A cry for cheaper housing has pressured developers to build smaller.
East End Capital’s Wynwood 25 apartment project won’t be completed for another two years — yet over 600 hopeful renters have placed their names on its waiting list. The mixed-use development rising in the Wynwood Arts District north of downtown Miami is one of the first South Florida rental projects to offer micro-apartment units. The smaller-than-usual residences promise to offer some relief for tenants struggling to meet rent in the city’s priciest urban areas.
“Miami is facing an unprecedented housing affordability crisis, and it’s a product of conventional developers building a product that’s not affordable to most Miamians,” said Joe Eisenberg, a city planner closely watching the micro-development trend make its way to South Florida. “It’s possible that allowing smaller units could have a positive impact on that.”
East End partnered with the Related Group to build Wynwood 25, where the average apartment will measure 750 square feet, much smaller than the 1,000- to 3,000-square-foot, high-end residencesbuilt in previous years.
The smallest units will be only about 400 square feet, roomier than micro-apartments found in cities like Seattle, where zoning codes have been amended to allow for pocket-sized units as small as 150 square feet. (In comparison, the traditional U.S. hotel room averages about 325 square feet.)
Jonathon Yormak, managing principal with East End Capital, said developers must charge at least $2.50 per square foot in rent to justify the high price paid for land and construction in Miami — a sticky mathematical equation with few options. One is to decrease square footage.
“The main reason to build them smaller is that affordable housing is a very, very serious problem in Miami,” Yormak said. “It’s one of the most expensive places to live when you look at rent versus income.”
His project has already proven that demand exists for a different type of residential product. With just 289 apartments, Wynwood 25 will accommodate fewer than half of those on its waiting list.
The building will target renters making $45,000 to $60,000 per year, Yormak said. Eighty percent of the units will be priced below $2,000 per month.
A crucial component of a micro-unit building is its amenity base, such as gyms and other shared spaces encouraging residences to step outside their tight living quarters, developers say.
Wynwood 25, for example, will offer a large fitness center with yoga studio, co-working space, coffee lounge, green courtyard and bike storage, to name a few.
Yormak plans to go smaller on his next project — the whole building will be composed of studios averaging fewer than 500 square feet.
Mending the Code
Miami’s zoning code requires studios to measure at least 400 square feet, one-bedroom apartments 550 square feet and two-bedroom units 650 square feet.
“We’ve had a lot of developers thinking of going to smaller units than that,” Eisenberg said.
Akerman partner Steven Wernick said the move toward smaller units reflects changing market conditions and the realization that a new generation of renters will trade off personal space for an urban lifestyle in a vibrant neighborhood.
“They’re not always looking for a building that has all the amenities of the luxury condo,” Wernick said. “The neighborhood is an amenity in and of itself.”
Broward County officials are also adapting to the trend, said Tracy Lautenschlager, a shareholder with Greenberg Traurig in Fort Lauderdale.
Studios spanning 500 square feet or less are now considered half a dwelling unit for residential density purposes, a revision the county recently adopted in its land use plan. Coastal cities like Dania Beach, Fort Lauderdale and Hallandale Beach are now allowing units of 400 to 500 square feet, a progressive step toward micro-development, the lawyer said.
“I have every expectation to see [micro-units] come to Broward and see them be successful for millennials and young professionals looking for a lifestyle outside their private unit,” Lautenschlager said.
If the smaller homes can relieve the financial burden of living in South Florida, government officials would see that as a win, she said.
Of all the apartments in the pipeline, the tiniest are set to rise in West Palm Beach.
Developer Jeff Greene won approval this year for a 12-story building composed of units of 300 to 549 square feet, smaller than the city’s 550-square-foot minimum for standard apartments.
West Palm lawyer David Layman said the city also amended its code to allow one parking space for every two units, junking a one-one mandate.
“This is somewhat of a trend right now, and the city is trying to accommodate it,” the Greenberg Traurig shareholder said.
But he’s uncertain of its success. He said micro-apartment developments will do well in neighborhoods that are walkable, have a functioning public transportation system and offer plenty of amenities. The area must also be home to a demographic mix of people who would like to live small.
Layman questions whether West Palm meets that criteria.
“You’re living essentially in a hotel room without a lot of space for storage other than your clothing,” he said.
Property Markets Group has already topped off its first micro-unit tower in downtown Miami and has plans to build over 1,000 units in Fort Lauderdale.
Its 464-unit Vice tower in Miami will offer studios as small as 450 square feet starting at $1,600 per month.
The group is set on addressing the costs of urban living through micro-development. In fact, PMG recently launched a division called PMGx that will specifically focus on micro-unit projects throughout the U.S.
A third micro-apartment venture is already in the works in Miami. New York entrepreneur and developer Moishe Mana secured the first layer of approval for a 328-unit tower composed of tiny apartments last year. Half of the units will be no larger than 400 square feet.
The residences will be outfitted with kitchens and fold-up Murphy-style beds, and the goal is for rents to start at $1,000, said Dylan Finger, managing director at Mana Miami.
While smaller living may not be appropriate for affordable housing users like families struggling to keep up with rising Miami rental rates, it may help millennials who are new to the city and can’t afford to put down first and last months’ rent plus a security deposit for an apartment.
“This is a housing type that is appropriate for them, someone getting their start here,” Eisenberg said. “It’s definitely not the silver bullet for affordable housing but one of the many strategies that together helps put downward pressure on housing prices.”