Consumers have a growing expectation for smart-home devices, which differentiate with modern lifestyle marketing and practical benefits.
Jun 05, 2022Ed. Note: This article was previously posted at Security Sales & Integration.
Multidwelling units (MDUs) and multifamily properties are buildings designed to house several different families and contained in a single building or several buildings within one complex. The building is typically divided into separate housing units and is owned by one entity.
Parks Associates research reveals that 34 percent of US broadband households are MDU residents. MDU categories consist of apartments, condominiums, duplexes, quadruplexes, townhomes and dormitories. As consumers and businesses grapple with the aftermath of the pandemic, property owners and managers will continue to face challenges. Inflation is high, and increased costs and labor, along with high demand, will continue to drive high rental rates.
The Reno-Sparks area in Nevada is one overheated rental market, where the average rent has jumped 38 percent from 2016 to the end of 2020. Vacancy rates are very low, driving up the cost for renters, while the eviction moratorium also drove up delinquency percentages—reducing revenue for property managers and owners.
At the other end of the spectrum, urban areas—such as Manhattan—have reported an increase in unoccupied units, due in large part to the COVID-19 pandemic. The number of vacant apartments in Manhattan was a record 15,025 in August 2020. Property taxes for apartment owners have nearly doubled since 2009, according to the National Apartment Association. An already tight labor market, compounded by the pandemic, is also driving up salaries and personnel expenses.
Smart technology is driving new revenue increases for MDUs and attracting residents through added amenities. The most significant benefit of installing smart home devices in MDUs is rental rate increases. Other benefits include reduced complaints from current residents and a boost in attracting new ones, along with many others. Consumers have a growing expectation for smart home technology and these new devices help differentiate with modern lifestyle marketing and practical benefits.
Consumers living in apartments are more likely to be technology adopters than those living in all broadband households; Parks notes that currently, 43 percent of MDU residents report using smart home devices. While the MDU market for proptech is relatively new, Wi-Fi access and bulk Internet are already widespread—88 percent of MDU renters in the United States report having access to Wi-Fi through their property, either in-unit or in a common area .
High-speed Internet access is also important because it provides connectivity for current and future proptech deployments, specifically smart home solutions. The vast majority of properties that do not offer Wi-Fi access services plan to do so in the next 12 months. Connected home devices and solutions installed in MDUs are similar to those in single-family
As it relates to partnerships, the MDU market is unique for its multiple stakeholders, bulk deployments and multiple locations for installations. End-user residents, MDU property managers and building owners benefit directly from proptech. Other ecosystem players are also in a position to capitalize on new demand and value, including smart home solution vendors, ISPs, insurance agencies, security providers and installers.
MDUs may have hundreds of units on one property, which leads to bulk device purchases and installations. Bulk sales are attractive to smart home device vendors, but deployment and integrations must be carefully managed for successful outcomes. Property managers and owners often partner with service providers or vendors with the resources and expertise to work within this unique environment.
The market for smart technology solutions in MDUs has lagged behind the single-family housing market, but it is quickly catching up, especially as demand for high-end rental properties has accelerated. MDUs can deploy proptech and smart home solutions outside the units, in public spaces and inside the units for residents’ use. While public Wi-Fi is the most common tech in public areas, 51 percent of MDU managers with at least one smart home-enabled property have smart cameras installed in MDU common areas.
Parks Associates data consistently finds that security and safety use cases resonate among all US broadband households, and we anticipate seeing networked cameras added to more properties. Smart cameras are the most prevalent smart home devices installed in common areas, but smart light bulbs/lighting are popular both in units and common areas, highlighting the strength of the security and safety value proposition. Resident requests are a key motivator for property managers and owners in deploying smart home solutions.
The top five most requested features are automated lighting, smart appliances, increased levels of security in common areas, increased broadband speed and remote access to residential units. MDU property managers and owners can stay competitive in this tight rental market by adding smart features to their properties, while device manufacturers and service providers can increase revenues by partnering to provide these solutions to MDUs.
Jennifer Kent is the VP of research at Parks Associates. This is an excerpt from Parks Associates whitepaper, “Smart Solutions—Boosting Revenue in Multifamily Properties,” in collaboration with SmartRent to explore how connected devices benefit multifamily owners and property managers, from improving business efficiency to driving additional revenues, as well as opportunities in the emerging MDU market for product vendors and service operators. Security Sales & Integration has partnered with Parks Associates for the creation of DIY FYI, a column designed to help dealers keep track of important smart home market developments, what the competition is and whether they want to jump into something they see as a new opportunity.