I know I can create multiple small homes on one lot, but I think it would be fun to make a TS2 style apartment building with a few units in it for singles or couples. Would be especially good for a retirement community as I don't want to forget my elders, but do want to open up larger houses for families. Is there a way to do this so that they would be separate households?

Nope. Currently all Sims living on a Lot together have to be part of the same household. (Well, unless you use the roommate feature but you can't control them). The seperate apartment Lots in San Myshuno are techinically seperate Lots housed within a building shell so there is no way to replicate that setup with the tools available to players. The closest you can get is setting up an apartment type building and locking various doors so that only certain Sims can access certain areas but all Sims would have to be part of the same household.

Thank you. I thought that there was a way for us to do it and I was missing it.I guess I'll do a shared living thing.

I've done something like this with a shared household by setting locks on each apartment door for only the inhabitants of that apartment. It makes it a little bit of a hassle to have people visit one apartment from another, but the building also has some public facilities for when the tenants want to hang out together. I believe I found a mod that allows a door to be passable for more than one Sim for apartments with multiple residents. Hope that helps a little!

Another option is to use Little Miss Sam's roommate mod. It allows you to have full families as roommates so it might have more of that vibe you're looking for.