The “American Dream” may not be dead after all. It’s just getting more compact.

Small living spaces, once characterized by squalid, disease-ridden inner-city tenements and home to those that were forced to live in poverty, have become the hip places to live for millennials and downsizing baby boomers for whom location is more important than square footage.

From New York to Hong Kong, mini-accommodations, micro-living and an unfortunate new marketing phrase—“walkable urbanism”—are becoming increasingly common in both urban and suburban areas. It’s not that people don’t want expansive homes with vast lawns. It’s simply that escalating real estate prices combined with relatively stagnant incomes are pricing many people—especially younger buyers—out of the market.

Small Is “In”

Given these and other factors, I’d wager that the mini-revolution is not just a fad, but a sustainable long-term trend for single family homes and urban dwellings.
The signs are everywhere. Shipping containers, which are only in service for 10-15 years, are already being recycled and converted into modular homes. The idea of “tiny homes” and mobility have become a phenomenon on HGTV, and if you go to Amazon, there are dozens of books telling you how to build and design container and micro homes.

Is this a mini-revolution in the making? At present, the average size of a new apartment in the U.S. is about 950 square feet and about 10-15 percent less on the West Coast. But these are palatial compared to what we are facing. And now’s the time to consider how living spaces of about 300 square feet or less—and sometimes shared—will impact everything from apparel to furniture retailing in the future.

• Closet space, already at a premium in urban housing, will get even tighter.
• Stores selling downsized furniture and accessories will capture sales from retailers of traditional sized items.
• Pantry loading, and some family size packaging, may become obsolete with people shopping far more frequently for food, with cabinet space, refrigerators and ovens getting smaller.
• Private homes, particularly new construction in close-in suburbs, will occupy less land, reducing the need for expensive lawn and garden equipment and accessories.
• Shared spaces that might include fitness centers, rooftop entertaining facilities, communal screening rooms and bulk storage spaces will become common.

Consider some recent developments.

In my newly-adopted hometown of Tucson, Arizona we anticipate seeing the shape and size of things to come in urban and suburban living: tiny houses and shipping container homes that make some New York apartments look like San Simeon.

Later this year in Tucson, whose architecture and consumer sensibilities fall somewhere between the old west and New York SOHO chic, construction will begin on the Stackhouse project.

Container Living

The Stackhouse is a steel skeleton with slots for shipping container homes. A special crane will lift and place the 320-square-foot containers in their slots. Each fully furnished container home costs $4,500 to deliver and the rent starts at $500 per month for the ground floor, rising to $1,000 per month for top floors. Each unit has a wraparound deck and membership in Stackhouse entitles owners to trade spaces with their neighbors.

This concept is clearly aimed at the downtown youth market, but is spreading to other areas. In Vail, Arizona, a generally upscale market, the local school district wants to build an entire community of tiny homes that will enable teachers to live in a neighborhood that’s generally above their entry pay grade of $36,000. Interestingly, they are billing these proposed dwellings as “luxurious and cool.” But how much cool can be stuffed into 300 square feet?

In New York City, the bastion of high-priced, micro living, there’s Carmel Place with 55 apartments of 260-360 square feet—22 of which are billed as “affordable” while the others rent for about $3,000 monthly.

Miami is also a touchstone for mini-living. In the Wynwood arts district north of downtown, 600 people are on the waiting list for the 289, “Wynwood 25” apartments that will run from an estimated 400 to 750 square feet. This development won’t be built for another two years, giving you an idea of pent-up demand.

Amenities Rule

Affordable doesn’t necessarily mean sparse. The Wynwood apartments are reportedly being marketed to those with incomes of $45,000 to $60,000 and will have such amenities as a fitness center, yoga studio, coffee bar, workspaces, bicycle storage and outside communal areas for residents. Obviously, developers are casting their nets for millennials who place greater value on location than square footage.

Projects like these radically impact design As Scott Lee, president of SB Architects, recently noted: \”You really have to think about the cabinetry, the built-ins, furniture placement. It is a much more granular level of design.\”

No doubt he’s right since some designers have come up with the idea of cutting down on needed space by having a sink shared by the kitchen and bathroom and beds doubling as couches. Moreover, Murphy beds, folding and telescoping tables, and mini-fridges are increasingly used to maximize space.

Seattle, the birthplace of grunge, might become the home of mausoleum-sized apartments. City fathers recently amended the building code to allow for 150-square-foot units. To give you an idea of how small this is, the average U.S. hotel room is reportedly about 325 square feet.

But wait! The Chinese are taking the mini-apartment to micro-mini levels in Hong Kong. In a place where 300 square feet is a luxury, developers are building so-called “gnat flats” with 128-square-foot apartments.

Generation Gap

But there’s always the other side of the spectrum. As Sir Isaac Newton taught us so many centuries ago, for every action there is an equal and opposite reaction.

In this instance, it is the much-discussed baby boom generation that will set the pace. Long thought to be the future of downsizing, recent studies by the Demand Institute, a non-profit group run by the Conference Board and Harvard’s Joint Center for Housing Studies, indicate that the majority of baby boomers are likely to age in place, and even if they do move, they’re not downsizing. They are confident they can qualify for any mortgage loan thrown at them and, contrary to some opinions, still prefer sprawling homes and large properties.

But the reality is that mini- and micro housing has become trendy as well as practical. It is offering people a sense of community in a world that is increasingly divisive and separated by technology and income.

It’s up to retailers to take advantage of this mini-movement with products and services that fit the lifestyles of multiple generations and demographics. I’ll leave any further discussion on that to the many creative minds that lead the industry.

To paraphrase Star Trek, living space may be “the final frontier.”