Will tiny apartments without parking solve Miami’s rent crunch?
The answer is probably not. However, the developer, if he delivers the product, it will rent. It is all about affordability. The affordability crunch is a significant issue in many of the nation’s urban centers. Conventional apartment rents in Los Angeles, NYC and San Francisco are now exceeding 40% of the monthly income of most of the rental population.
In most of the nation’s urban centers the typical developer is building new product for the ill-conceived notion that the new product is just the right fit for the “young professional” or the emerging Millennials. Yet the reality is that these two demographic groups only have the qualifying income in tech or financially driven job markets like Seattle and NYC. The typical new 700 square foot apartment will rent for at least $2.50 to $3.00 per square foot ($1,750 to $2,100). In NYC and San Francisco, the rent will be at minimum $1.00 more per square foot on a monthly basis. There is also the reality of the burden of student debt that many of the millennial demographic group is carrying.
Several developers are thinking out of the box and actually creating NEW product to serve the Millennial. In most cases, it is all about size and eliminating those previously thought “must have” apartment interior amenities that were in the old paradigms. For example, how critical is the cook oven to this customer base? How large a refrigerator does the single millennial need or really want? How large does the apartment really have to be? In NYC a newly delivered community, the apartments are averaging around 350 square foot.
The rent per square foot is high but, for a new one bed room apartment, they are a value for NYC. The Miami property will drop from the market average of 700 square feet to about 500 square feet… some apartment units will be as small as 400 square feet. For Miami this is being a pioneer. There will be no parking and like the NYC building (Carmel Place) there is no cooking oven. Yet there will be a community oven that you can reserve in a shared kitchen. The 400 square foot one bedroom will have a bargain price point of $2.25 per square foot for new construction. This will bring the Miami one bedroom (400 sq. ft.) in at $900 verses $1,570 for the 700 square foot apartment.
Another innovative concept was recently published on WWW.6sqft.com. The article was an interview of three of the residents in a brave new approach in a “Co-Living Concept”. Think about it living in a building and you would have 9 roommates. There is a lot of sharing. Follow the link to get the inside scoop. http://www.6sqft.com/three-people-share-what-its-like-to-live-in-commons-co-living-concept-in-brooklyn/
Again this is a developer thinking out the box and developing a new model so as to bring a new approach to affordability to the Millennial or the “young professional”. This new product type will also call for the operator to break the old molds in how they manage and market these buildings.