In 1985 the average square feet of an individual multifamily dwelling was 885 square feet. By 1999 this number had moved up to 1,105 square feet (Real Estate Market Analysis- Schmitz & Brett). In 2014, according to the National Association of Home Builders (NAHB) the median size is 1,074.
A review of median size excludes consideration of unit mix in terms of number of bedrooms. It also excludes segregation by use type; seniors housing, student housing and population density. However, use of median size does allow us to measure changes in rent per square foot. Like a good detective stories; we follow the money.
There is a certain amount of elasticity between unit size and proximity to Job Centers
Unit size takes a back seat until we know two more critical pieces of information: average family size and location. For example, central city locations are generally full of single people and close to job centers with smaller unit sizes and higher rents.
The further away we get from job centers (and the urban core) rents per square foot are lower. Away from the urban core family size increases and rent per square foot decreases. Unit size is larger in areas where there are a greater number of occupants per unit. Said another way, unit size is larger with fewer livable square feet per person per unit.
As a buyer or operator of multifamily properties, size only matters once we can wrap this information into our decision-making processes along with location and local demographic profiles. Otherwise, it's just a number.
Mr. Wilhoit is the author of two books: How To Read A Rent Roll: A Guide to Understanding Rental Income and Multifamily Insight Vol 1 - How to Acquire Wealth Through Buying the Right Multifamily Assets in the Right Markets.
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