Are any apartment building owners considering eliminating LR's?

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I was wondering if any apartment building owners ever considered converting their units so the living room becomes a bedroom.  This would only work if one didn't need to cross the living room to get somewhere else.  I find a good percentage of layouts offer this option.  I'm living in one right now.  For 1 bedroom units this results in a dramatic increase in revenue in most areas.  In my area 1 bedroom apartments average $750 if they're not recently remodelled.  But rooms average $550.  And the living room is usually much larger than the bedroom!  So say $550 (BR) + $700 (LR) = $1250 from $750 before. 

Are these percentages similar to your area?  Rooms rent for about 2/3 of 1 br apartments? 

But what if even the kitchen was turned into a bedroom?  They're usually smaller so the gains are less but then there's the bathroom.  By creating very nice common kitchens and bathrooms shared by more people another $500 (at least) could be extracted from the same space.  Maybe leave one small  sink for washing/cleaning.  Sinks do take up a lot of vertical space though.  Anyway, now you're at $1750 from $750.  But you do need to allocate space for those common kitchens and bathrooms and they have to be nice and kept pristine.  So people that clean up after themselves are crucial.  

When apartments are bigger often their price doesn't rise much. In my area that same $750 1 br would be about $900 if a 2 br. The problem is its not being rented to maximize revenue because each bedroom is not being rented to individuals.  I see that 2 br as $500 + $500 + $700 (LR) = $1700.  Using the kitchen and bathroom space (if they're together and there's not a load supporting wall between them), add another $500.  Of course as the apartment gets bigger the gains for converting the kitchen/bathroom get much smaller.  

A 3 br in the same building would be about $1100.   Of course being its a 3 br the LR is probably a lot bigger so say $800 for that.  So $500 + $500 + $500 + $800 = $2300 instead of $1100.  

What I'm curious about is rent controls and how they would apply to individuals renting each room.  Would they add up the revenue for the entire space and gasp and refuse this?  If so then you couldn't do this there and you'd find an area that welcomes housing creativity.  

Obviously this is for single people that are rarely home.  It might be useful to combine this with a food serving arrangement where people could order what they want to eat before they get home and it could be prepared for them at low cost.  Some people just hate preparing their own food.

There's another angle for getting the kitchen out of the main living space:  Overeating.  If no food is there its a lot easier to eat less.  Of course people can always bring in snack food but if they're trying to change they won't do this.  The point of this is to reduce the temptation problem.  And pretty much everyone sometimes eats when they don't need to.  We're moving the food away, making it less accessible.  

[Don Konipol]

This is done all the time in New York City.  In fact, there are companies that install prefab pressurized walls to create an extra bedroom out of a large (large for NY) living area.  So the result is a extra small bedroom with windows, and a smaller living area usually with no window.

If you’re going to rent rooms, you MIGHT generate a greater income, but once you rent by the room you are no longer just investing in real estate; now you’re also in the real estate business.  Also, you’ll have increased turnover, wear and tear, higher property management fees ( or if you self manage higher time commitments) etc.  The increased revenue will come with higher costs.  
A potential problem is that the resulting layout may generate less tenant demand and a resulting decrease in what a tenant is willing to pay.  Some areas rental rates are generally determined by the square footage, all else being equal, and since you’re not increasing square footage rental income won’t increase.

If you’re talking about eliminating a living area completely, and renting each room, what you’re created is not a boarding house, but what’s known as SRO, or single room occupancy (a boarding house has a common ( shared) living area, kitchen, dining room at a minimum, and usually additional common areas such as second living rooms, dens, patios.  With no common living areas your net income may actually decrease as you’ve just made your potential market significantly smaller.