Two-bedroom units have gone from about 40 percent of new-build units the past cycle to around 30 percent now. At the same time, one-bedroom units were roughly 50 percent of new units in the 2000s but are up to 60 percent now. Those with three bedrooms have gone from about 10 percent of all units built to roughly 5 percent while studios, which were virtually non-existent pre-2000, have increased to about 5 percent of new units.
Reasons for this shift likely include a focus on denser, urban areas such as Uptown, where land prices and construction costs make it more difficult to build larger units. As costs rise, it is more efficient for developers to pack as many renters into as small a space as possible, without sacrificing quality.
Smaller units also allow developers to target a wider range of potential renters, increasing the demand pool for that project. For example, an 800-square-foot, one-bedroom unit renting for $2 per square foot ($1,600 per month) takes up 32 percent of the annual pre-tax income of someone making $60,000. However, a 600-square-foot one-bedroom apartment, renting for the same $2 per square foot ($1,200 per month) takes up 25 percent of the annual pre-tax income of someone making only $60,000.
Smaller units also tend to command a higher rent per square foot on average, with studios and one-bedrooms yielding higher rents than two-bedrooms, relative to their size.
A few recently delivered and upcoming projects have bucked the smaller unit trend. High-end deals like the Residences at Park District (average unit size of 1,574 square feet), The McKenzie (1,607 square feet), The Katy (1,313 square feet) and The Laurel (1,485 square feet) are targeting empty nesters with their larger floorplans. Despite these high-profile outliers, it’s safe to expect that projects with smaller units, and a heavier studio and one-bedroom mix will remain the norm in Dallas-Fort Worth going forward.
