Apartment units in the top 20 U.S. metro areas are shrinking. Those built from 2010 to the present are, on average, 7% smaller (70 square feet) than those built from 2000 to 2009, according to real estate research company RCLCO.
Most of that change is attributed to the higher share of studio and one-bedroom apartments relative to larger, mutli-room units. Floorplans are shrinking as well, particularly among studio and one-bedroom units, with just how much dependent on the area of the country. Three-bedroom units, however, are increasing in all but the very high-cost markets.
To some degree, millennials are forcing the mix change to studios and one-bedrooms, according to Bloomberg, as they delay starting families, which reduces their need for space.
Regional data tells the wider story of shrinking apartment footprints. High-priced markets like Boston and Washington, DC, as well as moderately priced markets like Denver, Dallas and Miami saw the biggest size reductions as demand increases. The previous larger apartment footprint in those markets also allowed for a greater downward adjustment in size. The very-high-priced markets in San Francisco and New York saw the smallest change in average size (-4%) because apartment footprints in those cities already tended to be compact.
RCLCO's analysis follows an August report from the National Association of Home Builders noting that a rise in rental unit demand is keeping apartment size at almost prerecession levels. From early 2015 to the second quarter of 2016, the NAHB said, average unit size fell to 1,161 square feet from 1,247 square feet. On a one-year moving average, apartment size in the second quarter was only 1,153 square feet. As the market share of for-sale units increases, reducing pressure on the for-rent market, average apartment size should start ticking upwards again. The NAHB also noted that the average renter's appetite for smaller units has contributed to the decline in unit size.
Apartments aren’t the only housing units giving up space. According to another recent NAHB report, the median size of a single-family home in the U.S. fell 3% in the second quarter of 2016 from 2,465 square feet to 2,392 square feet. On a one-year moving average, though, median home size increased 16% — a market characteristic that the NAHB chalks up to a post-recession shift.