Detroit’s New Micro-Apartments May Cause Major Rent Hikes
Popular especially among young professionals moving into cities, these ultra-small apartments are a low-cost alternative to the climbing rent in more expensive cities.
According to the Detroit Free Press, two developers are responsible for spearheading the micro-apartment projects. They plan to build them in downtown Detroit, in addition to one in Kalamazoo.
Compared to normal-sized, one-bedroom apartments, micro-apartments are 20% to 30% lower in rent and are typically around 350 square feet. But despite their small size, these apartments still have full kitchens and bathrooms.
And while they are built for one person, roommates or couples who don’t mind sharing space utilize these micro-apartments also.
Considering the state of Millennial real estate statistics, it isn’t surprising that young people in cities are flocking to these micro-apartments. A recent survey showed that 50% of all Millennials rent their homes, a 13% increase from only five years prior.
Additionally, statistics show that the number of Millennial homeowners has decreased since 2010: 26% of all Millennials owned homes in 2015, compared to 35% in 2010.
But micro-apartments mean massive cost hikes for many conventional apartment rents in Detroit.
As development projects blossom in Detroit, landlords are raising rent anywhere between 3% and 10% in some neighborhoods. Not everyone can afford these new rents, and these price hikes might boot long-time residents out of their apartments.
“The rents are going up to the point that many people now renting are converting over to ownership,” said Austin Black II, founder and president of City Living Detroit brokerage. “At $2 a square foot that is $2,000 a month for a 1,000-square-foot unit, and you can get a decent condo with that kind of money.”
This momentum is also carrying over to Detroit’s condo market, an industry that was once stalled during the recession.