Some Americans Want Smaller Apartment Buildings, But Developers Can't Eat The Costs
Want to get a jump-start on upcoming deals? Meet the major players at one of our upcoming national events!
Americans fond of the smaller apartment buildings that once graced neighborhoods in abundance are anxious for their return, but developers are focusing much of their efforts on single-family homes and large apartment buildings in urban centers.
There are several benefits to small apartment buildings; one positive is they tend to have the cheapest rents, Bloomberg reports. Cheaper rent could help the nation’s affordable housing crisis, where more than 34% of America’s largest generation still lives with mom and dad, and in some cities nearly 45% of Millennials are living in their childhood homes.
Small apartment buildings also add density to neighborhoods without changing their character, unlike huge developments, and they offer older residents a cheaper, smaller option to downsize to while staying in the neighborhood.
Unfortunately, experts said for developers cheaper rents translate to smaller profits, especially since construction costs are so high. Enterprise Community Partners vice president Andrew Jakabovics said zoning rules push developers to favor single-family homes, and if developers are willing to absorb the regulatory costs to build multifamily units, they typically opt to build as big as possible to make cutting through the red tape worthwhile. Jakabovics said codes being rewritten to encourage smaller apartment development would be the incentive developers need.