Is small beautiful in expensive, crowded cities? A growing number of renters seem to think so. Many of them are turning to micro housing in cities where they find themselves squeezed out of the conventional rental market, both physically and financially.
And micro means what it says. In the nation’s top 10 cities for this type of housing, the maximum size of a unit ranges from 348 square feet in Honolulu to 446 square feet in Reno. In a development now under construction by Panoramic Interests in Berkeley, CA, the typical unit size is 175 square feet, including a private bath and basic kitchen appliances, with space for a bed, desk and chair.
For comparison, the average size of a Holiday Inn hotel room is 300 to 350 square feet, and a budget hotel room is 250 square feet.
According to a new analysis by StorageCafe of housing stock in 100 major cities, the micro share of the rental market has steadily climbed over the past decade. It defines these units in a given location as rental homes with a footprint no larger than half the average apartment size in that state and under 441 square feet.
“Roughly 2.4% of newly delivered rental units in the 2020s are under 441 square feet, more than double the 1.1% share seen in the 2000s,” it stated. The report called the trend “a smart, space-efficient response to the rising demand for housing.”
Often located in dense, walkable neighborhoods with good public transit and cultural and entertainment amenities, they appeal to individuals interested in sustainable, minimalist living. “In essence, tiny apartments are increasingly seen as a way to live with less – but closer to more,” the report commented.
Their clientele includes young professionals, individuals who are downsizing, entry-level employees, older adults, and students. They can also serve as workforce housing or to address homelessness.
The West leads the nation in micro housing. Particularly, in cities like San Francisco, Seattle, Honolulu, and Portland, small homes make up over 10% of their local inventories.
Nearly 15% of all housing units in San Francisco are considered undersized, with some offering just 124 square feet. And more are on the way, with 28.8% of planned new rental stock consisting of micro units.
In Seattle, likewise, some 12% of the city’s total housing inventory consists of micro units, and two-thirds of rental units under construction fall into this category. Recent zoning changes in the city permit micro-unit developments in all areas zoned for multifamily housing, the report said, in a move designed to increase housing diversity and supply across the city.
Minneapolis leads the Midwest, with 10.4% of its total rental inventory made up of micro housing. Some units are no more than 100 square feet. The savings can be significant. For example, in Chicago, conventional apartments rent at an average of $2,420 – compared to an average of $1,263 for a micro unit – almost half. Other Midwestern cities with a relatively high share of micro units are Cleveland, St. Paul, and Madison. All have sizable young adult populations and low rents.
“In the packed cities of the Northeast – think New York, Philadelphia, and Newark – micro apartments are quickly becoming an urban stable,” StorageCafe stated. Here again, the rent discount compared to conventional apartments is significant. Other Northeastern cities leading in the field are Buffalo, Boston, Jersey City and Pittsburgh.
The South, however, except for Miami, lags.
Nationwide, the report projected that the 10 cities likely to see the greatest growth in micro housing are Seattle (66%), Boston (56.2%), Newark (49.8%), New York City (43.3%), Reno (40.5%), San Francisco (28.8%), Norfolk (22.8%), San Diego (21.2%), Minneapolis (20.3%) and Portland (19.3%).
One CRE category expected to benefit from this development is self-storage. The limited space in micro housing is likely to encourage tenants to rent space in storage facilities, the report predicted.
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