Ready or not, the future is here! The smart home market has grown rapidly over the past several years and is considered by nearly half of Americans to be mainstream according to the Coldwell Banker Real Estate Smart Home Marketplace Survey. What’s next? Smart apartments! Here’s an overview into what’s to come: Who? Of Millennial homeowners ages 18 to 34, 72% would pay $1,500 or more and 44% would pay $3,000 or more to make their home smart (Coldwell Banker 2016). Furthermore, 44% of millennial renters would rather have an apartment equipped with smart technology than an apartment with a parking space (Allegion 2016). Yet across all age groups, the U.S. homeownership rate at 62.9% has now fallen to its lowest level in more than five decades (Washington Post 2016). This means we have millions of Americans who want and are willing to pay a signifcant price for smart home technology, but don’t own a home. Therefore the demand for smart apartments is more apparent than ever, and will become essential to offer in order to make your building appealing to tenants before we know it.
Why? The reasons to equip your building with smart technology extend far beyond the fact that everyone’s doing it.
As a property manager, smart technology is incredibly convenient. It allows you to manage countless features in your building from the temperature, to the security cameras, to the door locks, and everything in between from a single dashboard on your smart device. If a resident is locked out, no worries, you can unlock their door 24/7 from the touch of a button on your smart device application. You can also monitor your building’s security cameras all of the time from your smart device to ensure your residents feel safe and secure.
While the current data overwhelmingly proves the increased value of a home when it’s smart, the studies on smart apartments are still underway. Certain buildings have already raised the rent from 10-20% per month by offering units with smart technology. There are a number of studies currently underway to solidify these numbers, but I hypothesize the increase will be at least this substantial, if not significantly greater. Stay tuned.
From the resident’s perspective, there are countless benefits in a smart apartment as well. By controlling the thermostat in their unit from their smart device, residents save up to 30% on their energy bill annually, which in turn saves something absolutley priceless; our planet. Talk about a win-win situation!
Smart technology won’t only save money and the planet, it could save lives. Does your building have a single access point for entrance? With smart technology you can set up an outdoor camera on your building so that residents can see their guests as they from their smart device. As soon as a guest arrives, your resident will be alerted smart device. With a single tap on their app, they can decide whether or not to give the guest access to the building. This option is far more secure than the outdated method of giving guests access via 4-digit code on a keypad that works for anyone who’s ever been to the building. According to a study by iControl Networks, in both 2014 and 2015 an overwhelming 90% consumers list security as one of the top reasons to purchase a smart home camera system. This demand will certainly be reflected in the multifamily space as well.
How? There are several options for transitioning your building from outdated to smart.
The first is to create a model unit in your building full of all types of smart home technology. This includes the “plug and play” products which are not “necessities” but certainly appeal to those who desire a “Jetsons” life of automated utopia. This includes products such as a smart coffee maker that automatically makes your coffee when you wake up, to a smart pet feeder that allows one to video call their pet and even give them a treat when they are at work, and so much more. Products like these (I could go on forever, they’re so cool) definitely brings the WOW factor to tenants and those touring your property. More importantly than this however, is that the model unit also includes the standard smart home features such as a smart thermostat, door lock, and smart light bulbs which are considered “necessities”. Let me explain the difference. The plug and play products are typically offered as add-ons, in which residents purchase product and pay a one time set-up fee to have it in their unit. Thereafter, the resident is free to take the device(s) when they leave your property (although we doubt they ever will once it’s decked out with smart home technology).
Standard smart home products such as the thermostat, lock, lights, and cameras stay in the unit permanently. Residents will have an option to rent a smart apartment for an increased charge each month between 10-20% depending on your market. Within just a few short months, your standard smart home products and their installation will pay for themselves, and the devices will begin making your property money with the increased value.
When? Over 50% of renters consider the technology in their units to be outdated (Allegion 2016), thus it’s safe to say the time for smart apartments is now. Depending on your market and specific needs, your options to transition to offer smart apartments are vast. Some property managers opt to only create a model unit to test the market receptivity. From there, they typically install standard smart home products in anywhere from 25-50% of their units so that renters still have an option to go without smart technology in their apartment if they wish. In other cases, property managers want to stay ahead of the market curve and want to deck out the entire building in smart technology right away. Eventually, the latter approach will be standard in the world of apartments, and those who jump on it ahead of the curve will get a significant return on their investment.
To wrap up this up let’s think about how once upon a time, the telephone was only available for the elite to make calls on. Since then, phone booths, car phones, cordless phones, cell phones bigger than a brick, and eventually smartphones have emerged.This rapid evolution will be mirrored in smart home technology. The same way 68% of adults now own smartphone (Pew Research Center, 2015), the vast majority of individuals will control all aspects of their living space from the palm of their hand with smart home technology in the near future.