MF Per Unit vs Per Foot Rents
Curious to hear how other monkeys think about determining if a market is more per unit or per foot sensitive. Seeing a ton of deals whether the sponsor thinks they can increase per unit rents significantly bc a nearby “comp” that has 25% smaller units are getting there on a per foot basis, but in-line on a per unit basis. Thoughts?
At the end of the day, renters only care about their total monthly rent check. PSF rents are just a proxy for unit size, which only become a limiting factor when units “feel” small. Efficient unit layouts are the name of the game.
Generally speaking there's going to be a PSF discount for a larger unit of the same type (e.g. 1bd), but that's not to say your monthly rents should be the same. Obviously people are willing to pay a premium (sometimes significant) for more floor space.
Ultimately, renters look at their monthly bill and that's why the total monthly rent is a more important metric. PSF to me is just a sanity check to make sure you're relatively in line with comps of a similar size.
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