We’ve discussed smart homes to great length. Yet another area worth exploring is the smart apartment sector. This note discusses what are smart apartments, why they are increasingly popular (especially amid COVID), and what this means for developers.
We’ve discussed smart homes
to great length. Yet another area worth exploring is the smart apartment
sector. This note discusses what are smart apartments, why they are increasingly popular (especially amid COVID), and what this means for developers.
Growth in the smart apartment segment has been phenomenal. According to the latest Multifamily Smart Home report from Omdia
, the U.S. had 928,000 smart apartments in 2020, an increase of 1,460 percent relative to 2017. By 2025, Omdia predicts 42 percent of all apartments in the U.S. will have connected devices.
Just like smart homes, smart apartments rely on IoT and connected devices. According to Omdia, smart apartments are defined as multifamily dwelling units that have two or more smart home devices installed. “For example, a smart apartment could include a smart speaker and smart door lock or a smart door lock and a smart thermostat. Also, the devices must have been installed by the property manager and the platform must reside with the property manager,” said Blake Kozak, Senior Principal Analyst for Smart Home at Omdia.
Benefits for property managers and tenants alike
The use of smart IoT devices can benefit property managers and tenants alike. For property managers, they can save cost and generate additional revenue by using connected devices such as smart thermostats and smart locks
“For thermostats, these devices can reduce energy costs for unoccupied residence. For example, if a residence is being cleaned and repaired, the thermostat can be set at a maximum or minimum temperature in order to manage that expense. Smart door locks lower the expense of rekeying each unit after a tenant has left or if a key is lost,” Kozak said.
For tenants, smart technologies create use cases that improve the apartment life. Smart locks, for example, make entry and getting grocery deliveries easier. Other technologies are also available to facilitate residents.
“Alexa for Residential integrates with the property so tenants can ask about their rent payment or community events. Although not widely adopted today, smart appliances can add value for the tenant. For instance, if the washing machine becomes unbalanced, the property staff could receive an alert so the maintenance team could gain access to the apartment, fix the problem, all without the tenant having to do anything,” Kozak said.
Further growth amid pandemic
In fact, the smart apartment trend was already popular before COVID, as indicated by Omdia data that smart apartment growth was about 780 percent in 2018 and about 90 percent in 2019, year-on-year.
This growth trend has been further driven by the pandemic, which triggered remote visitation and connectivity needs. “The biggest impact of the pandemic on smart apartments was with self-guided showings and tours. This means, potential tenants could get access to an apartment without anyone from the property staff being present,” Kozak said.
And these self-guided tours can be beneficial not just for now, but also in the post-pandemic era. “Self-guided tours allow prospective tenant to view a property and apartment unit on their own time. This way, the prospective tenant is not constrained by the office hours of the property. For the property staff, the benefit is more touch points with prospective tenants. For example, in the past, property managers would miss phone calls from prospective tenants and lose opportunities due to scheduling conflicts. So, self-guided tours have profound benefits for both prospective tenants and property staff,” he said.
What this means for developers and real estate
So, what does this all mean for developers and real estate players? They should realize that that integration, automation and a focus on sustainability will be the future trends in the apartment sector. They should then seize opportunities under these trends, lest losing out in the competition.
“By 2025, nearly 40 percent of apartment units in the U.S. will be considered smart properties. For these properties, the staff and management will no longer lose out on prospective clients due to scheduling conflicts, working our restrictions or missed phone calls,” Kozak said. “Moreover, there is a growing shift toward green communities and sustainability. Properties with a BMS, combined with water leak/usage sensors and smart thermostats will likely qualify as a green property. This means, they will get loans with lower interest rates and possibly get a large discount on the hardware due to incentives and subsidies. So, overall, developers and real estate companies that are not at least starting to explore these technologies, could find themselves falling behind the competition as well as losing out on the valuable data being collected from these systems.”