Not Hollywood movie studios, but studio apartments.
At least that is the perspective of Daren B. Schmidt, a managing partner at Greenwood Village-based Allante Properties.
Online inquiries for studios account for about 25 percent of studio apartments, Schmidt noted.
But only 4 percent to 5 percent of the apartments in the Denver area are studios, he said.
“There is a major demand for them, but there is not a lot out of them out there,” said Schmidt, who owns Allante with his father, Darrell G. Schmidt.
The father-and-son team is carving out a niche of developing primarily studio apartments in Denver.
In fact, their Tennyson Place community under construction in the trendy Berkeley neighborhood in Northwest Denver only has studio apartment units.
The five-story, 81-unit community at 3885 Tennyson St. is scheduled to open in May. OZ Architecture designed it.
“The average square foot will be 490 square feet,” Daren said.
“I would say in a traditional mix of units, where you have studios, one-bedrooms and two-bedrooms, the average square footage would in the 700- to 800-sf range,” he said.
But do not call them micro-units, the growing trend of offering super small units.
First, they are too big.
“I think the definition of a true micro-unit is probably 250 to 350 sf,” Schmidt said.
The smallest units at Tennyson Place would be considered the large end of a micro-unit, he noted.
“There have been some negative connotations surrounding micro-units,” Schmidt said, often because such communities are seen to have inadequate parking.
Not that their residents necessarily need a parking space.
“I think that, in general, millennials are a lot more conscious of their impact on their neighborhood and their carbon footprint,” Schmidt said.
“For a lot of millennials, their apartment is just a crash pad,” Schmidt said.
For them, the true amenity is the neighborhood.
“They want to live in very well-located neighborhoods where they can walk to the coffee shops, restaurants and bars that are near parks where they can walk their dogs,” Schmidt said.
“If you figure you spend a third of your life sleeping, that’s primarily what they are using their apartments for,” he added.
Typically, he said they might cook one meal a week at home and go out to eat every other day.
In fact, he would like to develop an apartment community with no kitchen, but he said city codes and regulations probably prohibit that.
“But you don’t need a four-burner stove,” Schmidt said.
“I don’t think there are too many millennials out there who ever have four things boiling at the same time,” he said.
Downsizing a kitchen could reduce the construction cost about $10,000 per unit, he said.
“Spread over 81 units that is a pretty significant savings,” he noted.
He would like to look into “dormitory”-style apartments where there is a communal kitchen that serves several units, he said.
However, because studio units are relatively inexpensive doesn’t mean that the residents are scraping by.
Allante just put one of its completed communities, Highlands Place at West 38th and Julian Street, on the market.
It found that, based on the number of units, close to 60 percent of the renters earn more than $100,000.
Based on the number of people in the 68-unit development being listed by John Blackshire and Tom Wanberg at Transwestern, about 30 percent of them earn six figures.
“A lot of them are renters by choice,” Schmidt said.
And it’s not just millennials at Highlands Place, which includes 11,000 sf of ground-floor retail and was designed by Kephart.
“We have everyone from 22-year-olds to a 75-year-old,” Schmidt said.
One woman owns three homes, which she rents to her grown children.
“She prefers the maintenance-free lifestyle of being a renter,” Schmidt said.
The main reason people leave the units is to buy a home, he said.
“We have very few people who leave to rent a unit in another apartment project,” Schmidt said. “Really, a lot of our renters are future homeowners.”
Allante also began construction on Emerson Place, an 85-unit community at 18th and Emerson streets in the Uptown area.
“The average unit at Emerson Place is less than 475 sf,” Schmidt said.
The community is being designed by Sprocket Design Build.
Schmidt is talking to nearby hospitals to master-lease a block of the units at Emerson Place in order to make them available for their traveling nurse program, in which nurses will be in the area for three-month increments.
One thing Schmidt isn’t worried about is overbuilding.
“I would never say we are bullet-proof, but the phrase I like to use is supply resistant,” Scmidt said.
“If you look around the CBD, there are a lot of 300- to 400-unit complexes where the average square footage is probably in the 750 to 800-square-foot range,” Schmidt said.
Monthly rents can easily top $2,000 in new downtown communities.
“What we do is reverse engineer our projects so we can charge roughly $1,600 a month,” Schmidt said.
Of course, not every apartment developer is embracing the small-is-better concept.
UDR, the giant apartment REIT headquartered in Highlands Ranch, doesn’t have much of a local portfolio, but in areas where it is active, like California, it plans to developer more large units.
UDR is looking to increase its national portfolio to 10 percent three-bedrooms from its current level of 3 percent.
“It’s the two ends of the spectrum,” Schmidt said.