Does Chicago Need Microunits?

Microunits are not the future of multifamily, according to 70% of readers in our recent multifamily reader poll, but it is a burgeoning niche that can’t be ignored, even in a place like the Midwest where space is a bit easier to come by. Melvin M. Kaplan Realty prez Melvin Kaplan (above left, with his brother George) hopes microunits will take off here, because the city's frothy $3/SF-plus rents (and 4% cap rates) are not sustainable. “All a person really needs is a bed, a toilet, and a place with amenities like a convenience store downstairs,” he says. (Victorian powder rooms are out of the question?) It's a strong concept that has crossover for both apartments and hotels. Think a commodity broker who just needs a place to nap or crash in the evenings, or exchange students looking for lodging on the cheap, he tells us.

NY-based Sydell Group has the right idea with its planned Freehand hostel at the former Tokyo Hotel in River North, he says. A young 77, Melvin's been in the business for 40-plus years and says he works harder than he did at 50. (It's okay—your 50s are a time to see the world and let loose before you settle down.) Another pro-micro Chicago respondent said they’ll appeal to college grads less interested in material goods and more interested in experiences (as well as appealing to economic conditions and sustainability concerns). Another reader on the opposing side called them nothing more than glorified dorms that people may be willing to suffer through for shorter periods.