My perspective on micro-units is coloured by the Toronto condo crash that dominates the Canadian conversation on this, where they have really shown the limitations of tiny units.
Important context though - some of the bad feelings are really unique to Toronto's condo market and are too often discussed from the perspective of the individual owner/investor, as if that's the only purpose of housing. Some examples of the issues for small units are:
- Too many units sold as investments to individual owners assuming prices always rise
- A now obviously narrower-than-expected market segment that is willing to pay the rents required to support a ginormous mortgage on a small unit
- unattractive rental prices held up by landlords to try to minimize their increasing losses
But lower than expected demand for small units, does not mean zero demand for small units.
In this case and for Calgary, I am assuming this development will not be for sale, just a purpose-built rental. That changes the paradigm a bit - if they think there's a market for smaller units, go for it. A single apartment building owner has better control on the building's design and operating costs too, compared to an amenity-bloated for-sale condo.
Like most housing sub-markets, I think it's sometimes hard to imagine a different style of housing being popular to what someone is used to. But there's nearly 2 million people out there in the city, with a huge range of perspectives, housing needs and incomes. A few hundred small units in a perfect location probably has a market.
What's the worst that can happen if corporate landowners guess the demand for smaller units wrong and over-build? The units will eventually find a niche being a sub-optimal, but price-competitive, option compared to more in-demand unit types that are larger.