The Urban Land Institute Multifamily Housing Councils
were awarded a ULI Foundation research grant in fall 2013 to evaluate from
multiple perspectives the market performance and market acceptance of micro and
small units.
A ommon perception exists that unit sizes in new apartments
have been shrinking as developers
seek higher density and higher revenue per square foot to
offset rising land value and construction costs and to hold monthly rent at an
affordable level relative to income. The ultimate incarnation of this trend has
been the introduction—or the reintroduction—of very
small units, often referred to as micro units.
These very small (by traditional standards) apartments,
leasing at approximately 20 percent to 30 percent lower monthly rent than
conventional units, yet at very high value ratios (rent per square foot), have
been offered or are being considered in urban and urbanizing locales, particularly
high-density, expensive metropolitan markets such as Boston, New York, San
Francisco, Seattle, and Washington, D.C.
One key finding of the report was that smaller and micro
units outperform conventional units in the marketplace—they achieve higher occupancy
rates and garner significant rental-rate premiums (rent per square foot)
compared with conventional units. However, the stock of very small units is
still quite limited, and it is difficult to know whether the performance of
these smaller units is driven by their relative scarcity or whether significant
pent-up demand for micro units actually exists.
Download a PDF of this comprehensive report from the Urban
Land Institute and gain valuable insight from it comprehensive and detailed
industry data by going here…
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