Smart apartments should be a primary focus for investors and property managers. Smart devices can enhance ROI, reduce expenses, lower interest rates on loans, and reduce tenant churn, among other advantages.
Apartment life is changing, and COVID-19 has accelerated these deviations from the norm. More than ever, property managers are using the Internet of Things (IoT) to improve operational efficiencies, generate new sources of income, and reduce expenses. Meanwhile, the tenant experience is being enhanced through connected devices, unified access control, and frictionless interactions with property staff.
Nearly 1 million smart apartments in 2020
The US had 928,000 smart apartments in 2020, an increase of 1,460% relative to 2017, according to the latest Multifamily Smart Home Report – 2021 Analysis from Omdia. This means that about 4% of all apartments in the US in 2020 had connected devices installed. By 2025, Omdia predicts 42% of all apartments in the US will have connected devices.
Meanwhile, 3.4% of multifamily (rented) apartments globally will have connected devices. Omdia also predicts global hosting services and hardware revenue for smart resident units will generate more than $9.5 billion in annual revenue in 2025.
Pandemic-accelerated apartment trends
COVID-19 had a moderate impact on the smart apartment market in 2020. For example, the pandemic prompted many property managers to expedite plans to implement connected technology within their properties. Perhaps the most profound impact has been with self-guided tours. By embracing smart locks, chatbots, and other touchless experiences, apartments are reconsidering past strategies.
Although smart door locks and thermostats for apartments are becoming standard, this is just the tip of the iceberg. Through a complete ecosystem of connected devices, from heating, ventilating, and air conditioning (HVAC) to security, occupancy sensors, and building management systems (BMS), property managers are being presented with tools that allow them to become proactive rather than reactive to everyday tasks.
Remaining idle will be a risk
The US has about 23 million apartments housing about 40 million people. Adding connectivity to these buildings can solve countless problems, from affordable housing shortages and remote working to climate change and sustainability.
While the concept of a smart apartment is still new, investors and property managers cannot afford to remain idle. Even if the benefits of connected solutions aren’t enticing enough for key stakeholders, the risk of being a casualty of change is high because, for properties located in major metro areas, there is a good chance that a competing property is already in talks to incorporate the IoT into their complex.
Smart Home Devices Database – Update 1 Analysis (February 2021)
Smart Speakers Market Tracker – 1Q21 Analysis (April 2021)
Blake Kozak, Senior Principal Analyst, Smart Home