Construction has begun on an infill project at 38 Harriet Street in San Francisco that its developer, builder, and module supplier believe could determine whether micro apartments remain a highly publicized curiosity or are seen as legitimate housing alternatives for young urban professionals seeking cheaper, greener, and walkable living spaces.

“There are a lot of eyes on this project, a lot of interest,” says Naomi Porat, president and co-founder of Zeta Communities, whose factory in Sacramento, Calif., is close to completing the 12- by 65-foot modules that will be used to construct an 11,775-square-foot four-story wood-framed building squeezed onto a 3,750-square-foot lot in this city’s South of Market Street (SoMa) district. That building will contain 23 micro apartments measuring around 300 square feet each, with nine-foot ceilings, kitchens and baths, washers and dryers, and multipurpose built-ins for storage and workspaces that can convert to sleeping areas.

These apartments reflect a “Smart Space” concept that the project’s developer, Panoramic Interests, created with a team of architects and designers to address the needs of millenials poring into urban job centers where affordable housing is perennially in short supply.

“In San Francisco, 8,000 new tech workers have been hired this year alone,” says Patrick Kennedy, the owner of Panoramic Interests, to illustrate the potential demand for micro apartments. His firm test-drove its Smart Space design with a 160-square-foot prototype it built in a warehouse in Berkeley, Calif., and housed an MIT grad student for three weeks who provided feedback about what he thought did and didn’t work.

Kennedy told the San Francisco Chronicle that prospective residents of micro apartments are looking for a “launching space as they get established.” In an interview with Builder, he described micro apartments as “a return to more collaborative communal living.” He observed that millenials view apartments in the context of a lifestyle that is more socially and technologically defined. “They’ll trade 100 square feet of space for 100 more megabytes of Internet,” he quips.

And with monthly rents expected to start at $1,500 (with five of the 23 apartments being offered at a below-market rate of $910 per month), these micro apartments should be available for significantly less than the $2,000-plus per month an under-500-square-foot studio apartment fetches, on average, in San Francisco.

Demographic Drivers

When Zeta Communities unveiled its modules for the San Francisco micro apartment project a few weeks ago, more than 200 designers, builders, architects, and developers showed up at its factory to take a peek, says Porat. Panoramic Interests has been looking at several other markets—including Boston, Washington, Chicago, Santa Monica, Calif., and Portland, Ore.—to see if their redevelopment environment is receptive to its Smart Space model, says Kennedy. And some major cities already see micro apartments in their futures and have been adjusting their zoning regulations to allow more of them to be built.

Last month, New York—where 60% of households have only one or two residents—launched a pilot program called adAPT NYC to develop micro apartments of between 275 to 300 square feet. “Developing housing that matches how New Yorkers live today is critical to the City’s continued growth, future competitiveness, and long-term economic success,” said Mayor Michael Bloomberg.

In Boston, Mayor Thomas Menino announced last November his administration’s goal to build hundreds of micro apartments, with rents starting as low as $1,200 per month. One such project is already underway in Boston’s Seaport District, where the Boston Wharf Tower broke ground last month and will include 450-square-foot units.

The developer, Portland, Ore.-based Gerling Edlen, has another project across the street in which 27 apartments will be 330 square feet. Mark Edlen, the developer’s CEO, told TheBoston Globe that both buildings would have common areas where residents could congregate and socialize. He refers to this concept as “20-minute living,” meaning that residents would be able to walk to public transit, restaurants, retail stores, and other “major stops” in their lives. (Gerling Edlen did not return numerous calls from Builder seeking comment on these projects.)

The presumed willingness of a certain percentage of residents to live in such close quarters has given rise to all kinds of micro apartment ideas. One of the more innovative comes from Aaron (Zhibin) Cheng of Bar Architects in San Francisco, who has devised a micro apartment complex that converts into a parking deck.

His premise is that most cities underutilize certain spaces. So why not develop an apartment that, when empty during the workday hours, can be compressed, and use the open space for platforms that could help alleviate the city’s parking shortage.

In Cheng’s concept, 80 of the apartment’s 220 square feet would remain “fixed,” meaning that the kitchen, bath, and some storage areas would stay as is. The doors in the apartment would slide, to save space. And furniture in the apartment would need to be moved into storage areas (like a Murphy bed) before the apartment is compressed via a pneumatic system. Risers would elevate and retract the parking platforms, which in Cheng’s conception could accommodate 18 cars per building. (See slide show for how this looks and works.)

Cheng concedes his concept would require homeowners to subscribe to a fairly rigid work/live schedule, and would also require car owners to come and go at designated times. But leaving aside the practicality of this idea, Cheng doesn’t think it would be complicated or expensive to execute. “It has great potential,” he says, adding that he is looking for financial backers to actually construct one of his Parking+Housing buildings in a metro like New York or Shanghai, China.

Back in San Francisco, executing the construction of the micro apartments on Harriet Street has its challenges, says Wally Naylor, regional vice president for Charles Pankow Builders, which is the contractor on this project.

For one thing, “we’re working in a very, very tight space,” where the modules will be craned onto a site that has only 10 inches of clear as it is wedged between two other buildings. This site is also in a seismic zone 4, which is the city’s highest earthquake designation, so the building will need to be fortified to withstand significant shocks.

Naylor adds that the building’s vertical construction—such as its plumbing, sprinkler system, and risers—are tougher to install when the apartments are so small.

Pankow has been doing modular and prefab construction throughout its 50 years in business, but has mostly focused on commercial structures. It agreed to build this infill project, Naylor says, because “it’s high-density urban infill, and it gave us the potential to work with Zeta on net-zero-energy projects.” (This infill project will not be net-zero, but it is being built to LEED Gold standards.)

The apartment building is scheduled to be finished in time for the GreenBuild convention in San Francisco in November. Naylor says his company would like to do similar projects, and believes that as more builders, developers, and architects get into micro apartments, their construction will be “cost neutral” compared with more conventional apartment buildings. “It’s kind of like batting practice,” he says, where “you need to take a few swings.”

While Naylor thinks micro apartments could catch on more broadly, he also cautions that “the market will determine that.”

What Kennedy of Panoramic Interests says he’s hoping to avoid is striking out on micro apartments that still have their skeptics when it comes to questions of affordability and even the potential size of their customer base. “People are waiting to see if we drive over a cliff on this. Is it a death wish or a move forward?”

He’ll know better next week, when Panoramic is scheduled to pitch its SmartSpace concept to a “major university” in Pasadena, Calif. (he wouldn’t say which one) for student housing that Zeta would supply and Pankow would build. Panoramic is also working on a more ambitious Smart Space project, which will place an 11-story, 97,000-square-foot building onto a 9,208-square-foot lot in San Francisco’s Mission District. That building, which will offer 180 micro studios, is slated to open in the summer of 2014.

John Caulfield is senior editor for Builder magazine.