"As the price of housing rises faster than incomes for many people, you will see this being a small but steady and growing part of the market," said John McIlwain, a senior fellow at the Urban Land Institute think tank in Washington. "How do you make units affordable to people in the middle-income workforce if they want to live in the city?"
One answer, McIlwain said, is to make them small but with upscale designs and finishes such as granite countertops and stainless steel appliances.
That offers a competitive advantage in Santa Monica, where much of the apartment stock is several decades old and sometimes not well maintained.
"I was like, wow, everything is new and working," said Deja Prem, a massage therapist who shares an Olympic Studios unit with her high-school-age daughter Cecilia. "I can stay off the freeway and walk to the grocery store."
Prem's unit is Spartan. There is no television and no clutter. A small couch in front of an electric fireplace folds out to make her daughter's bed. Upstairs under an image of Buddha on the wall, Prem sits on her bed to work on a screenplay on her computer. She often takes her meals there, too.
One of the few signs of personal possessions is a shelf full of shoes by the front door.
"Why lug around a lot of stuff like it's going to be Armageddon?" Prem said. "I just like expansive spaces, because it opens up my imagination."
Being in the middle of it all does have its down sides. Olympic Studios sits in a busy light manufacturing district served by heavy trucks and traversed by thousands of commuters.
"There is street noise when the windows are open," making it harder to concentrate on school work, said Santa Monica College student Ori Dvir, who was attracted to Olympic Studios because he can walk to classes.
He sold most of his belongings when he moved from Chicago about six months ago, so fitting into his unit wasn't difficult, he said.
"I like the idea of scaling down," said Dvir, who is in his 30s. "I prefer small places. They are easier to clean and maintain."