The buzz in town this past week (before Menino’s future abdication shook the media world to its molten core) was of “micro-units,” and how Boston could solve a seemingly permanent housing crisis with a few hundred 300-square foot apartment units along Fort Point Channel. If only it were going to be that easy.
For the uninitiated, micro-units, also known as “innovation units,” are one-room studio apartments with as little as 300-square feet of space per unit, including room for a bed, kitchenette, closet, and separate bath with stand-up shower. Cost to rent: estimated to be around $4 per square foot, or roughly $1,200 per month.
Theoretically - and that is the thought space we inhabit now, since only a couple of these units have yet been built - the idea makes sense. Young, single professionals don’t need a lot of storage space, just a place to crash at night and drink coffee in the morning. Many eat out or have dinner delivered; find attainment in activity (clubs and concerts); and don’t own cars or other bulky possessions. A micro-unit is the modern version of the “bachelor pad” of days past - no frills, and no frill-related expenses (Mary Tyler Moore lived in such a small apartment, now that I come to think of it.)
The reality is, however, that nothing of this sort can be built for anywhere close to the prices that have been suggested. Data shows that it costs more than $400,000 to build one unit of housing in downtown Boston, so how one expect developers to rent them for only $1,200 per month? The truth is, you can’t. A more realisitc price on Boston’s rental market is is likely to be at least 25% more - $1,600 per month for a one-room apartment.
If a developer were able to build units that cheaply, demand would quickly out-strip supply to such an extent that the building’s owner would be foolish not to ask for more in payment. Meanwhile, nothing would prevent older people from renting in micro-unit buildings; so lower-paid, younger professionals would be competing with 30-and-40 year olds, as well as the expanding crop of empty-nesters looking for pied-à-terres. With hotels costing $250 per night (and more) in the city, why not just rent a micro-unit for your visiting friends and families; why not use one as a corporate rental for traveling businesspersons?
Why is everyone talking about micro-units as if they are our salvation? It is difficult to address the roots of systemic problems with sexy, headline-driven solutions. Even after a decade of development, during which an additional 20,000 apartments and condominiums were built in Boston, demand is still outstripping supply. Even if an additional 30,000 units built during the coming decade, as Mayor Menino recently promised, there’s no reason to believe that prices will be brought down significantly.
Politicians like mico-units because they can claim credit for progress: “Our young people can afford to live in Boston – we have apartments for $1,200!” Real estate investors like the idea of small apartments because it means they can build more units per building. Given the anti-development climate in many of Boston’s neighborhoods, it makes sense that, when a BRA nod is finally obtained, developers would want to build as many units as possible.
At some point we will have to be honest with our young people and others aspiring to urban residency: you will not live in downtown Boston if you can’t afford to pay the going rate. That rate will far exceed $1200/month until large-scale, vertically-oriented, rental development occurs. A sincere and practical plan is needed create thousands of new rental units in Boston - not just downtown, but all over the city, so that potential tenants and condo owners have real options from which to choose, and prices fall as a result.
