Created by Urban Land Institute Multifamily Housing Councils
As developers seek higher density and higher revenue per square foot to offset rising land value and construction costs while holding rents at an affordable level relative to income, markets have seen the reintroduction of very small units, often referred to as micro units.
Exploring this renewed trend in the United States, this 2014 report from the Urban Land Institute (ULI) evaluates the market performance and acceptance of micro and small units.
Download the Micro Unit report (PDF).
These very small (by traditional standards) apartments lease at approximately 20% to 30% lower monthly rent than conventional units, yet at very high value ratios (rent per square foot). They 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.
The report explores this renewed trend in the U.S. and seeks to answer the following key questions:
- What exactly is a micro unit?
- How have smaller and micro unit rental apartments performed in the marketplace compared with larger, more conventional apartments?
- Does the higher per square foot rent justify the higher construction cost?
- What are some of the examples across the country where micro units have been successfully developed and operated?
- What are the critical success factors and lessons learned from developers, owners, operators and design professionals?
- What have been the motivations and experiences of residents who have actually lived in one of these tiny apartments?
- What would motivate potential renters of conventional apartments to live in a smaller unit?
- What is the likely future for micro units — is this a passing fad or a growing trend?
To answer these and other questions, the research team analyzed hard data, conducted consumer research with residents of micro units, compiled case studies of micro unit rental apartment communities, and conducted a series of interviews with industry experts.