The Fold, by Ori

How much profit and demand are you leaving on the table by sticking with yesterday’s unit mix?

Imagine if airlines still sold tickets with only two choices: coach or first class. Or if Netflix offered just one subscription tier. The fewer price points you have, the more value you leave on the table. Economists call this price discrimination: the idea that the more ways you segment your product, the more of the market’s willingness to pay you can capture.

Multifamily housing is no different. For decades, developers have leaned on a familiar unit mix convention, roughly 60% one-bedrooms, 30% two-bedrooms, 10% studios. This approach, while not codified as law, became industry shorthand: a safe template lenders accepted and developers replicated. But if the goal is to maximize revenue, relevance and market demand, the old segmentation model doesn’t go far enough.

The Economics of Segmentation in Multifamily

In economics, pricing strategy evolves along three primary stages:

• ‍Single Price (Monopoly Pricing). Everyone pays the same. Suppliers capture only a slice of total value. This creates a scenario where some buyers are willing to pay more than they are, and others are priced out of the equation entirely.

• ‍Segmentation (Two Price Points). The market bifurcates. Some buy high, others buy low. Demand grows and suppliers capture more value, yet untapped opportunity remains beneath the curve.

• ‍Perfect Price Discrimination. Every buyer pays at their limit of willingness, enabling the supplier to capture total value while satisfying all potential demand.

Multifamily housing mostly lives in the middle stage of segmentation. A handful of unit types create a few tiers of pricing with occasional overlap depending on the market. The closer developers move toward more pricing options, the closer they get to maximizing yield. In other words: the more price points you offer, the more value you capture.

The Unit Mix Convention: 60-30-10 and Its Legacy

The 60-30-10 convention emerged because it was rational for its time. One-bedrooms offered predictable demand, two-bedrooms appealed to sharers and families, and studios were capped at a small share that lenders saw as prudent. The practice was driven chiefly by risk avoidance rather than by maximizing returns or serving buyers optimally.

Developers weren’t wrong to adopt this formula. For decades, it penciled. It was legible to lenders, familiar to appraisers, and backed by precedent. In today’s market, the conditions that made this convention safe have shifted, and what once was prudent now risks leaving opportunity untapped.

Why That Convention Leaves Money on the Table Today

Today’s housing realities look very different from when the 60-30-10 convention spread. Several pressures expose its limitations:

• ‍Demographic alignment. Nearly 70% of U.S. renter households are one- or two-person households.¹ Yet many buildings still overweight larger two-bedrooms at ratios that don’t reflect this shift in demand.

• ‍Affordability crisis. About half of renter households (22.6 million) spend more than 30% of income on rent.² Smaller, efficient units expand the range of attainable options and capture demand from those otherwise priced out.

• ‍Construction economics. Construction costs are roughly 30% higher than five years ago, with material costs up over 35% since 2020.³ Every additional square foot is more expensive to build than ever before.

• ‍Unit size trends. The average new U.S. apartment has shrunk by roughly 30 square feet over the last decade.⁴ This is not a fad. It’s a rational response to cost and demand pressures.

Together, these forces mean that the old segmentation model, with its narrow range of unit types, underserves demand and constrains revenue capture. The data tell the same story: while apartments keep getting smaller, costs keep climbing, and rent per square foot keeps rising.

More Price Points, More Value

Think back to airlines: when economy plus, premium economy, and business class entered the picture, airlines didn’t just add seats: they added price points. The result was higher total revenue without alienating budget travelers.

The same principle applies in multifamily. By introducing more small, livable unit types, developers add rungs to the pricing ladder. Instead of losing renters who can’t afford a one-bedroom, you capture them with an aspirational studio. Instead of flattening rents across a narrow mix, you widen the funnel of demand and pull more value from the market.

Case in point: In Arlington, Ori-equipped studios were 29% smaller yet achieved a 32% rent-per-square-foot premium. In Tampa, Ori units 33% smaller captured a 40% $/SF premium. More price points meant faster absorption, higher NOI, and stronger overall asset performance.

Ori’s Thesis on Unit Mix Strategy

Ori sees a clear opening: lean more heavily on smaller, high-performance homes without abandoning one- and two-bedrooms. The goal is a smarter balance that meets renter demand and strengthens asset economics.

• Expandable apartments make small viable. Ori units can be up to 40 percent smaller while living like full-size homes. Beds disappear, walls move, and rooms appear at a touch, giving renters more from less.

• Renters save, developers earn. Typical Ori apartments rent about 10 percent below conventional studios yet achieve 30–40 percent higher rent per square foot, driving NOI gains of up to 50 percent.

• Absorption accelerates. Buildings with Ori stabilize faster. In Arlington, Ori units leased three months ahead of peers; in Tampa, they were the only units that required no concessions.
  

By making compact units both desirable and profitable, Ori enables developers to add more studios and smaller one-bedrooms without compromising livability, renter satisfaction, or asset performance.

How Ori Expands the Pricing Spectrum Without Shrinking Experience

Traditionally, smaller units meant steeper discounts because they compromised livability. Micro-units became shorthand for cramped, uninspiring spaces. Ori flips that equation.

With Ori, apartments can be up to 40% smaller but feel expansive. Beds vanish, walls glide, rooms expand all with a touch. Renters pay about 10% less in monthly rent, but developers capture 30–40% higher rent per square foot, with NOI gains of up to 50%.

In practice, Ori-enabled buildings lease faster. In Arlington, Ori units stabilized months ahead of conventional comparable units. In Tampa, they were the only units in the building that didn’t require concessions. Smaller didn’t mean compromised. Proof that design, not square footage, defines desirability.

More Homes, More Possibility

Expanding the pricing spectrum isn’t just good economics for one building. It reshapes feasibility across entire markets.

• Unlock more sites. Shallow floorplates, narrow lots, and adaptive reuse projects that don’t pencil with conventional mixes can work with smaller, Expandable Apartments.

• ‍Accelerate adaptive reuse. Hotel rooms and deep office floorplates often sit idle because they’re too small or awkward for standard layouts. Ori makes them functional, aspirational apartments and unlocks value from stranded assets.

• ‍Deliver affordability at scale. By creating more price points, developers not only maximize NOI, they expand the range of attainable housing options in cities where half of renters are cost-burdened.²
  

• ‍Serve the needs of today's renters. Modern households seek design, flexibility, and style. Not just square footage. Ori’s Expandable Apartments turn compact footprints into aspirational spaces that fit contemporary living without compromise.

This isn’t about packing people tighter. It’s about matching homes to how people live today and unlocking projects that are both livable and financially viable.

Build Intentionally, Capture More Value

The old unit mix convention was never wrong. It was a smart hedge for its time. But today, clinging to it is like running an airline with only coach and first class. You’re leaving money and demand uncaptured.

Economics shows a simple truth: a wider range of price points creates more total value, capturing returns for developers while meeting more household needs. Perfect price discrimination may be theoretical, but Ori moves multifamily closer by expanding the spectrum of unit options without shrinking the renter experience.

For developers, this means faster lease-ups, stronger NOI, and new sites brought into play. For renters, it means attainable homes that feel expansive, not compromised. And for cities, it means more housing supply delivered where it’s needed most.

The next era of multifamily will not be built on narrow conventions. It will be built on intentional design, broader price points, and aspirational, expandable living.

‍End Notes‍

<sup>1. U.S. Census Bureau, "American CommunitySurvey" (2023)
2. JCHS, "State of the Nation 2025", (2025)
3. NAHB, “Cost to Construct a Home Rose Significantly Over Last Two Years” (2025)
4. RentCafe, “Average Apartment Size in U.S. Increases” (2025)
5.</sup> ‍<sup>U.S. Census Bureau, “Nearly Half of Renter Households Are Cost-Burdened” (2024)
6. U.S. Census Bureau, “Survey of Market Absorption” (2025)
7. RentCafe, “Average Apartment Size Goes Down in 2022” (2023) 
8. RentCafe, “US Average Apartment Sizes” (2025)
9. Apartments.com, “Rent Trends in the United States” (2025)
10. NCHFA, “Construction Cost Increases and the Impact on Housing Affordabilit,”(2024)
11. Construction Drive, “5 years after COVID hit, contractors still wait for prices to come down” (2025)
12. Fortune, “Rent is so expensive for Gen Zers that almost one-third are living with their parents” (2024)
13. Amenify, “Investment Insights: Overcoming Rental Market Hurdles” (2025)
14. Morris & Garritano, “Rising Material Costs in the Construction Industry and How it Affects Insurance Rates” (2024)
15. NAR, “2023 Community and Transportation Preferences Survey” (2023)
16. Urban Institute, “Small Apartment Buildings Can Help Address Housing Shortages, but High Land Costs and Interest Rates Are Limiting Construction” (2025)
17. US Government Accountability Office, GAO, “The Affordable Housing Crisis Grows While Efforts to Increase Supply Fall Short” (2023)
18. Brookings Institute, “Making apartments more affordable starts with understanding the costs of building them” (2020)</sup>

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