In new luxury rental buildings, space that would previously have been used for larger apartments is increasingly being devoted to shared amenities. At 34 Berry, a seven-story, 142-unit luxury rental building LCOR developed in Williamsburg, for example, more than 50 percent of the apartments are studios, ranging from 461 to 652 square feet. A shared lounge that residents can use if they start feeling claustrophobic features multiple flat-screen TVs, a catering kitchen, a billiards table and Nintendo Wii.

Mikael Schulz, 36, and his partner, Claudio De Menezes, 43, who share a 466-square-foot studio at 34 Berry and pay about $2,200 a month in rent, don’t have a television. When they want to watch TV or use the Internet, they treat the lounge as an extension of their apartment. For entertaining friends, there is a rooftop terrace with a barbecue grill and retro-style pod seating. With all the amenities, said Mr. Schulz, a fashion photographer who recently moved to New York from Sweden, “you basically just need a nice, calm space to sleep and a kitchen.”

Given that trend, many in the industry view Mayor Bloomberg’s competition as a welcome challenge, and city officials hope to find a prototype for a new model of affordable, if tiny, housing. “There are a lot of developers that would like to build units that are smaller,” to cater to people who would like to have the opportunity to rent on their own instead of with roommates, said Andrew Gerringer, managing director of new business development for the Marketing Directors, a New York development, leasing and marketing company. “A lot of people would like to have their own space, but they’ve been prevented.”

Good design is key, said Evan Rosenfeld, a broker with Citi Habitats. “The number is irrelevant. It’s the layout that counts.” If the studio is well designed and in a desirable neighborhood, he said, “a lot of times, people will sacrifice size.”

Diminutive apartments have become something of an art form in other cities, including Tokyo and Hong Kong. New apartments in Tokyo can be as tiny as 193 square feet for single people, depending on the neighborhood, according to Azby Brown, the director of the KIT Future Design Institute in Tokyo and the author of “The Very Small Home: Japanese ideas for living well in limited space."