We originally published this article in the Houston Apartment Association's ABODE magazine.
With so much technology at our disposal today, why have we not raised our expectations for the type of lifestyle that an apartment can provide its residents? Smart locks, learning thermostats, voice-controlled lighting and other recent improvements have been readily accessible to homeowners, but are rarely seen in even the most modern apartment properties.
The truth here is simple: Smart apartments are inevitable. This technology provides an ultimately convenient living experience for residents that they can’t help but want for themselves. As such, it presents an incredibly powerful opportunity for the more proactive apartment owners and managers who are looking to offer something new and useful.
With home automation’s booming popularity, it’s only a matter of time before residents simply start installing these devices themselves. And with the current state of apartment supply in Houston, there’s no better time to explore new ways for differentiating a property.
But first, what exactly is a smart apartment?
Home automation is still a relatively young industry, so it’s understandable how people can have different ideas of what “smart apartment” even really means. For the sake of this article, we’ll define it as an apartment that uses home automation technology – smart locks, thermostats, lights, etc. – to make life more convenient for the resident.
This means enabling residents to control their lights through voice commands or simply based on their presence. Providing peace of mind with doors that will automatically unlock as they arrive home, and lock behind them as they leave. Or helping residents save money on monthly utilities with a thermostat that intelligently adjusts to their daily schedule.
The perks of these technologies aren’t only for the resident, however. Ideally, a smart apartment system also makes managing vacant units significantly easier. For instance, what happens when someone accidentally leaves a light turned on in that vacant unit? Or if the air conditioning is left running? Management typically has no way of knowing when this has happened until someone physically steps foot in that unit again, which could range from days to even weeks (hopefully the former). Smart apartments give management complete control over those vacant units with remote access to lights and temperature settings. This provides immediate cost savings by minimizing the amount of electricity wasted by empty apartments.
Why are smart apartments inevitable?
Let’s take a look at the numbers.
According to the top Internet of Things (IoT) thought leaders, we’re expecting 30 to 50 billion IoT devices worldwide by 2020, which clearly is not far away.
As if that wasn’t enough, we happen to live in one of the top countries in the world for adopting this technology. The same country where 110 million people rent their home, of which roughly 35 million are living in a multifamily property.
Now you might be thinking to yourself, “That sounds like a pretty broad generalization. How do you know that Houston residents want smarter apartments?” Simply put, I know this because we (SOTAH) asked them. We spent three weeks surveying 200 local residents about their thoughts on home automation and its application in apartments. And the results were very unsurprising.
Nine out of 10 said that a smart home system would add value to the living experience of an apartment. Call me crazy, but I believe most people can agree that adding value is typically a good thing.
In addition to this, a whopping 82 percent said they were likely to let a smart home system be a determining factor when selecting a new apartment. These residents are looking for the properties that use the latest and greatest technology.
Lastly, and my personal favorite, nearly half of them were more likely to at least visit a property that offered smart apartments. Assuming you have a capable team of leasing agents, any increase in foot traffic should get you excited.
So let’s recap:
- At a minimum, we can expect 30 billion IoT devices online within the next three years.
- We’re living in one of the top countries in the world for adopting this technology.
- 35 million individuals live in multifamily properties across the U.S.
- Residents have an overwhelming desire for this technology and the living experience that it offers.
All things considered, what are the odds that none of your residents start buying and self-installing these devices?
This is actually exacerbated by the fact that most of today’s smart device manufacturers are all focusing more and more on convincing individuals to self-install these devices. For the sake of stating the obvious, I think everyone can agree that having residents self-install a new thermostat or door lock does not end well for anybody.
What about the costs? Aren’t smart apartments expensive?
True, new technology typically comes with a higher price tag. Thankfully there are plenty of options for properties to pursue this technology without breaking the bank. As a matter of fact, installing smart apartments can actually be a cheaper, more sustainable solution for attracting new residents when compared to the cost of rent concessions.
Think of it this way: Properties typically provide rent concessions every time they need to fill an empty unit. Alternatively, installing smart apartments is a one-time cost that distinguishes the units beyond their current resident – after one resident moves out, the smart apartment system remains in place for the next one. We call it “future-proofing” for precisely this reason. Not to mention, a vacant smart apartment will likely lease more quickly than its non-smart counterparts, and with a premium rent rate.
The technology is equally useful as a resident retention tool. The most straightforward solution is for properties to offer a smart apartment upgrade in exchange for renewed lease agreements. Additionally, smart apartments increase a resident’s switching cost since they’ll have difficulty finding a comparable living experience elsewhere.
How do you take advantage of this opportunity?
Well the most obvious solution involves simply providing these things for residents before they start providing it for themselves. Just like in every other industry, the first movers in this space stand the most to gain.
Plus, considering the proliferation of these devices over time, eventually a smart apartment system is going to become so standard that properties can’t claim a “modern lifestyle” without having one.
It’s strikingly similar to stainless steel appliances. Once upon a time, they were a major differentiator, but nowadays those same stainless steel appliances are expected. What was once an eye-catching feature is now only noticed in its absence. Smart apartments are headed on the exact same trajectory.
But if you’re still uncertain about whether or not your residents want this kind of lifestyle, then start small: Test the waters by offering standalone devices. Use it as a resident retention tool, offering a new smart thermostat in the unit in exchange for re-signing a lease. Use it to attract new residents, offering to install a smart door lock if they sign a lease.
The fact of the matter is that smart apartments are truly inevitable. It’s only a matter of whether properties provide the technology for residents, or if residents start providing it for themselves.