Real Estate Trending: Micro Apartments Make Mega Investment Ops
Tiny little apartments that boast 150 to 500 square feet (the average micro-apartment is about 300sq.ft) of living space are trending fast in high priced, crowded cities. Demand for these little gems is booming in such cities as Boston, San Diego, San Francisco, Seattle, Austin and New York where housing prices, and rents alike, are rising fast.
Staying with the “small is beautiful” trend that seems to be sweeping commercial spaces, studio micro apartment units are garnering significant attention from developers and investors who are hoping to maximize their returns in a number of the country’s hottest multifamily markets.
But why so hot?
The Citizens Housing and Planning Council, a non-profit research group in New York, has been studying new concepts in housing. Studies show that the number of people living by themselves in the United States has increased significantly in the last 50 years. Whereas it was less than 10% in the 1950s, it is closer to 30% now. According to the study, the reasons range from longer life spans, later in life marriages and reproduction, and higher divorce rates. Nonetheless, the supply of housing for single people has not kept up with the changing demographic.
In addition to the demographic changes, much has changed in terms of our need for space. We live in a world today where one’s books and music, for example, can be digitally stored on one small device; as people become more conscious about the environment, a minimalist attitude about lifestyle seems to be taking hold; and, a recent Business Insider report showed that by 2020 about 40% of people will work as freelancers, thus affording more freedom to travel, and, as logic would follow, very likely a lesser desire to be tied down to the responsibilities of maintaining a larger household or committing to higher rents or fat mortgage payments.
New York is so in awe of the micro movement that the Bloomberg administration recently held a competition for designers to encourage more micro apartment buildings. San Francisco and Boston are right there with New York, also developing complexes full of the tiny apartment spaces, thus similarly rising to meet the demands of their growing one to two person demographic.
According to an article in NY Local, HPD Commissioner Mathew Wambua said recently that the city of New York is already seeking new proposals for similar projects, hoping to combat the city’s housing shortage.
Smart real estate investors who’ve got their eye on these kinds of growing trends can get in on the movement early and reap the rewards for years to come.