One Bedroom Apartment Craze?
Jay Denton | November 24, 2015
Apartment developers are ramping up their production of one-bedroom units, believing that a strong demand from millennials for the smaller units will continue for years. Prior to 2012, the number of studio and one-bedroom floor plans and the number of two-bedroom floor plans was mostly equal at about 45.5 percent and 46.1 percent of a property. The remaining units in a property were three bedrooms. However, since 2012, the number of studio and one-bedroom units are now making up an average of 54.4 percent of apartment buildings while the percentage of two-bedroom units has dropped to 38.9 percent, according to data from Axiometrics. Read more: 4 Myths Millennials Want You to Stop Believing One-bedroom units can be a draw to developers and apartment owners because they provide more rental revenue per square foot than larger units. Young professionals in their 20s who are delaying marriage and children may prefer renting and drawn to the smaller units too. However, those 20-somethings will likely one day get married and have children and require larger accommodations. Some will then be drawn to home ownership, but for those who choose to continue to rent, will larger units be in short supply? “Developers of future apartment properties will likely need to offer a greater mix of two- and three-bedroom units, and the simple solution is to build them,” notes Jay Denton, senior vice president of analytics at Axiometrics. “However, the $1,921 average monthly rent for a newly constructed two-bedroom unit is almost half again the $1,298 average rent for a two-bedroom built before the current cycle began. The increase in average rents for studio/one-bedroom and is a lot less.”