The diversity of needs and use cases for smart home products among property managers creates many opportunities. Consumers are looking for the benefits of connected devices, such as integration, monitoring and streaming services, while property owners are looking to differentiate themselves and add value to increase rental rates. At the same time, many service providers are working to redefine bundled offerings to meet changing household preferences as they increasingly opt for add-on services rather than traditional cable TV packages. Service providers are looking at security and other smart home solutions as offerings to bundle with broadband services, and multi-dwelling units (MDUs) are a prime market for introducing these value propositions to a broad audience, creating a loyal customer base for the industry.
How smart home solutions can increase rents and improve ROI
While OPEX savings are significant, ILM managers and owners are installing smart home solutions to increase revenue, which translates into higher rents. In fact, demand for smart home solutions is strong among tenants. According to a recent National Apartment Association (NAA) survey, 84% of apartment residents who do not have smart home technologies would like to see these solutions deployed in their communities.
Consumers have embraced these mainstream technologies and view the amenities they offer as an essential feature, without concern for cost. Tenants are willing to pay higher rents, ranging from 10% to 30%, to benefit from the presence of smart home devices in the property. Managers and landlords have similar expectations about the costs they can recoup for adding the technology - According to 85% of respondents, smart home devices result in a rent increase of between 10 and 30 percent. Managers and owners can benefit from increased revenue from these new rental rates while providing added value to consumers.
According to a 2020 study by the Joint Center for Housing Studies at Harvard University, while the total number of renters in the United States is beginning to stagnate, the number of high-income renters continues to rise as many new developments target the upper end of this market. We can expect this data to be similar in major Canadian cities. Smart home solutions are seen as essential amenities for high-end ILMs, with residents willing to pay a premium for these connected apartments.