Seeing More Demand for Smaller Units — Anyone Else Now Looking More at 1 Bed Units?

Question

I’m watching the single tenantr rend show up a little differently in St. Louis than in higher-priced markets. Here, affordability means a lot of single tenants are choosing smaller, well-designed spaces — not settling for them — which shifts how certain assets perform especially in some key walkable areas.

I’ve been paying closer attention to properties with strong one-bedroom layouts(if you know St Louis that means 'real 1 bed' versus a 'shotgun' layout)  that allow multiple paths: stable long-term hold, mid-term furnished, or a slower reposition over time. In many cases, thoughtful function (laundry, storage, efficient flow) beats raw square footage for this renter profile.

Curious how others are adapting their buy box — are you still prioritizing larger unit mixes, or seeing similar demand around smaller, well-positioned units?

Frank Pyle · Answer

We are seeing the same thing in Indianapolis where affordability is still decent but renters are way more payment sensitive than square footage focused, so a true one bed with good layout and in unit laundry will often lease faster than a bigger awkward two bed in the same area. On our long term rentals a clean one bed in a walkable pocket will usually trade a little lower on rent but the turn cost and vacancy tend to be lower too, and when I run quick numbers I would rather have 1050 rent on a one bed with 5 percent vacancy and lighter wear than chase 1300 on a two bed with more turnover and higher maintenance. The key for us has been buying where the one beds still pencil as long term rentals first and letting mid term be upside not the plan. Are you seeing the rent gap between your true one beds and two beds widen or stay pretty tight in those walkable St Louis neighborhoods?

J Castro · Answer

Great perspective — we’re hearing of a similar shift in several markets. Affordability pressure is definitely driving demand toward smaller, well-designed units where functionality matters more than size.

From a lending standpoint, properties with flexible exit strategies — long-term rental, mid-term furnished, or reposition over time — tend to perform better and give investors more resilience as market conditions change.

The “right size + right location + smart layout” model is becoming just as important as unit count. Investors who adjust their buy box around demand and usability, not just square footage, are positioning themselves well in today’s environment.

Alicia Sierra · Answer

Actually - they stay pretty tight.  I agree with your assessment.  In fact, similarly the high cash flow single family property investors are very focused on 3-4 bedroom homes when I see 2 bedroom homes trade for a lot less and capable of producing similar cash flow numbers with (as you noted) fewer tenants and less wear and tear.

I like this observation of your as well "The key for us has been buying where the one beds still pencil as long term rentals first and letting mid term be upside not the plan." It should work as an LTR and excel as MTR.

Alicia Sierra · Answer

That's interesting to know that from the lending perspective; I'd love to share information on a current value add play here in St Louis to see what the lender POV is