The size of studios and one-bedrooms continues to decrease while the number of these units on the market increases. New data from Axiometrics and RCLCO Advisory shows that average unit size shrank 70 SF or 7% in units built in the last six years compared to the previous nine.
Milestone Apartments director Robert Debs (far left) has a few ideas about why this has happened. For one thing, residents now want a good location—particularly live/work/play—more than they want SF, Robert said at our Dallas Next Generation Leaders event last week.
High-cost markets (Chicago, Boston, Los Angeles, DC and San Diego) shaved off the most SF: 9%. Moderate markets (Dallas, Denver, Houston and Atlanta) shrank by 7%. Very high-cost markets (NYC and San Francisco) and low-cost markets (Detroit, Phoenix, St. Louis and Tampa) dropped unit sizes by 4% and 3%, respectively. Total units under 600 SF have doubled from 2010 to 2016 compared to 2000 to 2009, accounting for 15% of units on the market today.
Robert says construction costs are a big driver to reduce unit size. With concrete and other development costs at an all-time high, landlords feel the pressure to maximize income-earning space by building more units in the same amount of space. Here's Robert with Stream VP Ryan Evanich and Avison Young principal Bret Hefton.