National Apartment Association CEO: Millennials pushing micro-apartment trend

March 5, 2014 0
National Apartment Association CEO: Millennials pushing micro-apartment trendA micro-apartment in Chicago

During his 15-year tenure with the National Apartment Association, Doug Culkin has witnessed all sorts of changes in the apartment industry. One of the latest trends he’s seen: micro-apartments. These ultra-small units are geared toward urban dwellers in places like New York City and San Francisco.

In an interview with The Storage Facilitator, Culkin shares his views on micro-apartments—and how they could affect the self-storage industry.

Could you discuss the trend of micro-apartments?

There’s a shift in priorities among today’s young apartment residents who are part of the Millennial generation.

Multifamily housing developers are discovering that many 20-somethings are seeking a customizable apartment at a lively community in a prime location—even if that means sacrificing square footage. This is most frequently the case in cities such as San Francisco, Seattle, Portland and Jersey City, where micro-apartments are becoming a desired commodity.

The rising popularity of micro-apartments is due in large part to the lifestyle of many Millennials. With many young residents eating out several nights each week, there is no real need for a full kitchen. A compact refrigerator and moveable island are often sufficient—a similar setup to a college dorm room. A two-burner cooktop has replaced a full stove.

With the exception of closet space—which Millennials still desire—everything else is being scaled down.

Who is the target audience for these micro-apartments? Where are they most prevalent?

In San Francisco, there is a 280-square-foot micro-apartment that’s leasing for nearly $2,000 a month—and Millennials are willing to pay for it because of the location.

At another community in Los Angeles, 345-square-foot apartments that used to be bathrooms in an old subway terminal leased immediately for $1,600 a month a couple of years ago. The width of these apartments is just 10.5 feet, but they’re perfect for many young professionals on a budget who still want to live in the heart of a major city, in a really nice community.

san francisco

Micro-apartments are popping up in places like San Francisco.

In the past, Millennials in clerical or administrative jobs who worked downtown had to commute from the suburbs because they could not afford anything in the city. Now, they can afford 300-square-foot studios that cost less because they’re so small.

Designers have noted that these apartments also appeal to more affluent professionals who work very long hours and want to be in the city, close to their place of work, from Monday through Friday. They only need a mattress and a week’s worth of clothes because they’re spending their weekends at their main residence outside of the city.

Not all residents want the same things, but micro-apartment developers and management companies are targeting those who place a vibrant, urban location at the top of their priority list. The city they’re living in has become these residents’ greatest amenity.

Are micro-apartments typically found only in big, dense cities or can they also translate to smaller, secondary markets?

Part of this depends on a city or town’s specific zoning laws. Many cities also have minimum square footage requirements for livable units, so micro-units that are in the 200-something-square-foot range may not be permissible everywhere.

Additionally, some cities require apartment communities to provide a minimum number of parking spots for their residents, which can be an issue for micro-apartment buildings. While it’s possible for micro-apartments to spread to smaller, secondary markets, they typically work best in areas that have reliable public transportation and don’t have to provide a large amount of parking.

Doug Culkin

Doug Culkin is president and CEO of the National Apartment Association.

For these reasons, I’d have to believe that at least at the moment, micro-apartments are most useful and common in denser cities, and cities with high populations of young professionals and strong multifamily housing markets. San Francisco, Seattle, Portland, Jersey City—these are examples of places where downtown residents are mostly concerned about living in an urban neighborhood with a lot to do within walking distance, rather than having a lot of space.

Micro-apartments could also appeal to empty nesters who either want to downsize, or rent a second home to be close to all that a city has to offer.

A micro-apartment wouldn’t make much sense in a suburban market or a smaller, more sprawled-out city with poor public transportation where you need a car and don’t have some of the nearby attractions that an urban city has to offer. These residents would be far more likely to spend more time within their apartment and would require more space.

What effect could the micro-apartment trend have on the self-storage industry?

As apartment square footage is decreasing, storage and closet space are at a real premium for residents. I anticipate there will be a greater need for self-storage options and services as more renters move into micro-apartments with very little space to store their belongings. Millennials may be moving into smaller apartments, but that doesn’t necessarily mean they own less.

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