What Is an Efficiency Apartment?

Understand the different layouts while apartment-shopping, and decide whether an efficiency unit is right for you.

U.S. News & World Report

What Is an Efficiency Apartment?

Modern studio apartment

While small apartments make up only a sliver of the rental market, many renters prefer them for convenience and cheaper rent.(Getty Images)

You’re looking for an apartment on your own, but whether your budget is low, you travel a lot for work or you simply consider yourself a minimalist, you want a small space. The fewer walls, the better.

In that case, you may be in the market for an efficiency or studio apartment.

What Is an Efficiency Apartment?

An efficiency apartment is similar to a studio apartment in that it has no separate room for sleeping quarters and is often small in size compared to apartments that offer one or more bedrooms. You’ll likely find that efficiency or studio apartments are the most budget-friendly option in apartment buildings, although they can also be basement or garage apartments offered by homeowners looking for an individual tenant.

What Is the Difference Between an Efficiency Apartment and a Studio Apartment?

The differences between an efficiency and studio apartment depend on who you’re talking to. Some people believe an efficiency has a separate kitchen space and a studio does not, while others will tell you the studio is the larger of the two, with an extra 100 square feet or so.

In its definition of an efficiency unit or apartment, Barron’s "Dictionary of Real Estate Terms" also specifies that the bathroom or kitchen may not be complete – there may be a shower and no tub, there may be no full-size refrigerator or you may have a convection microwave instead of an oven.

In the multifamily housing industry, efficiency and studio can be assigned different meanings or can be considered interchangeable. One term can also be used almost exclusively based on where you are. For example, “you rarely hear the term efficiency used in the luxury downtown market in Chicago,” Beth Argaman, general manager for luxury apartment building 727 West Madison in Chicago, wrote in an email.

Whether you prefer to call it a studio or efficiency apartment, stay focused on the specifics of the space as you shop for apartments to ensure your definition matches up with the leasing agent’s. While a smaller-sized apartment may seem attractive or be the only option in your budget, make sure you know you can live in the space comfortably.

When Do You Want an Efficiency Apartment?

The coronavirus pandemic has led to changes in apartment popularity as people reassess their living space while spending more time at home. Rental property information company Apartment Guide reported in October that after two years of studio apartments having a higher average rent than one-bedroom apartments – which was caused by demand, location of studio apartments and other factors – studios had an average rent of $1,605 in 2020, down from $1,629 in 2019, while one-bedroom apartments increased to $1,617 in 2020 from $1,605 in 2019.

Rents in the densest parts of the country are dropping overall as well, as people seek more space to work from home and to isolate safely with loved ones. Rental real estate information company RENTCafé reports that in 2020, the city of San Francisco saw more than a 17% drop in the average rent compared with 2019 – to $3,055 from $3,695 (factoring in all single-bedroom apartments, including studios).

Many people who were living on their own in 2020 have opted to move home with parents. “You have to layer in the fact of remote work and the student situation,” says Doug Ressler, manager of business intelligence for Yardi Matrix, the parent company for RENTCafé. “A lot of smaller square-footage (apartments) are taken up with students, and a lot of them … have moved back home with their parents.”

Ressler points out that other former studio renters are opting to find roommates to lease larger spaces in areas a bit farther from city centers. Argaman notes that current renters at 727 West Madison who have been living in studios have inquired about upgrading to one- or two-bedroom apartments.

The downturn in the popularity of studios, efficiency apartments and even micro-apartments, which can be as small as 250 square feet but typically don’t get much bigger than 450 square feet, is in many ways cyclical. The smaller apartments certainly don’t appeal to everyone and are often considered a solution for a few years rather than a long-term home. But for people looking for specific features and location, they can be the ideal option for those few years.

“For studio apartments, the must-haves are location and convenience. People choose studios in order to have a convenient, walkable lifestyle and easy access to restaurants, grocery, work, cultural attractions, nightlife and more,” Argaman says. “While proximity to some of these places was less of a consideration over that past 9 months, it will be top of mind again going into 2021 and beyond.”

What Do Efficiency Apartments Offer Beyond Budget?

Your personal space in an efficiency or studio may be limited, but many renters who opt for a zero-bedroom apartment are inclined to take advantage of amenities that help expand their home beyond the walls of the apartment itself.

Argaman explains that the community amenities at 727 West Madison are designed to feel like an extension of a living room, with places to relax and watch TV, desks for work and comfortable chairs to read or enjoy views. Many apartment communities create mini dog parks or place grilling stations on the roof for tenants to use daily.

Especially after the pandemic made group gatherings unsafe, a quiet area to use as a remote work station has been a game-changer for some that makes working from home feel less like being confined to a tiny space 24 hours a day, as long as everyone follows social distancing protocol.

“We’ve found that residents appreciate these spaces as much as they ever have, especially with the onset of cold weather and limited opportunities to get outdoors,” Argaman says.

How to Find an Efficiency Apartment

Whether you're looking for an efficiency apartment or studio to allow you to be in the right location and have all the best amenities or simply because your budget only allows for the smallest square footage available, treat your zero-bedroom apartment hunt as you would any other space. Consider the apartment community, your needs for your personal space and the overall location.

Here’s how to find an efficiency apartment:

  • Start your search online. There are plenty of online rental search platforms that will allow you to see hundreds or even thousands of available rentals in your metro area. To limit your search to an efficiency or studio apartment, filter the number of bedrooms. Typically, “studio” is a specified option, but the filter may indicate studio apartments as having zero bedrooms.
  • Search for communities in your area. Apartment communities that specialize in micro-sized apartments will have their own websites as well. Search generally for micro-apartments in your city with a Google search to see if you can find a community that specializes in apartments with a small footprint.
  • Hire a real estate agent. The rental market in many major cities requires the help of a licensed real estate agent to find the best places available. Specify with your agent that you’re looking for a studio or efficiency, as well as any other criteria you need in your next home, including your budget.
  • Ask about concessions. Landlords and property managers frequently offer concessions to encourage renters to sign a lease, whether it’s a waived amenities fee, a free month of rent or a discount for the first six months. While apartments with little square footage are unpopular, you may find more deals await you. “What we see right now is that concessions are being offered quite heavily,” Ressler says.
Updated on Dec. 24, 2020: This story was published at an earlier date and has been updated with new information.

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