Higher property management costs at multifamily properties could persist for a while as people continue to work from home, but technology can help mitigate the increase.
Due to an increased number of people staying at home since lockdowns began in March, electricity and water usage at apartment rental buildings has skyrocketed. However, by adopting smart building tools, both multifamily building owners and tenants can achieve savings on utilities. In fact, smart building technology is now shifting from a nice-to-have amenity to must-have with immediate benefits.
NREI spoke with Felicite Moorman, CEO and co-founder of STRATIS IoT, an Internet of Things platform for the management of multifamily and student housing properties, to discuss how technology can be utilized in multifamily buildings to reduce energy and waste management costs that have escalated as a result of COVID-19.
This Q&A has been edited for style, length and clarity.
NREI: What are the apartment building expenses that have gone up the most since the pandemic and lockdowns began? By how much have they gone up?
Felicite Moorman: You see property owner and manager costs going up across the board. Energy costs are increasing if they are all-inclusive. We also do student housing, where a lot of times they are not metered per student, but rather they are metered as a whole building and then paid through the whole building. So, when we see that, the savings that are possible are possible directly through that owner. Water is a unique billable feature because sometimes that isn’t included, sometimes that’s simply the owner’s responsibility, depending on the age of the building. So, we’re seeing water [usage] increase. Now, there is something else people don’t think about, that’s maintenance. So, the maintenance of these buildings, when they’re being used, when all of the people are staying in their apartments all of the time, things like toilet flaps inevitably wear out faster. There’s something called planned obsolescence, where manufacturers traditionally plan for these devices to fail so that they can sell them again. So, if you see any of those devices that are used that frequently fail faster, that has a tremendous impact on water usage when those flaps aren’t working like they are supposed to. So, that’s just one example of an expense increasing that can be managed through the IoT.
NREI: What kinds of inquiries have you seen from apartment building owners and managers? What are some of the things they are most concerned about in terms of operations?
Felicite Moorman: Getting people to lease their units. If you have a new apartment building going up, you’re really concerned about whether or not people are going to come to your apartments to look at them. So, we’ve seen a lot of advertising around the technologies that enable that, self-touring primarily. Those who already have their buildings up and running and have leased up, are really focused on how they can improve their operating efficiencies, how they can change their amenities to offer more to their residents, despite the fact that we have social distancing. So, for instance, occupancy sensors, how many people are in the gym? How many should be in the gym? Those technologies that enable the safety of their residents and the operating efficiencies of their buildings are huge drivers right now.
NREI: Discuss your technology and how it’s being used in multifamily buildings to reduce energy and waste costs as a result of COVID-19?
Felicite Moorman: STRATIS in particular does access to door locks, energy management and control and also water management control. So, think about labor reduction of costs and resource reduction of costs from a utility perspective. Whether it’s electric or water, our goal and our job is to pay for ourselves by managing and controlling smart devices.
NREI: Why is this important and what are some of the benefits building owners and property managers can reap as a result?
Felicite Moorman: So, we’re seeing some pretty tremendous benefits. For example, when you use a smart thermostat, a lot of times owners think that the only benefit is going to be for the resident, which there is certainly a benefit for a resident in using a smart thermostat wisely. But we’re also seeing about 50 percent average savings on vacant units for the owners when they have lease-up, so before they’re fully occupied or even when they’re just transitioning or turning their units to new residents. That 50 percent savings is saving sometimes $30 to $40 a month. So, it could be pretty substantial for vacancies during lease-ups. So, for new properties, it’s kind of a no-brainer, just pick a smart thermostat with a supporting platform instead of a traditional thermostat.
We also see, and this is great news for owners, a huge trend right now for residents to prefer green buildings. So, we see more than 50 percent of residents pay as much as $100 a month or more to live in a green building and know that they are contributing to a reduction of their own carbon footprint. And that’s new information, that’s a new trend in multifamily, so that’s pretty exciting. When it comes to water, there is a tremendous number of meters that aren’t metering correctly right now. So, that means the residents could be being over-billed or the property could have leaks that the owner doesn’t know about because of faulty meters. So, another thing that we focus on is water management control and determining whether or not meters are accurate and frankly, active. So, there are a lot of opportunities there to save again for both residents and, also, the owner. That’s sometimes a reduction of as much as 88 cents a square foot for water management control. That’s pretty tremendous immediate benefits, you don’t have to wait for that. There is an immediate return on investment. Obviously, during this time our buildings are looking for those efficiencies in order to save money.
NREI: Have you seen increased inquiries into these types of technology in the multifamily sector since the pandemic started? Have downloads of the app increased?
Felicite Moorman: Residents are spending more time in their homes obviously and, because of that, more residents are downloading the mobile applications to make their lives easier. More residents are focused on their energy costs at home than before. So, that means for us, that those mobile downloads are increasing dramatically because residents have that time to figure out their systems. More importantly, I think, we’re seeing an increase in property owners and managers taking the time, because many of them have it now, to educate themselves as to the real value of IoT. When the economy is booming and everybody is pretty much doing well, the focus [is] on what’s sexy. But now, the focus is on what’s going to save money. And that’s where we really become valuable and not just a bonus. Another thing that is hugely important right now is self-touring or self-guided tours. We are obviously social distancing when we go out to properties, but a lot of our properties are keeping their leasing staff at home and their leasing staff is giving a tour while these perspective residents basically escort themselves through the house or apartment. That’s very different then before, when you would have a leasing agent walk you through the building. The alternative, of course, is a leasing agent who is walking somebody through the building, but via phone. So, these technologies are more and more important as we find new ways to find our home.
NREI: How much does it cost to implement this technology at a building?
Felicite Moorman: It can vary widely. We have companies that put in the same technologies that you put in a 10,000-square-foot home, a mansion, really expensive systems. But we also support public housing, affordable, low income and modular. So, you can go all the way to mansions and penthouses, or you can do something that is very cost-effective that will have a very rapid return on investment from an efficiency standpoint. So, we see these options of Google Nest, we see the adoption of Lutron and some of our higher class properties, but we also see the adoption of traditional smart thermostats with simpler networks. So, there is something for everybody, there is a [higher] price point or budget, no matter what your goal is.
NREI: In how many buildings has the technology been implemented? Have you encountered any challenges with adaptation?
Felicite Moorman: Now it’s easier to get someone on the phone, which maybe seems counterproductive or counterintuitive. But when the economy was booming and apartments were filling up overnight, people did not slow down and take the time to understand what technologies were available. Now, people are taking the time to really understand the system and the value, and that’s increasing our business substantially. So, now our job is to explain and educate from afar, because obviously we're not going down and sitting down in sales meetings, we’re all Zooming or calling. And also, to install our technology safely, … so just following all the CDC guidelines for effective and safe construction. It’s a part of our life now.
NREI: Any other trends that you evolving around technology for multifamily properties?
Felicite Moorman: Definitely, the on-demand economy, if there was an on-demand economy before quarantine, since quarantine, it has gotten so much more challenging, and package management has been a problem for five years in multifamily. Now that everything is delivered, everything is brought to you, how do you get people through your buildings again [while maintaining] social distance, without a doorman in a lot of these places? So, electronic access used to be a driver, but now those early adopters are really seeing the payoff because you can get the delivery person through your buildings, whether they’re delivering dog food, people food or dry cleaning, a mobile credential could get them all the way through your building without you having to see or talk to anyone. So, that on-demand economy is still driving tremendous adoption, that and the operating efficiencies are the two really big trends if you include self-touring in the on-demand piece. And, if you did not have good WiFi in your building, you have definitely heard it by now. So, we’re seeing a pretty tremendous pickup and requests for good WiFi. If it was important before, it’s the most important thing now.