The Internet of Things (IoT) is coming in a big way to multifamily buildings as use cases become clearer, and the business benefits to building operators are being proven with the help of some early adopter projects. Building operators typically evaluate any vendor solution by its impact on their NOI (Net Operating Income). NOI is an indicator of profitability and typically derives from revenue generated by rents and other sources less all the operating costs associated with running a building. IoT products and services can significantly contribute to a building’s rental revenue while providing cost savings to operating expenses.
Recent trends in the market are accelerating IoT in multifamily buildings and influencing decision-makers to consider adoption sooner than they anticipated. For example, Covid-19 underscores the importance of touchless solutions that allow building operators to remotely access operations and offer socially distanced solutions to residents to improve safety and hygiene.
Customer behavior is also playing a big role. Residents have come to expect smart home technology such as smart thermostats and are willing to pay a premium for it. This represents a revenue opportunity for building operators. In a survey conducted by a leading property management software firm, Entrata, more than half of residents are willing to increase their rent payment by $20 per month to use smart home technology in their suites.
The business benefits of IoT products and services in multifamily buildings can broadly be categorized into three categories: residential experience, operational efficiency, and visibility/control.
A wide range of IoT products and services are emerging to provide a superior resident experience in multifamily buildings. Residents can be empowered to personalize their comfort and environment with a central app that allows for local control of smart thermostats, smart lighting, locks, and doorbells.
Services such as package management can ensure seamless and timely delivery of packages inside suites using smart locks and save residents and operators time to sift through large stacks of packages that take up unnecessary space. Self-guided touring software delivers on the promise of social distancing. It is becoming increasingly popular with owners and operators as prospects wish to assess the suite digitally’s fit and layout before committing to rent it. System integrators that aggregate IoT hardware, software, and services will play a pivotal role in the market. They partner with a myriad of vendor solutions to present a unified front to multifamily buildings.
Operational costs in a multifamily building that constitute the regular running typically consist of fixed costs such as taxes and insurance and variable costs such as utilities, labor, repair, and maintenance. According to the National Apartment Association, staff and maintenance represent two of the top five costs. Cloud-based IoT solutions that enable remote access via the mobile or desktop can save operators considerable staff time to achieve goals and digitize daily tasks like unit inspections.
IoT can also lower repair and maintenance costs. Smart locks eliminate the need for rekeying the same unit multiple times, and leak detection sensors can prevent expensive water damages that can cost millions to repair. Operators can reduce energy spend in vacant units when rent revenue is not realized with smart thermostats. For example, operators can save up to 10% annually on heating and cooling by setting back temperatures by 7°F / 4°C.
Visibility and Control
IoT can truly connect multiple aspects of a multifamily building, and operators can gain building-wide visibility and control of doors, entryways, and common areas. New smart access control and video security solutions provide operators the ability to assign permissions to guests, delivery personnel, and residents with the flexibility of revoking access at any point.
Combining these solutions with smartphones makes for a strong use case because it eliminates the need for traditional keys or key fobs. Since these systems need connectivity to communicate with their standalone software or a central property management system, owners and operators should consider a high-speed and secure wireless network as a precursor to successfully adding an access and security layer to their building.
With a large existing building stock that’s ripe for retrofitting with IoT, residents and operators alike can be optimistic about how buildings will be modernized in the years to come. With clear benefits to the residential experience and the building NOI, IoT has gone from being a buzzword to a legitimate part of building operators’ budgets.