Dallas apartment builders hope less space means more profits

Provided By: dallasnews.com



 

They say good things come in small packages.

Builders are hoping that old saying holds true for apartments.

To hold down monthly rental costs, apartment developers are scaling down some rental units to the size of a hotel suite. They’re betting that renters will make do with less to live in a posh apartment in a prime location.

“If we can give someone luxury living at a price they can afford, they’ll jump at it,” said developer Matt Segrest, president of apartment builder Alamo Manhattan.

At Monaco, Alamo’s new building in Dallas’ Uptown neighborhood, a 571-square-foot studio apartment will set you back $1,459 a month.

While small by Dallas standards, the apartment comes with a view of the Katy Trail, top-of-the line appliances and use of the rental project’s many amenities.

“Our small units are in high demand,” Segrest said. “People want to live where the action is.”

Alamo Manhattan has leased more than a quarter of the Monaco project and is trying to slow rentals to catch up with construction. The average unit size in the entire project is about 800 square feet.

The trend toward smaller apartments started on the West Coast and quickly spread across the country.

The 24-story SkyHouse Dallas apartment tower that’s under construction in Victory Park just north of downtown Dallas will have units that start in size at 577 square feet. The average size in the 336-apartment tower will be about 800 square feet.

“While our apartments are designed to be very efficient and therefore to meet our residents’ budgets, the floor-to-ceiling glass makes the apartments feel like a larger home,” said Thornton Kennedy, spokesman for developer Novare Group.

Dallas apartment architect Mark Humphreys said apartment sizes have dropped as development costs and rents have soared.

“It’s been a hot topic for some time,” he said. “New micro units are now below 400 square feet.

“We have these all over the country, and it’s done great.”

But efficiency apartments have to be done right for renters to accept them.

“The key to us is you have to have a separate sleeping area,” Humphreys said. “They don’t want to walk in the living room and there is the bedroom.”

Humphreys & Partners is putting the bed in an alcove off the main living area to give a sense of privacy.

“It seems to have a lot of legs,” Humphreys said.

At its Taylor apartment project under construction in Uptown, developer StreetLights Residential has studio units starting at less than 570 square feet.

StreetLights partner Tom Bakewell said they appeal to younger renters but not the older, empty nester tenants who are looking at the project.

“Their comment is this unit is too small,” Bakewell said at a recent apartment seminar in Dallas. “Our doors have been open a little over a month now, and 30 percent of our traffic coming in is an empty nester.”

Longtime Dallas apartment analyst Greg Willett said there is renter demand for all sizes of new rental units. But he cautions developers not to produce too many small units.

“You do see a lot of these units in San Francisco and New York, and it works in those markets where the rents are so incredibly high,” said Willett, vice president of Carrollton-based MPF Research. “In the middle of the country, overdoing these would be pretty easy.

“There is demand for this product, but it’s a niche.”