Rents are on the rise, but apartments are getting smaller.

Much, much smaller.

Developers are building hundreds of “micro” apartments in the most coveted neighborhoods in the Twin Cities. Only a little bigger than a one-car garage, the units are aimed at renters who care more about location than the size of their living area.

Studio apartments are an old concept. But developers these days are putting them in resort-style buildings with the kinds of amenities that will make residents forget they don’t have space for a dining table. The trend is a reflection of a growing desire for mobility but also a deepening disparity between rent increases and wage growth.

“Micro units will not suit all of the market, but a modest proportion has generally been popular with the younger crowd,” said Mary Bujold, president of Maxfield Research.

The average studio apartment in the Twin Cities is 500 to 525 square feet, according to Bujold. But developers have recently built them with as little as 300 square feet. At least a half-dozen apartment complexes with micro units are under construction in the metro area. At the high end, Solhem Cos.’ new project along Holmes Avenue near Lake Calhoun will offer renters a 380-square-foot, one-room apartment for $1,200 per month.

For renters, such projects are an opportunity to live in a neighborhood they might not otherwise be able to afford. For developers, it’s a way to cater to a swelling segment of the rental pool at a time when thousands of upscale units have already been built.

Nationwide, the trend has been well underway in geographically isolated areas and in coastal cities where there’s a limited amount of ground on which to develop. In Seattle, for example, a developer recently touted a 130-square-foot “prison cell” apartment that was a hot commodity at $750 per month.

In Minneapolis, the epicenter of the trend is in the North Loop, Uptown and University of Minnesota neighborhoods. And in St. Paul, developers are focusing on sites along the Green Line.

Just a few minutes from the Raymond Avenue stop along the Green Line, about 70 of 79 units in the new Ray Apartments will be studios. Some of the smallest units, including a 360-square-foot unit that rents for $850, have already been reserved, but there are still eight 370-square-foot units available for $890.

Design features include Wi-Fi thermostats, electronic entry to units and black cabinetry, countertops and appliances. Residents will share a library with fireplace, a listening station for vinyl records and several areas for pets, including a dog run on the roof.

“Our residents really want everything that comes with a superior building, great location, great amenities, great units, but they have decided to make the smart decision to not spend their money on more square feet in their unit that they don’t need,” said Noah Bly, development coordinator for Integrated Development, which is in charge of the project.

Neil Reardon of UrbanWorks Architecture designed the studios to include windows that provide 50 percent more light and views than a typical studio with standard double-hung windows. The kitchens even have dishwashers, and the units have a variety of options for sleeping areas and alcoves.

When Steven Scott Management started leasing apartments at the nearby C & E Lofts, the smallest units rented first. So the company is now developing C & E Flats, where studio apartments will have 441 to 509 square feet and even the two-bedroom units will be less than 1,000 square feet.

Solhem, which is developing the building along Holmes Avenue, helped pioneer the micro concept in the Twin Cities a few years ago when it built Coze Flats near the University of Minnesota and Nolo Flats in the North Loop.

In the Twin Cities, waning affordability is one of the key drivers of the concept. The vast majority of the apartments that have been built during the last development cycle are in luxury buildings, where rents can average more than $2 per square foot — still a bargain compared with many coastal cities, but nearly double the metrowide average. The average vacancy rate has been one of the lowest in the nation, emboldening landlords to charge more.

Though micro units offer renters a more affordable option, they’re not necessarily the best value. On a per-square-foot basis, they tend to cost more than a larger unit. Because developers still have to equip those units with all the same features of a larger one, including appliances and bathroom fixtures, these smaller units aren’t necessarily a financial boon to them.

The micro trend is also limited by external forces. As is true for single-family houses, many municipalities have a minimum square-foot requirement for living spaces.

When Bianca Fine of Fine & Associates converted an obsolete high-rise nursing home in Minneapolis into an apartment building, Fine had to get a variance to include 21 micro apartments. With an attractive location near the Mississippi River and University of Minnesota driving rents up, Fine wanted to ensure the building was affordable to a broad cross-section of renters. “They turned out to be very popular and leased immediately,” Fine said.

In the North Loop, Greco Properties and Opus Development are partnering on an innovative 144-unit building that will include some micro units with just 385 square feet. “Young people want to live in the neighborhood, but it might be their first job and they can’t afford a $1,700 one-bedroom, but they can afford a $1,100 micro unit,” said Josh Brandsted, president of Greco Properties.

 

500-600 sq. footage in the Twin Cities

469 sq. footage near U of M campus

655 sq. footage in northwest metro