Unit mix

Unit mix is the composition of a building: how many studios, one-bedrooms, two-bedrooms, and larger apartments it contains, and how large each is. A building with mostly small units has more units and more kitchens and bathrooms per square foot; a building with mostly large units has fewer units and a lower cost per square foot but a higher cost per unit.

Developers choose a mix by weighing construction cost against achievable rent. Kitchens and bathrooms are the most expensive rooms to build, so a studio costs more per square foot than a three-bedroom even though it costs less in total. Rent per square foot usually runs the other way, with smaller units commanding more per square foot. The mix that produces the highest net operating income for a given cost depends on what local renters want and what the zoning allows.

Rules that constrain unit mix have cost consequences. A requirement for a minimum share of family-sized units, a minimum unit size, or a cap on the number of units per building all push the mix toward larger, more expensive apartments and fewer of them, which raises land and fixed cost per unit. Parking ratios that scale by bedroom count have a similar effect. Our illustrative building uses a single average unit at $240,000 of total development cost for simplicity; a real budget is a weighted average across the mix.