The multi-family housing industry continues to grow in 2020. According to a report from RealPage, more new units will be added this year than during any of the past 30 years. Multifamily vacancies hit record lows last year, and occupancy levels reached as high as 95.8 percent. RealPage expects about 371,000 new apartment units to become available in 2020 – a 50-percent increase over 2019 and a 17-percent increase in the total number of units on the market.
At the same time, rent costs are on the rise. According to YardiMatrix, rents in multifamily buildings increased an average of 3.2 percent between 2018 and 2019. So, how do developers and property owners attract all of these new residents?
It wasn’t all that long ago that multifamily units could be marketed successfully with little more than a “For Rent” or “Vacancy” sign in the building’s front lawn. Later, a free classified ad on a site like Craig’s List could be the ticket to signing a lease. But consumers in 2020 need more convincing before they select the unit where they will call home.
Instead, prospective residents want to experience an apartment before ever stepping foot inside of it. They look to mobile-friendly virtual tours of buildings, sweeping images shot by camera-equipped drones and those all-important online reviews to help them choose their new abode.
Younger Market Demands Smarter Homes
As older members of Generation Z begin seeking their first apartments, communities need to impress prospective residents with technology, which is becoming paramount for multi-family property owners. While its majority are still children, Gen Z already contributes about $44 million to the U.S. economy each year.
They’ve grown up with smartphones and are accustomed to instant gratification when they seek answers. They have no patience to wait a few days for information or to get their results of their leasing application. Multi-family building marketers have to be quick to reply, and units that aren’t equipped with Internet of Things (IoT) technology aren’t going to interest the younger demographic.
These renters aren’t paying for space, they are paying for amenities. Integrated smart technology is no longer a luxury, but an integral building feature.
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“For residents, smart technologies offer an obvious upside, from the peace of mind that comes with smart locks to the possible cost savings of smart thermostats and lighting, as well as the increased convenience stemming from devices like smart washers and dryers,” Adrian Adriano, VP of Strategic Initiatives at Xfinity Communities, said in a press release.
Fortunately for multi-family property owners, the same technology in demand by potential residents can also benefit their businesses.
“Sometimes overlooked, however, are the benefits to the organizations implementing these technologies,” Adriano added. “They’re able to remotely monitor various building infrastructures, such as water and energy systems, realize long-term savings from the efficiencies gained, and are empowered to promote themselves to residents willing to pay a premium for the latest technology.”
Smart Solutions Benefit Residents, Managers and Owners
Developers and property owners are taking note. A majority of respondents to an Xfinity Communities survey said they had already adopted – or were in the midst of adopting – a variety of building technologies, including:
- 77% adopted smart locks
- 75% installed smart thermostats
- 71% installed smart lighting
- 66% adopted smart washers and dryers
- 70% utilized water leak detectors
- 69% featured smart home energy options
Of course, real-estate technology options have expanded far beyond locks and appliances. In fact, an increasingly popular option among multi-family operators is an overall smart platform for their buildings instead of individual connected amenities.
SmartRent, for example, features a smart home automation platform that can be used by renters as well as property managers. The company – with financial backing from both Real Estate Technology Ventures and Amazon – develops software and hardware that connects multi-family housing communities through residents’ and managements’ smart devices.
“The multifamily housing market has been largely overlooked when it comes to central installation and management of smart home technologies as a way to create a more modern, differentiated and safer renting experience for residents,” SmartRent CEO Lucas Haldeman told HousingWire.
Motili’s multi-family asset management product suite also benefits both building owners and operators. By offering a comprehensive solution for HVAC and hot water asset tracking, replacement optimization and repairs, Motili enables multi-family managers to make proactive business decisions based on comprehensive data. With a single point of contact for all maintenance and repair jobs, Motili has also been shown to boost resident satisfaction by about 20 percent.
“We facilitate better decision-making through data on reactive repair items, but more importantly robust long-term multi-year capital plans,” Motili multi-family vice president Matthew Sallee said. “We’re able to give a true forecast a few years out and look at not just one or two buildings, but across the nationwide portfolio, helping a multi-family conglomerate find tens of millions of dollars through savings and optimization. It often makes more sense to spread your investment over a multi-year period.”