Driving the Adoption of Smart Home Technology

smart home technology


Industry, multifamily working to overcome slow adoption of smart home technology

The path to smart home technology adoption in multifamily maintains a twisting route navigated with short steps, much like the pace of the industry that promises systems to propel residential living of the future into the next galaxy.

The subject has been a hot topic at just about every major multifamily housing industry conference in the last two years. And while multifamily movers and shakers continue to drive the transition of smart thermostats, lighting and entry accesses through pilot programs and select installations across the country, few have reached third gear. Some are even stalling on the drawing board when money is a consideration.

Providers, multifamily optimistic about future of smart home technology

At a 2014 National Multifamily Housing Council conference, executives from Forest City Residential Group, Lincoln Property Co., and AMLI Residential approached smart technology with cautious optimism. High-tech devices were seen as potential value-adds for both landlord and resident but security and privacy questions persisted.

Today, those sentiments are still at play as the smart home technology industry attempts to build momentum toward mass adoption.

In a recent smart home technology market update, BI Intelligence said it believes the market is “stuck in the ‘chasm’ of the technology adoption curve, in which it is struggling to surpass the early-adopter phase and move to the mass-market phase of adoption.”

The big roadblock is the technological fragmentation of the smart home ecosystem, which dictates that consumers need multiple networking devices and apps to operate a smart home. Until that issue and others − high prices, limited consumer demand and long device replacement cycles – are resolved, the smart home needs more tutoring.

However, providers and multifamily executives are optimistic that smart home technology will be a steady player in providing future high-tech living. A what-can-you-do-for-me generation of new renters wants the technology, and apartment owners and operators continue to see value in potential energy benefits and other savings resulting from data generated by the devices.

The very near future could determine how fast smart home technology gets to the finish line in multifamily, some say. Developers of the technology say hold on to your hats.

“The industry will be surprised by just how the smart apartment will become common place in the coming three to five years,” says Embue President and CEO Robert Cooper, whose company is on the leading edge of networking the devices for better operational efficiency. “The competitive drive to keep residents is what will incent them to install smart apartment platforms that match the expectations of today and tomorrow’s renters.”

Consumer interest is growing in North America, Europe

smart home technology

Consumer interest in smart home technology is growing. “Smart Homes and Home Automation – 4th Edition” published by Berg Insight in May reports that North America’s smart home market growth in 2015 skyrocketed 62 percent with 16.9 million installations. About 2.8 million were multifunction or whole-home systems, compared to 14.1 million point solutions designed for one specific function – a thermostat or smart door lock.

North America is now the top smart home market on the globe with installations in 9.7 percent of all households. Europe lags but is making up ground. By the end of last year, smart homes in the EU28+2 countries doubled to 6.6 million.

Berg Insight predicts that 36 million homes in Europe and North America will be smart by next year. Point solution purchases are expected to fuel the growth, but how fast smart home technology latches onto the multifamily industry is a wait-and-see.

Multifamily operators and owners will feel the crunch of demand by renters of all ages. Pamela Darmofalski, Director, Advantage Solutions/National Accounts and Sustainability for Greystar, says “residents of all ages are interested in the technology and they are just starting to see how it can enhance their lifestyle.”

According to the National Apartment Association (NAA), some operators say they are getting $45 to $65 a month in additional rent from Texas to California. Others tout energy savings of 10 percent to 20 percent per month using smart thermostats.

But embracing the technology is slow as the multifamily industry struggles with many unanswered questions around functionality, privacy and value.

Multifamily cautious about privacy issues, risks, ROI

Darmofalski, who spoke on smart home technology at the 2016 National Apartment Association Education Conference & Exposition, and others see a methodical adoption in multifamily.

Greystar has implemented the technology in about 1,000 units across its ownership portfolio. Understanding the return on investment can be challenging says Darmofalski, because residents benefit from the energy savings rather than the communities. Smart thermostats, which are typically more expensive than non-programmable thermostats, are viewed as more of an amenity, like granite countertops, and are a selling points for the unit.

Industry players are concerned that the information within the devices could be potentially invasive. Knowing exactly when residents lock their doors, indicating times the apartment is occupied or vacant, could raise concerns and create fear among residents who may not even want the technology.

“The technology is a matter of personal preference,” said Darmofalski. “You can select to opt-out or customize the system to meet your lifestyle. If you opt out of the program you still have a functional home and the technology would simply be inactive.”

Earlier this year, the NAA formed a technology committee to work through the privacy, safety and risks. A pressing task is creating a white paper with guidelines on available technology, scalability, longevity, privacy policies, data creation and data ownership and security of smart home technology. A team of owners, developers and technology specialists are contributing to the paper, which is due in the fall.

Michael Flynn, NAA’s chief information officer, hopes the paper will help members better navigate a subject that many can’t completely get their arms around.

“There are people who willing to try something, but nobody is willing to jump in with both feet.”

Key is finding systems that can talk to each other

Until the apartment industry achieves a comfort level of offering high-tech living, adoption will continue to be slow, stakeholders say. As Berg Insights projects, point solutions will likely be in favor. Smart locks are logical first choices to be installed, because they don’t harbor information.

Before a full-scale adoption make sense, the smart technology industry must overcome the device fragmentation and efficiently network devices  so residents don’t need multiple apps to control them and operators can have access when need.

The tech gurus, including Embue, point to the cloud as a solution. Embue’s system works through a central portal and creates a redundant wireless network within an apartment building.

But costs, not just for systems like the one that Embue offers, will need to come down to make installation justifiable for owners and developers. The price to outfit a unit can be steep and the return on investment is not clearly visible, says Darmofalski.

Mike Smith, who is a technology consultant for the commercial building and apartment industry with White Space Building Technology, says the price for going smart will become more affordable as new players enter the market. But right now, costs in some cases are forcing some developers and owners to slash smart technology from building projects.

“It’s still a big topic of conversation with the owners that I talk to, but it’s also the first thing that seems to get value-engineered out,” he said. “So, you need to cut several thousand dollars from your project, you take all the smarts and parts inside the apartment.”

Holli Beckman, vice president of marketing and leasing operations, says W.C. Smith is dabbling in smart technology by installing smart locks at its properties. She’s particularly interested in how a resident’s smart wearables can interact with an apartment to enhance the living experience.

But, the company is satisfied to take a methodical approach and watch how the rest of the industry maneuvers through adoption.

“We’d love to see it happen,” she said. “It’s the way to go with technology. But there are challenges. We’re okay to be a follower.”

Data generation, automation will drive mass adoption

Smith says owners can benefit from smart technology although many think that the residents are the sole beneficiaries by saving on utilities. It’s just a matter of convincing them that smart technology can potentially improve the asset and resident experience, which leads to retention, through detection and equipment monitoring.

It’s also about better data, not big data, and not about big brother.

“The technology, from an owner’s perspective, is not to control occupied units but to control vacant utilities,” he said. “And then it’s to get any errors like the HVAC is not operating efficiently. If I can get notified before the resident ever knows, it keeps the resident happy, it’s all about resident retention, extending the life of the equipment. It’s to get more insight into what’s going on.”

Cooper agrees that a big value of smart technology is being able to see inside the inner workings of an apartment to better maintain and improve efficiency of the asset.

Also, as the sharing economy moves into multifamily housing, he believes operators will see they can make more money offering flexible, shorter stays with help from smart home technology that automates and personalizes locks, thermostats and lights.

“This will be one of the key drivers to hasten mass adoption.”

Already, Embue is working with a number of owners and managers who are running pilot programs, which Cooper believes will lead to smart building technology becoming part of the spec for new construction, renovation and the apartment turnover upgrade packages.

For now, easy does it in multifamily

Still, smart technology has a lot of ground yet to gain, at least to one multifamily stakeholder who was polled by NAA’s Units magazine in July. The respondent said the thermostats, light bulbs, ovens and security systems make for a pretty great things however the technology is still being refined.

Darmofalski says the multifamily industry will continue to keep an eye on the emerging trend.

“The combination of increased resident’s expectations and the speed of changing technology could make this the next important amenity over the next few years,” she said. “We will continue to review the technology and monitor the demand.”


Contributing Editor, Property Management Insider
President, Ballpark Impressions, LLC

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Tim Blackwell is a long-time publishing and printing executive in the Dallas/Fort Worth area who writes about the multifamily housing and transportation industries. He has contributed numerous articles to Property Management Insider, and worked as a newspaper reporter in the D/FW area. Blackwell is president of Ballpark Impressions, and publishes the Cowcatcher Magazine. He is a member of the Fort Worth Chapter/Society of Professional Journalists.

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