The impact and value of implementing smart device technology into existing and new multifamily units
BY SCE PIKE
Remember when fitness centers were the hot new amenity in multifamily communities? Remember when most apartments included utilities? When bicycles were stored on patios? When pets were not allowed?
Decades ago, apartments were found by looking at newspapers and walking through neighborhoods. The multifamily industry has found a way to balance the demands of renters with business needs by adapting to change. Yet some things remain the same. Investors still want to maximize value and command the highest rents possible.
Enter the smart apartment. What was once a concept is now a reality. Industry wide adoption is now a question of when, not if. Thankfully, the smart apartment is defined, and today the money is going to smart infrastructure instead of smart devices. Why? Ask any developer who “square pegged” apartments with smart devices intended for single-family dwellings. They will tell you at least one sad tale of wasted resources, angry residents, and a heaping helping of humble pie.
For those of you who want to be on the leading edge and not the bleeding edge, it’s time. It’s a digital world, and lasting value is created when buildings are designed to enable smart devices to work seamlessly in their shared environments. Developers who integrate this infrastructure into their assets can achieve consistently higher rents with relatively small investment and no change to scope or specs. The key is future proofing.
It all starts with demand. Prospects and residents want the experience of living in a smart apartment home, and they will pay for the experience because it saves them money and time. The truly smart apartment is ready to integrate with any device that comes through the door. As devices come and go, the smart apartment will stay ahead because it’s not about devices, but about the software.
Imagine living in an apartment that knows you want the light on in the kitchen when you open your bedroom door. The smart apartment will anticipate what residents want based on learned behavior. And that fitness center? Your resident can see if their favorite treadmill is in use before they leave their apartment. It doesn’t hurt that residents love the experience and peace of mind that come with having a smart living space. It’s easy to justify paying more for this type of lifestyle especially since residents are saving an average of 27 percent on energy due to their smart thermostats and smart lights.
What about the hardworking on-site teams? When was the last time a solution simplified their life? An enterprise application is a valuable tool for local property managers and marketers as they prepare vacant units prior to showing them. This provides the advantage of delivering a consistently positive first impression and a reliable sales experience.
A truly smart platform also enables control for items, such as strategically turning on lights in vacant apartments during overnight hours to improve the appearance of the building, and offering the appearance of empty apartments as occupied. Imagine a resident leaving for vacation and returning to black mold. This happens, and when it does the apartment has to be taken offline, torn down to the studs, abated and rebuilt. With a notification, this and all the accompanying losses would have been prevented. That’s just one example of what an infrastructure and enterprise solution can do.
For developers and investors, adding smart apartment infrastructure is good business. Investors with new developments are experiencing accelerated absorption, and increased prospect interest due to the market differentiation factor. In addition, developers can expect to see reduced energy costs and benefit from loss prevention. In new construction, things happen. Water leaks, pipe bursts, HVAC issues and electricity spikes can go for days, even weeks, in unoccupied spaces. With a smart infrastructure and an enterprise application, these emergencies are discovered before significant damage is done.
This isn’t just for new developments. With millions of dollars raised to acquire value-add assets, going smart is, well, smart. It’s affordable, flexible, easy to implement, and can be done at turn or at renewal with minimal disruption. Jim Dobbie, Senior Vice President at Hunt Investment Management installed a smart apartment system in both new construction as well as 1990s product as a value-add strategy instead of granite. He reports that they are achieving $30 premiums just for the experience the platform provides. Even at a sub-five cap rate, that $30 multiplied by 288 units equates to significant increase in value.
What’s next for the Internet of Things (IoT)? IoT, specifically IoT for multifamily communities, is looking at years of exponential growth as it creates a win-win for developers and residents alike. Assets that enable the interoperability of any type of devices, automation, machination and finally anticipation will have a compelling and lasting advantage in a digital lifestyle world.
Beyond the asset, the true value of IoT in living spaces is the data. Owners can monetize data and open new revenue streams if they choose the right platform.
Sce Pike is President and CEO of IOTAS, a smart apartment hardware and software technology company to help the multifamily industry increase revenue, save costs and gather insights. She may be reached at www.iotashome.com.