Sometimes bigger isn’t always better, and a newer style in commercial property development is out to prove that. “Micro-units” are becoming popular based on their affordability for tenants and landlords’ ability to charge higher pricing per square foot. This style works not only for multi-family properties, but also with offices, and even restaurant space.
From Asia to America
Micro-units have been rapidly growing in the Hong Kong market over the last decade, but they’re beginning to crop up in American markets. Over 13 percent of apartments sold in Hong Kong were less than 260 square feet, up from under 1 percent in early 2010. Property owners in cities like New York, Philadelphia, Los Angeles, and Denver are all recognizing the potential for these down-sized dwellings, primarily because they allow for more units inside of a building. This is a big plus in housing markets with low inventory.
The Layout
Residential units look very similar to studio apartments, albeit shrunk down considerably from around the average of 500 square feet. Some areas offer two bed and bath units that are still less than 1,000 square feet. Most come with the basic kitchen furnishings and a smaller bathroom in order to make the most out of the main floor space. Large floor to ceiling windows are installed to help residents feel less confined.
Pricing
The cost that CRE managers charge for micro-units can vary greatly depending on demand and location. To be an available option for people that can’t afford the higher-end apartments, some property owners have found that lower prices are beneficial. But for up-and-coming areas, you might not find much of a difference between pricing. A good thing to keep in mind is your target demographic. Buildings that are close to office parks and the city’s best spots are likely to have a younger market who seek premium location, but may be unable to afford a premium price.
Use for Affordable Housing
To combat the issue of homelessness or inflated pricing, landlords are marketing these “nano-apartments” as affordable housing. This helps with problems that people may have trying to find decent space in a crowded market, while also letting managers recoup their investments.
Attraction
Location is everything when it comes to rental properties. Being in a prime location next to bars and restaurants, work, and local attractions can help sell even a tiny unit. To make renters feel like they’re getting the most for their money, a community atmosphere goes a long way. Incorporating common areas like a lounge or outdoor patio help give these tiny apartments a neighborhood feel.
Mini Transformations
Cities with higher costs of living whose real estate growth may have stalled recently are seeing the value that micro-units have to offer. Housing Diversity Corporation has begun working on projects in Los Angeles to expand affordable housing to residents. As populations continue to grow in destination markets like L.A. or New York, revamping the traditional apartment could be the answer for many.
No matter the size of your commercial property, have it inspected by a trained NPI professional.
