What Is a Micro Apartment (and Should You Invest in One)?

Is this a fleeting trend or a timeless investment?

Tiny Apartment
••• Szymon Hanczar

Micro apartments are a fairly new type of rental. New York City's Department of Housing Preservation and Development approved its first micro apartment development, Carmel Place, in 2013. These units try to squeeze all the amenities of a standard apartment into the smallest space possible. Learn what classifies an apartment as micro and, as a landlord, if it is worth the investment.

What Is a Micro Apartment?

A micro apartment is an apartment unit that would technically be considered a studio apartment but on a smaller scale. The goal of a micro apartment is to combine necessity and functionality into the smallest area possible. The essential amenities of any apartment–a bathroom, kitchen area, living space, and sleeping space–are packed into a minimal area using multifunctional furniture and storage concepts, such as sofas that turn into Murphy beds.

Another method of maximizing the space in these units is how the builders use certain features to try and give these small units the illusion of more space.

Units tend to have high ceilings, usually between nine and ten feet, large, sometimes floor to ceiling windows, and small private balconies to extend the living space.

Micro apartments also focus on community living. They have luxury amenities like lounges, gyms, pools, rooftop decks and outdoor space which gives the tenants additional space to use outside of their unit. Some feature communal kitchen space, cafes or private dining rooms that can be reserved. Most have additional storage space for each unit.

Key features of micro apartments include small square footage, multipurpose furniture, community amenities, high ceilings, large windows, and balconies.

Location

Micro apartments are most often seen in cities. Rent prices in cities have become unaffordable for many renters, so the theory is that the micro apartment’s smaller size makes them more affordable than other available units that are not rent controlled. Tenants of these micro apartments are generally willing to sacrifice square footage to be able to live in an urban area and enjoy city life.

Average Cost

The cost of a micro apartment will vary widely based on the specific builder and the area of the country where the apartment is located. In general, the rent on a micro apartment is between 80% and 70% of what you would expect to pay for a conventionally sized apartment in that same area. Below are some sample rents of micro apartments across the country.

  • Carmel Place, New York: Micro studio rents begin at $2,775 a month
  • 77 Bluxome Apartments, San Francisco: Rent starts at $2,439 a month
  • The Flats, Chicago: Studios start at $1,625 a month
  • The Harper, Washington: Studios start at $2,075 a month
  • Turntable Studios, Denver: Studios start at $1,180 a month

Average Size

Micro apartments are usually under 400 square feet, with most ranging from 150 to 400 square feet. Many cities, such as New York, Boston, and San Francisco had existing laws in place which put limits on the minimum size of a studio apartment. Some jurisdictions, like California, have amended their existing laws to allow builders to build smaller, efficient micro apartments.

What Type of Tenant Does a Micro Apartment Appeal To?

The type of tenant that a micro apartment aims to attract is a single professional in their early to mid-20s. This type of person is just starting out in their career and may have just moved to a new city to pursue this path. They have not accumulated much furniture or other possessions at this point, making a micro apartment an ideal place to begin their future as it cannot accommodate many belongings.

These young professionals will ideally spend most of their time away from the apartment, whether at work or exploring the city.

The building common areas also give them the ability to socialize without going too far from home. The actual apartment is, for the most part, utilitarian. It serves their basic needs of sleeping, eating, and bathing.

A micro apartment is attractive because it allows these tenants to live in a major city without needing a roommate to pay for half the rent. It is also cheaper than a traditional studio apartment.

Are Micro Apartments a Good Investment?

Landlords who are considering investing in micro apartments need to take several things into consideration. Operating costs are high, because cities tend to have higher taxes and utility usage will be high with so many tenants, and you are targeting a very niche market. However, you are able to squeeze a significantly larger number of apartments into your property, which increases your profit potential per square foot.

Pros of Micro Apartments

  • Maximize building square footage with a maximum number of apartments

  • Collect more rent per square foot

  • Allows single tenants to rent without needing a roommate

  • Attract tenants because they are more affordable than other city apartments

Cons of Micro Apartments

  • The landlord must furnish the unit

  • More common in the city, so insurance and taxes will be higher

  • More tenants equal higher utility bills

  • More tenants and units equals more maintenance issues

  • More tenant turnover as tenants move to bigger apartments

  • Targeting a very specific tenant market

Article Sources

  1. New York City Housing Preservation and Development. "New York City Officials Join Monadnock Development and Partners to Begin Stacking Modules for New York City's First Micro-Apartment Development," Accessed Oct. 1, 2019.


  2. adAPT NYC. "Request for Proposals: adAPT NYC Guidelines," Pages 9-10. Accessed Oct. 1, 2019.


  3. Urban Land Institute. "The Macro View on Micro Units," Page 4. Accessed Oct. 1, 2019.


  4. Urban Land Institute. "The Macro View on Micro Units," Page 5. Accessed Oct. 1, 2019.


  5. Ollie. "Carmel Place," Accessed Oct. 1, 2019.


  6. Equity Apartments. "77 Bluxome Apartments," Accessed Oct. 1, 2019.


  7. CA Management Services. "The Flats Student Housing," Accessed Oct. 1, 2019.


  8. Keener Management. "The Harper," Accessed Oct. 1, 2019.


  9. Boutique Apartments. "Turntable Studios," Accessed Oct. 1, 2019.


  10. Seattle Clerk's Office. "Different Cities' Strategies on Micro-Housing," Accessed Oct. 1, 2019.


  11. Department of Housing Preservation and Development. "HPD Design Guidelines for Multifamily New Construction and Senior Housing," Page 17. Accessed Oct. 1, 2019.


  12. City of Boston. "Meeting the Housing Code in Boston," Accessed Oct. 1, 2019.


  13. Seattle Municipal Code. "Title 22: Building and Construction Codes, Subtitle II: Housing Codes, Chapter 22.206, Subchapter I: Minimum Space and Occupancy Standards," Accessed Oct. 1, 2019.


  14. California Legislative Information. "AB-352 State Housing Law: Efficiency Units (2017-2018)," Accessed Oct. 1, 2019.