A rendering of a micro-unit at The Wharf from Perkins Eastman.
Should tiny mean cheap?
That’s the question developers in DC, who are easing into the micro-unit trend, will need to answer.
At a conference last week on the small homes, data was highlighted by George Mason University’s David Versel suggesting the city may need to build at least 10,000-20,000 micro-units to accommodate an influx of young, single professionals who will come to work in the city over the next several years, but not make much money.
When developers describe their target for the housing, this is the demographic they’re highlighting: carless, mobile young adults who want to be in the middle of city centers and are used to biking or taking transit to get around. But the pitch leaves out the fact that most of the cohort can’t afford to pay what developers are proposing for the units, because these newcomers’ rental budgets will top out around $1,750 a month.
The rental rates for the smallest micro-units at The Wharf project in Southwest will go for about $1,570 a month, though that will likely increase by the time the building delivers in 2017. The largest units at The Wharf, with an additional 50 square feet or so of space, will top out at about $1,800 a month.
The small, furnished units proposed for the Patterson Mansion on Dupont Circle, however, will rent at a higher rate. That was made clear at a recent ANC meeting, where a commissioner asked if the units were being built as pieds-à-terre for frequent travelers to the city. “Basically,” the project developer responded.
“I do (see a disconnect)” between the proposed rents and the people who most need the housing, said Versel, a demographics researcher. “But this is the beginning of the wave. What we’re seeing is we always start with the top of the market. So you’re seeing the luxury apartment go in first. When that works, you’ll see a bunch of imitators who’ll try to shave 10 to 20 percent off that rent.”
Versel also pointed out that rents will vary based on where the micro-units are built.
“If you start to see these in H Street NE or Petworth, they will be less expensive by virtue of the land being less expensive,” Versel told UrbanTurf. “I know millennials don’t buy cars, but the analogy is, they want a Toyota, they don’t want a Lexus. And [right now] they’re selling a Lexus here.”
This article originally published at http://dc.urbanturf.com/articles/blog/estimated_microunit_pricing_outpaces_market_reality/8211
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