But the overall price of the units is competitive with the median Miami Beach condo sales price of $430,000 and a steal at the luxury condo median sales price of $2.8 million, according to the 2018 first quarter Elliman Report released Thursday.
The 6080 Collins building sits on a prime location, across the street from the ocean, and features all the perks of the luxe life other than space, 24-hour valet parking, concierge, gym, rooftop pool, even maid service. The monthly maintenance fee is $1.27 per square foot, or $445 per month for the smallest units.
Location matters Analysts say that micro-units don't make financial sense in suburban neighborhoods such as Kendall or Doral, where renters and buyers can still find good living spaces at an attainable price. Nor are they a good fit for older neighborhoods such as Little Havana or South Beach, where a lot of the older existing housing is already pint-sized.
But for the booming urban cores of Miami, where much of the development over the last five years was geared at the luxury ($1 million and over) market, micro-units and downsized living are a good fit, and another indication of the city's ongoing maturation from vacation mecca to a true urban center.
According to the most recent Demographia International study, which compared median household incomes to median home prices in the third quarter of 2017, Miami is the sixth least-affordable major market in the U.S. for "new starter housing of an acceptable quality" located near industrial and commercial developments, requiring buyers to pay 6.5 times their annual income. That's almost double the national median of 3.8x and higher than notoriously expensive markets such as Seattle (5.9x), New York (5.7x) and Boston (5.5x).
That's where tiny living and micro-units, which are generally priced 20 percent lower than market rates, come in.
"Miami residents love their big spaces, but there are all sorts of new things that are at play with micro-units," said Jonathan Miller, president/CEO of the New York-based real estate consulting firm Miller Samuel Inc. "The old rules don't apply, because we're in an exploratory period. Miami's trend toward new urbanism, where it's all about walkability and niche neighborhoods, focuses on things that prior generations didn't focused on. Micro-units are aimed at people who are not being served by what's been built."
At the same time, Miller said, the real estate industry is awash with capital at lower interest rates, and when there's money available, developers don't stop building.
"When there's a new market to explore, you see this sort of boom," Miller said. "A parcel of land where a developer can get a much higher price per square foot becomes a draw. In valuation-speak, it's 'highest and best use.'"
Some developers also see micro-units as an investment in the future. Carlos Rosso, president of condo development at The Related Group, points out the company is building office towers adjacent to two of its residential developments in Wynwood: A 40,000 square foot office building next to Wynwood 25 and another 40,000 square foot office space near VHouse. The developer is also adding nearly 70,000 square feet of retail spaces to the neighborhood that will be curated as if they were amenities _ coffeehouses, gyms, restaurants and barber shops.
"We have a vision for Wynwood," Rosso said. "Ten years from now, we want to be remembered as the developers who redefined living in Wynwood. We are doing it one building at a time, like you film a movie one frame at a time, and won't stop until our vision is achieved."
The right timing The arrival of micro-units comes at the right time for Miami-Dade County, when many of the younger professionals living in Brickell and downtown are already used to smaller, shared living spaces.
"We are like any of the highly desirable international cities like San Francisco, New York and Hong Kong in the sense that we have increasing demand and very constricted supply," said Gerard Yetning, executive vice president of Colliers International South Florida . "We are literally an island between the ocean and the Everglades, and there are pockets in there that have desirable neighborhoods with a 24-hour lifestyle. People are already creating their own micro-units there by living with roommates."
Ryan Shear, a principal at the development firm PMG, said the company intends to double the number of units in its RBB co-living PMGx operation to a total of 10,000 within five years. X Miami will be the third building in the division: The first two, X University Village and X Logan Square, have already proven the concept. Like most micro-units, the apartments come fully furnished. You sign a lease for a bedroom, between $1,300-$1,500 a month, depending on the floor, and if you end up not getting along with your roommates, you can transfer to another bedroom in the building.
"We have taken an old process, finding a roommate, and modernized it," Shear said. "The lease application for X Miami went online five days ago and we already have a waiting list. And it's drawing all kinds of people. The majority of our market is 25 year-olds, but we're also seeing a lot of waitresses, service-sector people and folks who work downtown. They say they're dying to live in a nice place downtown, but their budget is $1,400."
Although Miami-Dade's micro-unit boom is limited on hot neighborhoods with higher land values for now, the concept may spread to other areas. In December, the City of Miami approved an amendment to the Miami 21 building code that reduced the mandatory minimum size of micro-units in Transit Oriented Development (TOD) areas from 400 to 275 square feet. The amendment, which only applies to projects close to mass transit such as Metrorail, Metromover and the upcoming Brightline train service, also reduces or eliminates the requirement for parking spaces, a construction cost that forces developers to raise their prices.
On March 6, the Miami-Dade County Commission launched a 120-day study of micro-housing to "encourage the efficient use of land by accommodating greater population density in a smaller area," another indication of local government exploring possible solutions to the area's affordable housing crisis.
But some developers argue micro-units not a viable long-term solution, because people can't live in such tiny quarters for long. Jay S. Jacobson, president and CEO of EDEN Multifamily, which specializes in boutique apartment buildings located in underserved neighborhoods, said he helped develop a micro-unit in
Seattle in 2010, directly across the street from Amazon headquarters.
But the project was a bust, with a turnover rate of 137 percent. The average turnover rate for a regular apartment building is between 55 and 57 percent per year.
"The average size of the units was 330 square feet, but once people realized they had no place to put their clothes or shoes or handbags, they were moving in and moving out on the same day," Jacobson said.
"Conceptually, micro-units are a great idea. But you have to put the human element into it. Dropping unit sizes to 400 or 500 square feet is workable. But when you're building 250 square foot units, all you're building is hotel rooms. You can't solve affordability by squeezing people into those. It's not a lifestyle conducive to any human being in this country."
For now, though, the real estate industry is bullish on the micro-units currently being developed in Miami, because they are filling a gap created by the post-recession emphasis on luxury development in Miami-Dade's booming urban cores.
"The housing market is changing because of cost and supply," said Steven Wernick, a land-use partner at Akerman LLC. "There's going to be new types of housing product, and there are a number of trends and public policy objectives that are part of the conversation with micro-units. Some people immediately think all apartments are going to become micro-units, but that's not the case. We are seeing a few projects come out of the ground that are incorporating them. We're going to keep exploring the concept project by project."