These Are the Essential Smart Features
When operators choose smart-home amenities, they need to distinguish between “must-haves” and “like-to-haves.” Find out how they make those decisions.
Throughout residential real estate, developers, renovators, and operators are grappling with questions about smart-home technology. They are trying to understand what residents expect, what will pay for itself, and what they need to offer to compete.
Student housing is no different, though the smart-home demands here may be even greater with younger, more technologically engaged residents.
For Mark Zikra, Director of Technology, CA Ventures, Internet television and strong bandwidth are things students demand. “They are just like water—essential,” he said at CampusConnex in Orlando last month.
But student operators should not forget about access control and closed-circuit television (CCTV).
“We spend a lot of time thinking about access control—how people get in and how they flow through the building,” Zikra says. “CCTV helps residents feel more comfortable.”
In student settings, access control can be especially useful. A laundry company can use a code to open a door and pick up a student’s clothes. “If you invite guests over to study, they can get a one-time use code for the front door and the study room,” Zikra says.
Michael Phillips, CFO of PHILLIPS Enterprises, says some of the best smart-home investments go beyond customer-facing technology. He sees an opportunity to reduce costs and waste by putting sensors on chillers and adding water shut offs to prevent overflows. Having proper wiring and back office networking in place is also important.
“We are looking at infrastructure,” Phillips says. “As more smart-home devices are introduced, having the right infrastructure is important.”
Once student operators designate their must have’s, they can consider things such as virtual reality in game rooms and study room reservation systems.
“The majority of the other technology out there is a ‘want to have,’” Zikra says. “In a year, these things could become ‘a need to have.’”
As an example, Zikra points to furnished apartments and managed Wi-Fi. These things started out as ‘want-to-haves,’ but became ‘need-to-haves.’ “When we have clear winners in brands and quality [among smart-home devices], the adoption of these devices will happen at an exponential rate,” he says.
That adoption has already happened with consumer devices, such as Alexa, which means student housing operators are not under pressure to provide these products.
“The cost of commercially available products has dropped, and residents are now bringing their own” Zikra says. “From a management perspective this is a good sign, but it’s our job to make sure the network, infrastructure and owner supplied tech can support and compliment this ‘BYOD’ [bring your own device] model.”
Even if students are bringing their own devices, tech investments can be expensive and there are other issues. “Smart home automation has a fragmentation problem,” Phillips says. “There is always a new protocol and with service integrations competing between Google, Amazon and Apple, it continues to make choosing the smart products for your property a risky decision.”
With traditional locks, housing operators would pay an upfront cost and be finished. Smart locks come with a monthly cost per door, according to Phillips. “These things change the entire pro forma [of your community],” he says.
Given the speed with which technology changes, Phillips is skeptical that these investments will pay for themselves.
“Historically you had longer payback periods to realize returns on investments, but with the accelerated times lines of recent smart home devices, technology can become obsolete before you had the opportunity to realize a return on it,” he says. “Providing furniture had a nice payback [over time].
With these [smart home] devices, you may only have one or two years to get a return.”
If there is not a real ROI to smart-home devices, do operators need to think about them differently? “Are [tech investments] something that is just an expense at the end of the day?” Phillips asks. “Is it just part of the services that you are providing?”
Even if it is hard to draw a straight line between access control, for instance, fetching an additional amount in rent, Zikra says these investments provide a revenue boost.
“If you add smart-home devices, you can be more confident in pushing rents,” Zikra says. “The communities with great revenue growth are at the forefront on the technology side.”
Zikra has had success outfitting an entire penthouse floor with high-tech devices, such as smart lighting and Bluetooth showerheads. “If you have a technology package, you can slowly roll it out over time and increase the value of the building and revenue because of that,” he says.
Even if these new devices don’t entirely pay for themselves, Phillips has found savings in his tech budget to help justify the cost.
“I view negotiations with cable and internet contracts as an opportunity for cost savings,” Phillips says. “For instance, bandwidth costs have dropped a lot.”
Eventually, access control and CCTV can allow self-guided tours. “You can reduce the leasing agent staff, which saves you money,” Zikra says. “Instead you can have higher-paid leasing specialists.”
Zikra believes technology can also help improve amenities, which could also save money by potentially eliminating things that residents do not use.
“Smart tech can help you understand the occupancy load at the gym or how many people are using the movie theaters,” Zikra says.