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Micros for Millennials

December 6, 2013

Small. It’s the new big.

Micro-unit apartments and condominiums measuring in at as little as 250 square feet have become the latest housing option for price-conscious Millennials and a growing number of single and two-person households emerging across America.

There is no one set design for micro-unit developments. Most units have built in furniture features, such as a Murphy Bed or a kitchen table. There isn’t space for books or CDs but most of these renters have Kindles and iPods. Extra space isn’t a high priority for these tenants and they don’t want to spend the extra money heating and cooling the additional space either.

Small spaces are nothing new. They are common in Tokyo, Singapore and Paris as well as in older building stock in cities like San Francisco and New York. But developers all across America — and especially in cities where land is expensive — are rediscovering small and making it more efficient.

The latest trend in the United States kicked into high gear about five years ago with the work of Evan Granoff. Granoff, a Rhode Island-based developer, announced plans to renovate “The Arcade” from a one-time indoor shopping mall that had been shuttered earlier that year into a mixed-use commercial space with 48 micro-units and 29,000 square feet of rentable space.

After toiling on the project since 2008, Granoff refuses to say exactly when the building will open. The hesitance comes after missing self-imposed opening deadlines in the past. The delays are attributable to everything from bad timing — the financial markets tightened due to the economic meltdown — to renovating and repurposing a 180-yearold historic building that needed to be brought up to code and made compliant with the Americans with Disabilities Act.

Built in 1828, The Arcade is a three-story building that boasts Greek Revival columns and granite walls. It sits on prime Providence real estate between Westminster and Weybosset streets and is a stone’s throw away from Brown University and the Rhode Island School of Design, among a number of other colleges. It is walking distance to the state Capitol, where the Rhode Island General Assembly meets and is in the heart of Providence’s financial center.

The Arcade was built as the first indoor mall in America. It has an atrium in the center of the building and has skylights. It was declared a national historic landmark in 1976 but was shuttered when the economy crashed in 2008. It has appeared on the Providence Preservation Society’s list of most endangered properties list since 2009.

“When I first started, people were saying I was crazy for making units this small, that no one wants to live in a really, really small unit,” Granoff said. “But I think they do.”

Indeed they do. The waiting list to rent at The Arcade is long. Granoff won’t say exactly how many names are on it but he has been collecting applications for the last five years. While he intends on awarding the apartments by order of the wait list he says people freely share their credentials, hoping it will help them get one of the 48 coveted apartments.

“People act like they are applying to college, they put all this personal information on their applications,” he said. “The interest in this was much, much, greater than I ever anticipated it would be.”

While micro-units occupy the second and third floors of the building, Granoff has designed the first floor for micro retail featuring fashion and jewelry designers from the Rhode Island School of Design.

Complementing the retail will be three restaurants, all of which are Rhode Island based or locally owned. While he may like Argentinian steak houses, Granoff said he didn’t want any chains in The Arcade. “I wanted (the restaurants) to be an amenity to the retail as well as the residential.”

Grand-opening delays have done nothing to deter interest in the Providence, Rhode Island redevelopment, which was featured in the City of New York Museum exhibit: Making Room: New Models for Housing New Yorkers.

The exhibit opened in January following Mayor Michael R. Bloomberg’s press conference announcing the winners of the adAPT NYC Competition. The city solicited proposals for the design, construction and operation of a micro-unit apartment building at 335 East 27th Street in the Kips Bay neighborhood in Manhattan.

The winning proposal — called “My Micro New York” — was submitted by a team of professionals from Monadnock Development LLC, Actors Fund Housing Development Corporation and nARCHITECTS.

The development is allowable under a pilot program that allows the buildings to be smaller than the mandated 400 square feet. The goal is to close the deal and have all the zoning requirements approved by the end of the year before Mayor Bloomberg leaves office, said Tobias Oriwol, My Mirco New York project manager for Monadnock Development.

Bloomberg said the new building will create needed housing stock for the growing number of single and two-person households in the city. There are upward of 1.8 million households with just one or two people according to the mayor’s office, but only 1 million studio apartments in the city.

To keep traditional construction costs down and to help ensure spaces are built properly, the My Micro New York building will be prefabricated and modular. Brooklyn Naval Yard based Capsys will make the modules which will be assembled on site.

There will be 55 new micro-units that will vary in size from 260 square feet to 360 square feet. Twenty-two of the units are affordable. Rent numbers won’t be finalized until the time of the affordable unit lottery, Monadnock Development says, but rent in the 22 units cannot exceed more than 30 percent of the residents’ annual income. Specifically, 11 units will be reserved for people with incomes at or below 80 percent of the Area Median Income (AMI) and another 11 units will be reserved for households earning at or below 130 percent of AMI. For a one-person household in 2013, these annual income restrictions were $46,901 and $67,002, respectively.

The remaining units won’t be restricted but are expected to rent for less than other new construction market studios with similar amenities in the neighborhood.

Sarah Watson, Citizens Housing Planning Council executive director, concedes that the My Micro New York project hasn’t been hailed as good public policy by all New Yorkers. Citizens Housing Planning Council partnered with the Museum of the City of New York on the museum exhibit and has made increasing options for single persons one of its top initiatives.

Watson attributes the push back to the micro-units in Manhattan to several causes including concerns about increased density. “It’s ironic,” she said noting that New York City is the most densely populated city in the United States.

Watson claims the city has some of the most arduous regulations and restrictions when it comes to housing and its attributes and says New Yorkers generally and staunchly defend the codes. Some regulations, such as those that require certain square footage in certain areas of the city and others that restrict how many non-related people can share space, are at odds with the growing demographic of single-person households.

“There’s a feeling that homeowners create a stable community and they don’t want renters,” Watson said, describing a housing market bias against single-person households and renters. “And the next step is they (the public) feel like families create stable communities and people who aren’t in families, don’t. It’s an embedded value thing, it’s tough to break. It is something that people believe even if they themselves are single renters. They don’t want single renters in their communities.”

Monadnock Development’s Oriwol called the opposition to the project a “knee jerk” reaction from people who fear the building may become an illegal hotel or may operate like a bed and breakfast.

“It’s not a new model of living,” he said, adding that over the course of public hearings associated with the My Micro New York project there have been scores of people supporting the project. “They are at the meetings and sending emails that say, I live in a 200-square-foot apartment and it’s fine. And I like it. It happens more than you think,” said Oriwol.

In Washington, D.C., debate surrounding a new micro-unit building there was less about single renters or appropriate living spaces and more about the parking. To help gain initial approval for his micro-unit project on the 1400 block of Church Street in Washington, D.C., through the planning process, Developer Brook Rose has agreed to parking restrictions.

Normally, D.C. regulations would require Brook Rose to provide at least 18 parking spaces for the modern glass building that will sit behind three brick “row house” buildings that the developer says are in disrepair. They will ask that the parking requirement be waived, and in exchange, commit to a ban against tenants acquiring a residential parking permit. To ensure they don’t seek a permit, the developer will periodically review DMV records.

If a tenant obtains a residential parking permit, their lease will be terminated. Advisory Neighborhood Commission (ANC) 2F member Walt Cain said that parking is a top concern for area residents and the impact of an apartment building would not have gone unnoticed. ANCs are local governments in Washington, D.C., that work to ensure neighborhoods are properly represented in city government.

Brook Rose Development offered the creative parking deal to the ANC 2F’s Community Development Committee, which is responsible for reviewing proposed real estate developments and renovations and housing stock and traffic management and parking, among other things, and making recommendations for action by the full ANC. Cain, who chairs the committee, said it was unlikely the project would have gotten the committee’s blessing without the arrangement.

Just how big a controversy these teeny, tiny units make often depends on codes and whether the housing options are allowed by current regulations. In Seattle, micro-units were initially heralded as affordable housing options, and since 2006, the city has permitted 48 micro-housing projects. If all are built, they would yield living quarters for about 2,300 people.

Indeed, LEED Platinum certified Tudor Manor, in Redmond near Seattle, is minutes from Microsoft, DigiPen Institute of Technology and AT&T and has a walk score of 94. In 2012, the city of Redmond and Tudor Manor won the Washington state Governor’s Smart Communities Award for their partnership in the project.

More recently, though, there’s been a backlash against micro-units in Seattle, where relatively lax building codes allowed micro-units as small as 150 square feet. Residents in the Capitol Hill community complained about the units — commonly called “a-pod-ments” in the Seattle area — and alleged that some developers were fudging how they were reporting the housing units.

When it inured to their benefit, such as applying for a multi-family property tax exemption that was created to help generate more affordable housing units — they would use the number of bedrooms in a building. In Seattle some “a-pod-ments” are essentially bedrooms only with shared communal space for kitchens and laundry. The “a-pod-ments” can have eight bedrooms to one kitchen.

However, when dealing with land regulations the same developers reported housing units by the number of kitchens — one — and were able to circumvent planning review regulations.

Seattle Office of Housing Director Rick Hooper in March 2013 issued a rule that aligned affordable housing incentives with permitting regulations and guidelines. Meanwhile, the Seattle Planning Commission and the Department of Planning and Development are making recommendations to the Seattle City Council on micro dwellings and what, if anything, should be changed in the regulations going forward.

Like Mayor Bloomberg in New York, though, Seattle Mayor Mike McGinn is a proponent of smaller spaces and their role in vibrant cities.

“We talk a lot about making it affordable for people to live here,” McGinn said recently when asked about the units. “It’s not good for the health of the city to create jobs here and not create places to live.”