Could letting really small apartments be built (microunits) dramatically relieve housing shortage?

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Fans of microunits (as small as 140 sq ft apartments) claim that housing affordability could be substantially improved if cities let smaller units be built. LA's Central City Association examines the barriers and the advantages.

Similar to parking requirements, limits on unit density disadvantage construction of smaller apartments. For example, a site with 10,000 square feet of development capacity and a maximum density of 10 units could create ten 1,000-square-foot units or five 2,000-square-foot units, but not twenty 500-square-foot units.

If the developer chooses to build smaller apartments, they will still only be able to construct a maximum of 10 units and will earn a lower return on their project. More precisely, their pro forma will return a lower residual land value and they will not be able to offer a competitive price for the site, so it will be sold to another developer willing to build larger units.

This is a bad outcome for a city in need of more housing choices.

Go Deeper:

• High Density or Low Density? Understanding how we got into our housing crisis (part 1 of 3)
• Analysis: Why Bay Area cities should call it quits with CEQA, PLAs, rent controls
• The case for de-densifying Bay Area living

The Greater Downtown Housing Incentive Area (GDHIA) ordinance eliminated density limits in DTLA, making it one of the few locations in the city without this barrier to micro-unit development.  Because Downtown projects are not density-limited, they do not benefit as greatly from the TOC Guidelines density bonus; importantly, however, TOC projects in the GDHIA are still eligible for a 40% FAR bonus, meaning they can secure additional development capacity without making TFAR or linkage fee payments. Although micro-unit development may be feasible outside of Downtown in limited circumstances, reducing or eliminating density limits is essential to making micro-units viable in more locations throughout LA.

Solutions

• Expand the Greater Downtown Housing Incentive Area (or something similar) to other transit-accessible locations in the city. State Senate Bill 827 would eliminate density limits and parking minimums within a half mile of transit across the state.

• Allow for higher dwelling unit density for projects where household size is lower than average (i.e., for studios and especially micro-units) and where limited parking is provided (or car-share access is guaranteed). This policy change would recognize that household sizes are smaller for studios and micro-units and therefore the impacts on roads, utilities ...

Read the whole thing here.

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