Build-to-Rent (BTR) offers professionally managed, long-term rental housing addressing urban density challenges. While BTR's financial aspects are well-studied, spatial design impacts on tenant experience remain underexplored. This study examines how compact apartment design influences tenant wellbeing in Australia’s subtropical, inner-suburban BTR developments. Focusing on BTR’s core demographic, professionals aged 25–40 without children, we employed a mixed-methods approach. Phase 1 surveyed 43 Australians on amenity preferences, revealing priorities for cleanliness, security and privacy in shared facilities. Phase 2 used virtual reality (VR) and electroencephalography (EEG) to assess 20 Southeast Queensland participants’ responses to five one-bedroom apartments (40 m2). Results demonstrate complex design-experience relationships. Apartments featuring biophilic and industrial elements or flexible configurations generated the highest positive affect and engagement. Conversely, units with minimal daylight, though meeting regulatory standards, triggered elevated stress and dissatisfaction. Critically, EEG revealed physiological stress responses invisible to self-reports, particularly where biophilic and industrial aesthetics conflicted, suggesting design coherence is essential for restorative effects. These findings establish that regulatory compliance alone fails to ensure tenant wellbeing in high-density housing. As Australian cities increasingly rely on BTR to address affordability pressures, evidence-based design incorporating experiential quality beyond minimum standards becomes crucial for tenant satisfaction and long-term market viability.