How Do Smart Homes & Smart Technology Impact the Rental Market?
We are currently living in a world with smartphones, smart cars, smart televisions and now, smart homes. Even though the smart home industry is still developing, people are actually adopting this technology more rapidly than originally imagined. In fact, we are already seeing the next step in this evolution: smart apartments.
Market Creation
Millennials are now the largest living generation, surpassing baby boomers for the first time. They’ve grown up with constant access to and integration with information technology, and as they enter the home buyer market, they’ve brought their proclivity for “smart tech” with them. According to a study from Wakefield Research, 86% of Millennials would pay (about 20%) more for a rental unit with smart technology. 44% would even sacrifice a parking spot for smart features in their apartment. And notably, homeownership across all age groups is simultaneously on the decline, falling to an all-time low of 62.9%.
What’s more, a new generation – Gen-Z – has now entered the rental marketplace. Gen-Z grew up with even greater technological integration than Millennials, and many have never lived without smart technology. In a few short years, many members of this generation will have the ability to afford higher-tech rentals, too.
So this is what we know: there are mass amounts of Americans who are willing to pay a significant price for a home with integrated smart technology, but don’t own a home. As an apartment or rental home owner, this represents a significant opportunity. Upgrading your buildings with smart features will make your rentals more appealing to this new generation of renters and give you a competitive edge.
Convenient for Your Tenants and You
“Smart homes” are already moving into the mainstream with the market currently worth $62.69 billion and expected to grow 27% by 2030. But the reasons to implement smart technology into your units go beyond the fact that everyone is doing it. As a landlord or property manager, you know that time wasted is money lost. Smart technology offers significant convenience as a manager as well. Being able to control the temperature of your building, monitor your security cameras, and control the lights all from a dashboard on your smartphone increases the efficiency of your managing skills while also saving you and your tenants money.
Imagine this: you just had the longest day of your life. As you are just about to take a sip of an ice-cold beer and watch the game, you get a call from your tenant. They’ve locked themselves out and don’t have another key. What do you do? Well, if your unit was equipped with a smart lock, then all you would do is take out your smartphone and click “unlock.” Smart locks offer landlords the ability to unlock doors from anywhere with just a few clicks. This 24/7 availability is a time saver for both landlord and tenant.
Smart Savings
From a tenant’s perspective, living in an apartment with smart technology offers countless benefits. Adjusting your thermostat from your smartphone has been reported to save you 10%-12% on heating and 10% on cooling. Adjusting your lights via smartphone has shown savings too. These savings can be the same for landlords. Adjusting the buildings temperature from your home or having lights that know precisely when the sun is going to set and rise will keep the overhead on your building low and save you money in the long run.
Smart Security
When it comes to choosing an apartment, feeling safe is a priority for most renters. In fact, 63% of tenants move out of their apartments due to a lack of security. In the past, security has meant a lock and key, electronic code, or buzz mechanism. With smart security cameras, your tenant will actually be notified when their guest arrives. Simply tapping “unlock” on their smartphone easily grants the tenants guest access to the building. As a landlord, keeping your buildings and tenants safe is extremely important. Having the ability to monitor your properties from your phone increases the security of your building.
Where to Start
Coldwell Banker’s Smart Home Marketplace Survey indicates that temperature control and security are two of the most appealing features for tenants. However, installing a security system or a smart HVAC system is a pretty large project. If you are new to the smart apartment game, we suggest starting small. Smart lighting and locks are usually enough to make a drastic impact, and they can be installed relatively quickly.
Wrapping Up
When it comes to smart home technology, the approach you should ultimately take depends on your market and the demographics of your tenants. Some landlords or property managers will decide to upgrade only a quarter of their units first. This provides the tenants the option to live with or without these features. On the other hand, there are landlords who want to get ahead of the curve and put these smart features into every unit.
Regardless of where you start, smart home technology is a wise investment for landlords. Tapping into this market will help your properties become noticed by the largest generation while also enhancing your operational efficiency.
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