Cities across America are facing an affordability crunch and housing in Miami is no different. The short supply of affordable housing is even scarcer in proximity to Miami’s central employment districts with no single solution available. Efforts to promote inclusionary zoning (mandatory affordable unit requirements) have populist appeal, but limited success and actually reduce land values for property owners. Micro-units though, have the opportunity to create both affordable housing and also increase developer profitability. In accomplishing both affordability and profitability, micro-units hit the perfect spot that incentivizes the private sector to build affordable housing because it is more profitable. As a result, several municipalities in South Florida are exploring codifying micro-units.
Micro-units provide affordability for the simple reason that the units are smaller and cost less to build, while yielding a greater return for developers and landlords. Thus, they provide the unique dual benefit of affordability and profitability. Reduction of minimum unit size increases unit density with the same building envelope. Moreover, smaller units always rent for more per square foot than their larger counterparts. Thus, the same building envelope can now contain more units and these units can rent at a higher price per square foot. The units remain relatively inexpensive to rent simply due to their size. In Manhattan’s Kips Bay neighborhood, micro-units ranging from 260 to 360 square feet were developed to test the viability of micro-units. The Kips Bay units are fully leased, proving out the micro-unit model. Continue Reading