How Micro Units Can Help the NYC Apartment Market
Buying or renting an NYC apartment can be challenging. Factors like rising mortgage rates, soaring inflation, people returning to the city post-pandemic and skyrocketing costs for new construction have converged to create nightmarish conditions across the five boroughs. Housing availability and affordability have been issues in the city for many years, but things are reaching a pressure point these days. Could micro apartments help?
Too Many People, Too Few Units
With more than 8.5 million residents, NYC is already packed to the gills. The city’s population slumped a bit during the worst of the pandemic, but it’s largely rebounded. Those who stayed, signing longer leases with concessions like lower rents, are seeing those leases expire. As they enter the rental and sales market, conditions are being squeezed even tighter. There’s only so much space for new construction, and many believe micro apartments could help relieve many of the current issues.
How Bad Is It, Really?
For a fleeting moment in early 2020, as a mass exodus of people fled the city for more space and to work remote jobs, vacancy rates for apartments in New York shot up. Desperate to fill their buildings, landlords slashed lease rates and enticed renters with concessions like free rent and reduced lease prices. Just as the pandemic is easing, many of those two-year leases are expiring – and more people are out there looking for homes.
In May 2022, the median rent for an apartment in Manhattan hit a record high of $4,000 per month. It rose 2% in a single month and more than 25% from May 2021. In Brooklyn, the median rent in May stood at $3,250, an 18% increase since the same period the previous year.
Heading into the hot summer rental and sales market, lease signings are up. At the same time, listing inventory is down. In May 2021, listing inventory in NYC stood at just over 19,000; as of May 2022, one year later, it stood at less than 6,000. In the space of a year, then, availability dropped by 70%.
Could Micro Apartments Be the Answer?
NYC apartments are notoriously small. However, in reality, rental units across the city have gotten bigger and bigger over time. For developers and investors, selling or leasing larger, more expensive units tends to be more profitable. In fact, the cost of developing micro housing tends to be quite a bit higher than the cost of developing traditional rental units.
Of course, cost isn’t the only issue. Availability is an even bigger one. Since more units can fit in a smaller area, micro apartments could help ease rock-bottom vacancy rates, helping people find homes closer to where they work or attend school.
A Brief History of Apartment Sizes in NYC
As immigrants flooded into New York starting in the mid-1800s, tenements – sprawling buildings split up into many small, cramped units – became par for the course. In the Lower East Side, especially, tenement housing provided an affordable means for people to survive in a rapidly growing city.
Unfortunately, tenement housing was of notoriously low quality. The average size of an NYC tenement unit was around 284 square feet, and four or more people would cram into that tiny space. As buildings filled up with densely packed units, conditions deteriorated. Before long, many New Yorkers were living in unsafe, unsanitary tenement buildings with little to no recourse.
Things started changing at the turn of the 20th century and the passage of the 1901 Tenement Housing Act. After the act went into law, every NYC apartment was required to have at least one room measuring a minimum of 120 square feet and additional rooms adding a minimum of 70 square feet. The act eventually became the basis of NYC low-rise housing regulations, prompting sweeping changes to the types of rental units that would be permitted across the city.
Changes to tenement buildings prompted the onset of single-room occupancy units, or SRO units. By the 1950s, SROs accounted for 10% of the city’s housing stock. These units were designed for single people, so they started falling out of favor as demographics changed. As more families required housing, SROs became less and less profitable and viable for landlords.
During the 1960s, the city created tax and financial incentives to encourage landlords to convert SROs into regular apartments. By the 1980s, more than 100,000 affordable SRO units had been eliminated. Homelessness soared across the five boroughs, and more people struggled to find affordable housing than ever.
Later in the 1980s, the city tried backpedaling on its stance regarding SROs, implementing a temporary ban on converting SROs to regular apartments. The Department of City Planning implemented a Quality Housing Program with zoning ordinances that encourage the development of bulkier, lower, more economical apartment buildings. That policy has since lapsed, however, causing a further reduction in the availability of SROs.
Complicating matters further, NYC has contradictory stances regarding SROs in the 21st century. The city won’t allow the construction of new, for-profit SRO buildings. At the same time, it discourages the conversion of existing SROs into other types of units.
What Are Micro Apartments?
The concept of micro apartments can be problematic for those worried about overcrowding, squalid building conditions and other issues that abounded in the days of tenement and SRO buildings. However, micro units, as they’re also known, are designed with modern conditions in mind – and they could be a powerful way to add more safe, affordable housing across the city’s more than 200 neighborhoods.
During Mayor Bloomberg’s administration, the My Micro NY initiative was developed to promote the innovative design of micro apartments. Although zoning ordinances limited apartments to sizes of 400 square feet or larger, the initiative permitted developers to create smaller units.
The winning design of that contest, Carmel Place, opened in Kip’s Bay in 2016. The property epitomizes what micro apartment buildings are about, featuring 55 units offering 260 to 360 square feet of space. The first micro apartment building in the city, Carmel Place, paved the way for many new developments to come.
In March 2016, the NYC City Council approved the Zoning for Quality and Affordability Act, a proposal spearheaded by then-Mayor Bill de Blasio. The proposal eliminated the 400 square foot minimum on new units in many cases, opening the door for developing more micro units. However, such properties are still subject to “zoning density factors,” designed to keep overcrowding at bay.
In 2022, micro apartments are becoming more available across NYC. Such units typically offer 350 square feet or less of space. In most cases, they are fully stocked homes designed for single tenants, incorporating unique design features to make the most of the limited space.
Micro apartments in New York typically include a kitchen area with a table, book, island or other eating areas; sleeping space or a loft; living space or an actual living room; and a bathroom. Most micro apartment buildings offer furnished units, relying on multi-functional furniture to make the most of the space. For example, such units often include lofted, foldout or Murphy beds, extra storage space in kitchen islands and foldout desks.
Some micro apartments include cutting-edge features like movable walls. In this case, an electrically operated wall divides a space in half. By day, the space can be used as a workspace, with a desk folding out and bunk beds hidden behind the wall. Later, the space can be configured as a living space.
Communal Living
To make up for the lack of private space in micro units, micro apartment buildings in NYC usually have lots of communal areas to help residents feel more comfortable. Examples of such spaces include laundry areas, fitness centers, rooftop lounges, entertainment rooms, children’s playrooms and courtyards and other green spaces.
Benefits of Renting an NYC Micro Apartment
If you need to rent a place in NYC and live alone or with another person, a micro apartment may be the answer. Some of the top benefits of micro units include the following:
- Prime Location – Many times, micro apartment buildings are located in in-demand areas where apartments typically fetch top dollar. In exchange for putting up with less living space, renters enjoy a terrific location with ready access to public transportation, entertainment, shopping, dining and much more.
- Affordability – Micro apartments can be more affordable than traditional apartments. It depends on the quality of the units and other factors. Generally speaking, though, they tend to be more affordable options in most parts of NYC. On the other hand, some high-end micro units can cost just as much – or even more than – regular apartments.
- Efficiency – If you’re worried about your carbon footprint or want to embrace a simpler lifestyle, renting a micro unit may be for you. Indeed, many eco-conscious New Yorkers are opting for these compact homes primarily to do their part to save the environment.
- Maintenance – Since micro units are so small, they are way cheaper to heat and cool. Maintenance and upkeep are usually more manageable, and there’s less space to tidy up and keep clean. Young working professionals often spend little time at home and appreciate the ease of cleaning and maintaining such apartments.
- Privacy – Like many New Yorkers, you may have to rely on roommates to afford living quarters. Micro apartments largely eliminate this need, making it easier for single individuals to rent units on their own. Although you will have less space, you won’t be sharing it with someone else. In a place like NYC, that can be absolutely priceless.
- Community – Many micro apartment complexes go to great lengths to encourage a sense of community among residents. Most people in such buildings live alone, and such homes don’t offer enough space for entertaining. To make up for this, such buildings often have perks like lounges, rooftop decks, high-end gyms and more. These buildings also usually host regular community events.
Drawbacks of Renting NYC Micro Apartments
Some potential downsides of renting a micro unit in NYC include the following:
- Cabin Fever – During NYC’s notoriously cold winters, it’s easy to feel to cooped up if you live in a tiny micro apartment. With that in mind, select a building with plenty of on-site amenities and community features so that you can have some breathing room during inclement weather.
- Lack of Storage Space – If you have a minimalistic lifestyle, living in a micro apartment should be easy. If you have a decent amount of belongings, though, you may struggle to find space for everything. If you have to resort to renting a storage unit, you’re negating any savings you enjoy from the smaller place.
- No Entertainment Space – Micro units are so small that throwing get togethers is not practical. If you love having friends over regularly, you may be better off in a studio or one-bedroom home.
- No Growth Potential – If you want to stay put for a while, remember that you won’t be getting more space in a micro apartment. Such buildings usually only offer micro units, so you’ll have to move elsewhere for more space.
- Arranging Furniture – Most micro apartments are furnished. If you rent one that isn’t, you may struggle to find furniture that fits the tiny space. It can also be tricky to find multi-functional furniture that provides the right balance of storage and comfort.
- No Pets – Micro apartment buildings in NYC often don’t allow pets. Units are barely large enough for a single person, so adding pets to the mix isn’t reasonable. If you have pets, then, renting a micro unit may not work.
Should You Rent a Micro Apartment in NYC?
If you will be living alone – or prefer to – and need a place to rent in NYC, renting a micro apartment may be the answer. For some folks, micro units offer the perfect blend of affordability, privacy and location, allowing them to live in areas they’d otherwise never be able to afford. If you want to rent an NYC micro apartment, BCP Real Estate Group can help. Contact us today for more information.