ATLANTA: Are We Pricing Out Millennials?
Could apartment developers be driving away the very demographic they're striving to attract? As construction costs soar (up as much as 40% since 2010) and Class-A rents in many big markets hit all-time highs, Millennials may be unable to afford rent in places like Atlanta's tony Midtown, said Novare CEO Jim Borders at this week's Bisnow Atlanta Future of Midtown event. There, new units are commanding more than $2/SF in rents. It's not only Atlanta: REIS predicts rents will rise 3.3% across the board this year; in Manhattan, average rents are back to $3,300/month, according to recent reports. Integral Group's Chris Martorella says price hikes are forcing developers to create smaller units to make rents more affordable. (This all seems like a ploy by lobbyists for Big Bunk Bed.)
Yet, a recent Bisnow reader poll on microunits says that the tiny apartment craze is just a tempest in a teapot, especially since it's only a niche meant for young, student loan-saddled Millennials whose belongings are mostly virtual (or empty nesters tired of the ‘burbs). More than 800 readers responded, and 70% said microunits are not the future. (So if you were thinking of renting out your walk-in closet, think again.) Microunits are a future of multifamily, not the future, readers say. Learn why some readers call this the "Pet Rock of residential housing," yet developers are unfazed in today's special National Multifamily Bisnow report.