By Rene Rodriguez Miami Herald
WWR Article Summary (tl;dr) The "tiny-living" concept is picking up steam in Miami where developers are banking on the micro-unit concept to attract buyers and renters MIAMI
Would you plunk down $300,000 for a studio that measures 350 square feet, about the size of two surface parking lot spaces, to live in the heart of Miami Beach? If the idea seems preposterous, micro-units are not for you.
But a growing number of real estate developers are banking on the micro-unit concept, tiny, furnished apartments in amenity-laden buildings, located in hot neighborhoods, to attract buyers and renters who want to live in Miami-Dade's most popular neighborhoods but can't afford to pay market rates.
They are also exploiting the malleability of the tiny-living concept, which has been used in cities such as Seattle and New York to alleviate the affordable housing crunch, and customizing it to suit their individual projects. They include:
The 70-unit 6080 Boutique Hotel at 6080 Collins Ave., due for completion in July, is a residential/hotel mixed-use project with turnkey residences ranging in size from 350 square foot studios to 900 square foot two-bedrooms (about a fifth of a professional basketball court). Prices range from $300,000 to $750,000.
Developer Property Management Group has launched a co-living operation, dubbed PMGx, that applies the micro-unit living concept to traditional apartments. The company is adopting a rent-by-bedroom (RBB) tactic at the 464 units in the X Miami tower (formerly known as Vice) at 300 Biscayne Blvd., just down the street from the Miami-Dade College Wolfson Campus. The RBB strategy is simple: You rent a single bedroom (with its own private bathroom) inside a fully-furnished unit and share living space with roommates that have been screened and vetted during the application process. Rents will range from $1,300 to $1,500. The building is due this summer.
-X Las Olas, a two-tower project at 300 SW First Ave. in Fort Lauderdale, will add another 1,100 RBB units to the PMGx stockpile. The company plans to break ground on a third South Florida project, the 700-unit tower X Biscayne, at 400 Biscayne Blvd., in late 2018.
_Wynwood 25, a partnership between The Related Group and East End Capital located at 227 NW 24th St., will deliver 289 rental apartments to the trendy neighborhood, where housing remains scarce. They will range in size from 400 to 1,200 square feet and go for $1,400 to $3,200 per month. The building was topped off last week and construction will be completed in early 2019.
_Related has two other projects in the area: Wynwood 26, a joint venture with Block Capital Group at 51 NW 26th St., will add 172 apartments between 400 and 900 square feet, priced from $200,000 to $500,000. Singer Lenny Kravitz will serve as creative director of the building's public areas and amenity spaces. The project broke ground on Monday.
_VHouse Wynwood will duplicate the model of Related's boutique-residential tower in Sao Paulo. The building, to be located at NW First Ave and 28th St., will partner Related with Metro 1 and deliver 192 condos between 416 and 900 square feet, with prices starting at $200,000. The project is in the development phase.
_YOTELPAD Miami, a $150 million joint venture between Aria Development Group and the Kuwait-based AQARAT real estate company, is another micro-unit residential/hotel project, this one in downtown Miami at 227 NE Second St. The building will be a 31-story tower offering 250 Yotel-branded hotel rooms (or "cabins," as the company calls them) and 215 condos ranging in size from 425 to 700 square feet. Prices will start in the $300,000 range and construction is scheduled to begin in late 2018.
_Moishe Mana, the developer who owns large chunks of land in Wynwood and along Flagler Street in downtown Miami, is proceeding with his plan to build a 49-story tower at 200 North Miami Ave. that would include 328 micro-units between 400-500 square feet in size.
"It is our initiative to endorse the development of micro-units in the city of Miami," said Mana, who has previously expressed a desire to turn into Miami into the Silicon Valley of South America. "It is crucial to provide housing for millennials to ensure the growth of Miami as a global hub for industries and technology. Until today, the need to keep the millennials here was overlooked. Our project is not based on constructing one single condo building, because Miami has enough of those. Our concept is about building connectivity within a neighborhood."
Millennial appeal All of these developments take advantage of building and zoning codes that allow for higher density and lower parking requirements, which maximize land use. Although some fixed construction costs stay the same, you still need a bathroom and a kitchen, for example, the overall building costs are roughly 20 percent lower.
"Developers and lenders see Miami is growing up," said Luis Flores, a partner at Saul Ewing Arnstein & Lehr LLP, who works with developers around the U.S. "The micro-unit model permits rentals and complies with zoning. For a New York lender, that's a no-brainer. The wrinkle Miami adds is that the units will also have beautiful design and finishes. If I'm a 25 year-old first-year lawyer or banker who works in downtown or Brickell, I'm not thinking about square footage. I want a great location and a shiny new apartment with great amenities."
All of the micro-unit buildings coming online in Miami-Dade are rich in amenities, common work and play spaces, gyms, pools and outdoor areas. Some of them, such as the 6080 Boutique Hotel and the X Miami tower, come fully furnished with beds, sofas, flat-screen TVs, even flatware and bed linens.
In other words, they are move-in ready, you just need to bring your clothes, which is what their residents want.
According to a study by the Urban Land Institute Multifamily Housing Councils, the majority of micro-unit dwellers are young (under 30) professionals and first-time renters who haven't accumulated many possessions and don't need as much living space. or, presumably, closets.
According to the study, micro-unit users consider the small apartments as "launch pads" for new careers and lives, most move on to a larger place within two years, and they are social animals who prefer to meet their friends at a restaurant or bar instead of hanging out at home.
Most important is location. Nearly all the respondents in the study (97 percent) cited location as the most important priority in deciding to rent a micro-unit. The study also found that a minority of micro-unit users are older and use the small spaces as a part-time residence near relatives, in-town pied-a-terre or party pad.
Philip Freedman, managing director of Compass Development Division, said the small sizes have not impeded sales at 6080 Collins Boutique Hotel, where 70 percent of the units have been pre-sold to a mix of South Florida residents and out-of-towners from the U.S. and nine foreign countries.
The $45 million project is a joint venture between Buenos Aires-based Domus Group and the management company Eskape Collection, which will run the building's hotel operations when it opens in July.
Eskape currently operates another residential hotel property on Miami Beach, the Abae Hotel at 1215 West Ave. "The local buyers have been people who live in Coral Gables or Pinecrest or Hialeah who want to have a new, easy weekend place on Miami Beach," Freedman said. "The other buyers are people who want to come here for the weekend or on vacation without dealing with a condo association or big maintenance fees. When people come to look at this type of unit, they've already managed their own expectations. They know they're not going to be large. It's a totally different mindset."
Using the traditional real estate benchmark of price per square foot, the micro-units at the 6080 project are nearly twice as expensive as a regular Miami Beach condo, costing $857 per square foot for a studio. The current median price per square foot in Miami Beach is $505, according to Realtor.com.