Posted in Industry News
Micro Apartments: The Growing Trend in City Living
As people flock to cities for work, scarce land and lack of new construction continue to drive up rent prices. As a result, many middle-income residents are unable to afford high-end housing. Enter the rising trend in multifamily housing solutions – the micro apartment. Since New York City’s first micro apartment building opened in the Fall of 2015, the trend has been gaining popularity across the country.
Although micro apartments have no standard definition, the units are typically less than 400 square feet with a fully functioning and accessibility compliant kitchen and bathroom. Micro apartments provide functionality in a convenient location with heavy emphasis on amenities available outside the unit itself. Many micro apartment communities offer shared amenities that often include restaurant-kitchens, dining areas, lounges, gyms, roof decks, laundry and cleaning services.
“For a lot of people home is the happy place, but more home doesn’t equal more happy. I think more home equals more money and more maintenance,” Christopher Bledsoe recently told Arch Daily. Bledsoe is cofounder of Ollie, a company that facilitates shared amenities and services for micro housing units. The combination of amenities, services and architecture seem to upend the long-held real estate belief that square footage determines the cost. Bledsoe says that every square foot which is eliminated from an apartment can be given back to the tenant in services.
While micro apartments may not appeal to a growing family of four, the attractiveness is undeniable for Millennials seeking a minimalistic lifestyle. According to Glen Kelman of real estate firm Redfin, the Millennial lifestyle has inspired the boom in micro-living. Millennials are demanding an “on-demand lifestyle” that values location over square footage and in-unit amenities; they want to be close to the action and value things like shared community amenities, service and walkability explains Kelman.
Like many real estate trends, the micro apartment trend has a few pain points. Micro apartment buildings may violate density controls and building codes in some parts of the country. However, as the trend continues to gain traction, cities, including New York, have reduced the restrictions concerning minimum residential unit sizes. As cities begin to embrace the building movement, some critics still believe the trend is the result of developers exploiting an out-of-control market.
Despite the challenges, there is a fundamental economic formula making micro apartment communities appealing for developers: rent per square foot vs. chunk rent. Chunk rent, which many micro apartment developers use, allows apartment managers to use a metric for market demand and revenue to generate prices. By using the chunk rent formula, micro apartment developers set rent prices based on location and amenities rather than apartment size.
As cities and developers embrace the idea of micro living, LP® FlameBlock® fire-rated OSB sheathing’s cost, time and space saving benefits may provide multifamily builders with the ideal solution for micro building design and construction per local codes.
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