Technologically advanced, or “smart,” buildings not only provide residents and prospects with desired experiences, but they also offer profound financial and operational benefits for owners and operators.
This has played out massively during the COVID-19 pandemic, as apartment communities with tech features ranging from keyless access control and smart-home technology to lightning-fast connectivity, community-wide Wi-Fi and self-guided touring options were able to adapt quicker to operation constraints related to stay-at-home orders and social distancing requirements.
In the post-pandemic world, multifamily's embrace of intelligent building technology is the new normal, according to industry experts. However, getting to the new normal requires more than just shifting our thinking around property operations and embracing new smart technology and enhanced digital connectivity. It requires laying the groundwork in buildings and communities by creating the proper digital infrastructure.
Smart Technology Provides Tangible Benefits
Many multifamily owner and managers are finding significant financial and operational advantages of smart apartment buildings and homes.
For example, during a session on industry trends, building automation and connectivity at NMHC OPTECH in November, Elizabeth Parks, vice president of marketing at market intelligence firm Parks Associates, said that results from a recent survey by her firm showed that 54 percent of multifamily respondents estimated that smart home devices drive operational savings of 6 percent or less, while 46 percent said the savings are 7 percent or more.
Similarly, Sce Pike, CEO of IOTAS, a smart building tech provider, noted that smart apartments can drive rent premiums of between 3 percent to 10 percent while also reducing a 250-unit community's annual labor and energy costs by $5,000 and $4,000, respectively. In addition, smart-home technology's ability to detect water leaks can result in savings of $11,000 per avoided leak incident. Overall smart-home systems can bump up annual net operating income by as much as $135,000, Pike said.
But through the lens of the pandemic, the clear tech winner has been the rapid adoption of self-guided tour solutions. Properties that offer both self-guided and agent-led tours see their lead-to-lease conversation rates increase by 38 percent, said Todd Katler, CEO of Anyone Home, during a panel discussion at OPTECH.
"It's a really interesting data point," Katler said. "It shows that this is a choice that the prospect always wanted. COVID was just a catalyst to make it more ubiquitous."
After quickly rolling out self-guided tours across its entire portfolio during the early stages of the pandemic, Pegasus Residential actually saw a year-over-year increase of 6 percent in leases when compared with the same period in 2019, noted Wendy Dorchester, vice president of operations and culture at Pegasus Residential, during another discussion of new options for leasing tours at OPTECH.
Similarly, Camden Property Trust experienced a 30 percent spike in website views and a 12 percent increase in guest cards after offering self-guided and virtual tours.
“The cool thing is that our team members love the new options and so do our customers,” said Julie Keel, vice president of marketing for Camden Property Trust, during the same session. “At the end of the day, who doesn’t like options?”
But First the Groundwork
While the benefits of many of these intelligent technology solutions are attractive, they are only achievable with a proper digital infrastructure. Creating such a sufficient technological backbone for an apartment community is anything but an easy process, though. Owners, developers and operators not only have to consider a building's current connectivity needs but also anticipate its future needs as well.
Multifamily executives strongly believe that getting into the business of future proofing communities requires expert help and many urge apartment companies to bring IT experts into the development process from the get-go.
"The bottom line for us is experts are required every step of the way in our opinion, from preliminary budgeting to turning over the project to the eventual management company," said Jeff Woll, senior development manager at LMC, during a discussion of multifamily digital infrastructure at OPTECH. "We really do rely on specialists every step of the way, and we try to get them on board as soon as humanly possible."
Experts can help developers build adequate budgets for digital infrastructure, Woll added.
"When the process is clean, that [digital infrastructure] component of a large multifamily job is typically about 0.8 percent to 1.2 percent of the GMP contract," he said. "When that process is not clean, that can balloon all the way to 2 percent, sometimes even north of 2 percent, of that overall contract."
Developers set the stage for inadequate digital budgets when they rely on their experiences with previous projects, added Steve Sadler, director of multifamily development at RealPage.
"We all know how fast technology changes, and the idea that you would bring a cost budget from a previous job that took you two or three years to build into a new job—imagine how much technology improvements and things have changed in just that period of time," Sadler said.
Telecom providers and intelligent building solutions providers also agree. Josh Lunsford, director of MDU and new build strategy for Cox Communications, echoed Woll's thoughts on the importance of finding the right digital expertise, during another panel discussion at OPTECH.
"When you really start thinking about connectivity, I believe that choosing the right partner is key," he said. "Choose the partner that you trust, that will sit down with you and understand what the needs of your business plan are and what the needs of your residents are. That partner can advise on how to leverage your infrastructure to not just provide what you may need today, but to make sure you're providing for what you will need in the future."
And the future is chock full of technology progress for the industry.
"We keep moving forward and progressing,” said Demetrios Barnes, co-founder and COO of SmartRent, at OPTECH. “I don't think there's any going back."
This article includes reporting from Stephen Ursery, content manager for LinnellTaylor Marketing.
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