Since the COVID pandemic, the demand for multi-dwelling units (MDUs)—also known as multifamily properties—has seen unprecedented growth, with the total number of units built during 2020 rising by 6% over the previous year, and hitting a 30-year high of 375,000 MDUs completed in total. With occupancy rates also at an all-time high, and rent continuing to grow, MDUs are an increasingly attractive category of property, both for renters and prospective buyers.
Leading the trend towards MDU living are the millennials—those renters and buyers born during the eighties and early 90s. As a group, they include young professionals and growing families who enjoy greater flexibility in terms of choosing locations to rent or buy thanks to the growing popularity of hybrid working practices, their career advancements, and relatively high spending power. This makes them discerning consumers when it comes to choosing a property, prioritizing their choices based on the additional features available.
Where before property managers may have viewed preinstalled fiber internet, wifi, smart locks, and other IoT devices as a luxury add-on, these types of amenities are fast becoming the default expectation for millennials—and properties without these features are at a disadvantage in attracting buyers or tenants. Put simply, the current generation of buyers and renters are not only prepared to pay a premium for MDUs which come with smart tech features as standard, but they will reject those properties which don’t make the grade.
The main categories of interest among prospective tenants or buyers which were marked as “very important” in a recent Park Associates survey1 include hi-tech infrastructure such as fiber broadband to the home (FTTH), preinstalled hi-speed wifi, and smart TV services, as well as a range of “Smart Home” features such as thermostats, lighting, security, and smart locks.
We’ve taken a look at some of the most in-demand smart technology features which MDU managers should target if they want to maximize interest in their properties from millennial buyers or renters.
Lighting
Smart lighting systems provide advantages for both residents and property managers. As well as allowing residents sophisticated control over their lighting, whether they are present in the unit or not, they also allow building management to reduce running costs by selectively activating and deactivating lighting in communal areas, as well as receiving notifications when bulbs or sensors need to be replaced.
Thermostats
Similarly, smart climate control systems appeal to millennial residents from an environmental as well as cost control standpoint, but deliver the same benefits to property managers, ensuring that they can balance the need to provide a comfortable environment while reducing excessive use of heating or air-conditioning systems and proactively alerting maintenance teams to any system issues.
Smart locks
Smart access control systems are a must for security-conscious millennial tenants, allowing them to keep their homes safe while offering the flexibility to grant temporary access to visitors, delivery drivers, or tradespeople. On the management side, smart access control systems offer a range of benefits over traditional alternatives, reducing administrative costs, eliminating issues around key assignment, tracking and replacement, and providing much clearer reporting and tracking of the movements of residents and visitors around the property.
Connectivity
High-speed internet connectivity is invaluable to the current generation of prospective renters and buyers, with many working at least part-time from home, and also relying on wifi connections for entertainment such as streaming services and gaming, video communication, and remote management of the smart systems mentioned above. Fiber to the home and high-performance 5G wifi throughout communal areas, as well as in-home, have become the base-level expectation for millennial consumers.
Market intelligence firm Parks Associates has recently published research showing that 65% of MDU tenants consider the inclusion of smart home devices in a property a key feature2. However, it seems that the market is lagging behind this trend, with only 34% of MDU property managers currently offering IoT devices in at least one of their properties3, as reported in the same study.
There is therefore a clear opportunity for managers of multi-family dwellings to fill this gap by incorporating these in-demand technological amenities and thereby being able to command a higher sales price or increased monthly rent compared to their competitors—as much as a 15% premium overall, according to the previously quoted research.
Implementing more smart technology is now a key consideration for property managers looking to upgrade their value offering. It’s important to approach this strategically, as the significant investment needed, paired with the rapid pace of technological change, means that new systems have to be future-proofed to as great an extent as possible. This will maximize the lifespan of the initial investment and make it easy to make modular upgrades as the underlying technology develops, rather than being forced to overhaul entire systems every few years.
References
1: White paper: Simplifying the IoT Edge: Smart Spaces Best Practices (http://www.parksassociates.com/shop/accesswhitepapers)
2: Blog article: https://www.parksassociates.com/blog/article/05252022
3: Blog article: https://www.parksassociates.com/blog/article/05192022
