Micro-Apartment Developers Move to Secondary Markets
After success in dense, coastal markets, micro-apartment developers are setting their sights on smaller secondary markets, reports National Real Estate Investor. The news outlet reports on Transwestern Development, which has new, low-square-footage projects in Austin, Texas, and Phoenix.
Micro-units in smaller markets “compelling,”
“Micro-units are spreading to secondary markets, but I would say slowly,” Ty Puckett, executive vice president of Transwestern, told the news outlet. “The demand in secondary markets is somewhat unproven, but with good locations and competitive prices the projects are compelling,” he argued.
According to the article, Puckett’s firm is building 138 units in Austin, ranging from 350-square-foot studios to 520-square-foot two bedroom units. Transwestern has a similar micro-unit project under development in Phoenix.
Micro-apartments part of a larger downsizing trend
Micro-apartments are a fairly new phenomenon that has come about in the last decade or so in expensive rental markets with low vacancy rates. While developers have for years built small efficiency units for very low-income tenants, micro-apartments are something different. Renters trade larger units for great urban locations and “fancy” amenity spaces.
“The building activity in this product niche is mostly in the most expensive coastal markets,” Greg Willett, chief economist for RealPage, a property management solutions firm, told the news outlet. Willett noted Seattle had more micro-apartment developments than San Francisco or New York.
The article reports that micro-apartment living fits into a larger trend of smaller living quarters in urban areas. Willett said that average unit sizes for regular apartments in new developments are smaller than in previous construction cycles.