Stumbling Blocks
Lifestyle technologies must overcome obstacles to achieve widespread adoption. As cool as a combination portable wireless concierge-TiVo player sounds, there are some formidable obstacles to widespread adoption–namely cost, awareness, and the technical capabilities.
But Chris Acker, director of ancillary services at Cleveland-based Forest City Residential Management, notes that even in the apartment market, where rents have been considerably more modest than the sales in the high-flying condo market, multifamily companies are investing heavily in high-tech infrastructure. They’re laying infrastructure, forging agreements with service providers, and buying plasma screens and handheld devices.
Of course, this all costs money, and many multifamily firms are still uncertain about the returns they will get on these investments. “The management companies are still expected to sell these amenities, just like any other,” says Tara Thomason, a market intelligence consultant at the Tara Thomason Co. in Austin, Texas. “It is ultimately their responsibility to get the rents and fees up high enough to cover costs.” That can be a hard sell at many apartment properties, after the economic woes and stumbling job markets of the last few years.
Others have tried a more hybrid approach. At Colonial’s Lauderdale by the Sea, “we provide [the concierge service] as part of the basic agreement with buyers,” John Deinhardt says. But if residents want expanded offerings, they pay the extra fees directly to the service providers. This is similar to the model that property owners use for introducing fiber to residents, notes Thomason.
When it comes to selling lifestyle technologies, though, properties can encounter difficulty, in part because the technology is just so new. “I don’t think people can imagine what it will be like until they have it,” says Dan Kodsi.
Thomason concurs. “I think there is still a lot of educating left to be done on this front. Most residents have no idea what is possible in the realm of anything other than Internet access when it comes to fiber,” she says. “Unfortunately for the builders, developers, owners, and managers of [multifamily properties] as well as the broadband providers, marketing will need to focus on educating and getting the word out to potential and existing residents regarding security upgrades, smart appliances, and even wireless capabilities within the home. … Until people know what is possible and available, they are not going to pay for it.”
Others believe there must be a fundamental shift in the attitude and business practices of property owners before high-tech amenities are adopted. Lenders tend to “look at the balance sheet and cash flow every month,” says Richard Holtz, president of Infinisys, a low-voltage design firm based in Daytona, Fla., that brings technology-based solutions to multifamily properties, planned development communities, commercial buildings, and student housing. “But [properties] are building today not for next year; they’re building for 20 years from now. You can’t keep an infrastructure that will be obsolete.”