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Q: Why do developers keep building so many Studios & 1BRs instead of family-sized units?
A: Short-term financial incentives + underwriting logic reward small units … but it hurts cities long-term.
Smaller apartments generate higher rent per square foot than larger ones. While it’s cheaper in absolute terms to build a 1200sf 2BR than three 400sf Studios, the studios almost always bring in more rent relative to cost. Beyond construction economics, the structure of underwriting reinforces this trend. Developers, lenders, and equity partners tend to focus on short-term, 2-3 year windows. They analyze the current market, identify which unit types are renting best, and build more of those, without stopping to consider what happens if everyone follows the same strategy. It reflects a broader problem of short-term thinking.
This mindset becomes a serious issue when we consider who cities are meant to serve. Places like Philadelphia attract people for graduate school or early-career jobs, and many come to love the walkability, culture, and community. But without larger apartments to grow into, residents feel a ticking clock. Eventually, they leave. Not because they want to, but because they do not see a viable way to stay.
Family-sized apartments cannot solve every urban challenge. Philadelphia still needs to improve its schools, public safety, and other quality-of-life factors. But these apartments can help. They give people a reason to imagine a longer-term future in the city and make it easier for them to put down roots in their neighborhood.
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