• DanielParrella

Why are Apartment Unit Sizes Getting Smaller?

Updated: Jun 11, 2020

Across the county, especially in urban centers, unit sizes for newly built apartment complexes are trending smaller. According to data from Yardi Matrix, the average size of a new U.S. apartment has shrunk 5% over the last 10 year. Studio apartments have seen the largest decrease of about 10%. Some cities have seen an even greater decrease. Seattle now has the title of smallest average apartment size for new construction in the United States. Seattle has gone from an average of about 950 square feet in 2005 down to 711 square feet in 2018.

This trend has contributed to a rise of co-living spaces, single room occupancy units as well as what is most commonly seen in Sacramento, microunits. This trend is most noticeable in the 19J Development project by Nikky Mohanna. 80% of the 175 units at 19J are studios with an average size of 415 square feet. The smallest unit in the complex is 275 square feet.

Why are developers decreasing the size of the units? Really there are three main reasons.

The first is the smaller units seem to have lower vacancy rates. According to the Costar Group, The smallest 25% of units have the lowest average vacancy rates. This trend is especially pronounced in urban core markets.

The second reason is the rents. While in absolute terms the rent someone pays is lower the price per square foot is very attractive to developers. The 19J development in Sacramento asking rent for a 411 square foot studio is $1695 as of May 2020. That comes out to $4.12 cents per square foot. For comparison the brand new 940 square foot units at 1430 Q Street are asking for $3100, or $3.29 per square foot. In absolute terms the rent is much higher at 1430 Q Street but the price per square foot is significantly lower.

The third reason is the growing trend towards urbanization coupled with the housing crisis. As rents continue to go up yet more and more people want to live in downtown areas with access to jobs, education and entertainment developers have responded by maximizing the number of units that be squeezed onto infill lots. Originally microunits were thought to be primarily for the millennial migrations into cities but as they have been built more and more developers have realized they appeal to a much broader demographic than originally expected.


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