For commercial real estate investors, small may be beautiful. Urban centers are starting to adapt to overcrowding by embracing the tiny house movement and compact vertical living, which not only promotes sustainability but presents new – and for many, exciting – investment opportunities.

Major metropolitan areas such as New York, Los Angeles, and Portland, are reviewing their building codes, and signs are positive. Here are three types of compact living concepts that may interest investors anxious to take advantage of this growing trend.

Tiny houses. The tiny house movement has been growing for years. It began as a way for people to own a home while minimizing their carbon footprint and reducing living costs. Many owners of tiny homes have no mortgage at all, and tiny home builders have begun offering both short- and long-term rentals so those interested in the tiny home lifestyle can try it without long-term commitment.

Micro-loft/apartments. In November 2017, the city of Miami began considering proposals for residential units with a minimum square footage of 275 square feet. Now cities such as New York and Los Angeles are trying to adapt their zoning to allow for smaller residential accommodations.

Student housing. College and university towns have seen sharp increases in the costs of student accommodations. Investors can meet these towns’ housing needs by investing in apartment-type projects with the same footprint as a traditional building, but which include the communal living spaces students crave. The result: increased numbers of units and the lower overhead costs that will appeal to this competitive tenant group.

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