recent retirees who favor the city lifestyle.
The Right Price
By far the biggest benefit touted by promoters is the lower price point. In New York City, 300 sq ft units are expected to rent for $2000 a month, while in Seattle monthly rents for pint size units range between $500 and $700, often including utilities, furniture and internet.
There are certainly pockets of dissent speaking out against the trend. Tenant’s rights advocates have expressed worry that this trend could set a bad precedent. There is considerable concern over the impact of crowding too many people together.
Some major cities have had to change zoning regulations in order to accommodate development of micro-apartment units. New York City, for example, will have to amend current zoning laws that set the minimum size of an apartment at 400 sq ft. to accommodate a recently commissioned micro-apartment project.
Impact on the Investor
At present, the opportunities for investors carry a significant level of risk. While microapartments have shown significant interest and growth, the market size is currently speculative. There is bound to be some trepidation as it remains to be seen whether community backlash will hinder developments.
Should the micro-apartment trend become a viable, competitive alternative. there will be some adaptations necessary to manage these units effectively. Smaller units will mean more residents per square foot, increasing the number of leases to manage for a single property. Marketing approaches will require niche strategies to find ideal tenants that fit the micro-apartment demographic. Enhanced safety precautions may be necessary to ensure emergencies are well managed with enhanced evacuation planning and fire prevention techniques.
Beyond the Concept
Even if micro-apartments themselves don’t overtake the urban landscape, it is certain that the “small is big” phenomena is affecting the construction and design markets. Multi-family units are going smaller to save on costs, being cheaper to build and rent. Appliances are being downsized, with many 18-inch dishwashers, the 20-inch ranges and 24-inch refrigerators being installed. It seems clear, that real estate investment professionals will be challenged to “think small” in some respect over the coming years.
