A new luxury apartment complex in the U.S. could offer a cheaper and more convenient alternative to pricey condo developments.
In a report released Tuesday, the Urban Land Institute found that more than 20% of new housing in the country is located in new luxury apartments.
While condos are more expensive than newer luxury apartments, the authors found that a condo-style development could be more economically attractive to investors and renters.
The study found that one-bedroom units typically sell for more than $3 million.
The median price of a two-bedroom unit in the study is $1.8 million.
In the new project, the developers would build an office tower and a two bedroom townhome, both of which could be rented for $4 million to $6 million per year.
In this scenario, the developer would lease the two townhomes for 10 years, starting in 2020, while the tower was under construction.
The two-story tower would have a floor area of 3,600 square feet, which is nearly 40% larger than the current average two-level residential building.
In a typical four-story building, the average floor area is about 2,600.
The two- and three-story units are roughly the same size.
The new tower would be a five-story structure, and the townhoms would be 7- and 9-story, according to the report.
In the first year of the lease, the townhouses would rent for $1,600 per month, or $1 per night.
In each year, the rent would increase to $1 a night.
The authors said that with the additional space and amenities offered by a condo, developers could offer new renters a better deal.
They said the market could also grow if more developers were willing to build more apartments in new neighborhoods.
“This is a very appealing model, especially in a market where there’s a lot of vacancies,” said the authors, Matthew J. Loomis, a senior fellow at the Urban Institute.
“It provides more of a variety of homes and rents at lower prices than a single-family home.
If a developer can provide more than one housing unit for rent, that increases the rental stock.”
In addition to apartments, Loomi said developers could also build a hotel, which would allow residents to live on the top floor and take advantage of amenities, such as a rooftop pool.
The authors also said developers would need to be flexible in how they planned the buildings and would need an approval process.
The developers, whose projects have gone to various state, federal and private agencies, declined to comment on the report when reached by CNNMoney.