Going beyond proptech, owner-operators are upgrading resident-facing systems and devices.
The pandemic helped usher in virtual tours, contactless leasing and software galore, but emerging technology and a flood of federal funding is changing the multifamily game again. Outdoor televisions, apps that control elevator access and faster internet speeds are complemented by roof mounted solar arrays partially funded by the Inflation Reduction Act.
Savvy owner-operators are staying one step ahead of the competition by deploying gadgets and systems across a variety of fronts. “Morgan Properties invests in technology across the board,” said a company spokesperson. “From multi-gig speed internet, keyless door access, smart thermostats, level two EV charging and even micro-markets to provide high-end vending options for our residents.”
Morgan sometimes leverages local partnerships to get the deal done. “We recently added high-speed internet at an apartment community in Valparaiso, Indiana,” said the spokesperson. “Due to its location near a large golf course with no nearby wiring, our residents were utilizing an antiquated internet system. We were able to work together with the service provider and the city to bring in fiber optic wiring from two miles away and offer multi-gig internet.”
Smart TVs and Thermometers
Venues for viewing all that high-speed content are moving outdoors. “We have a student housing property in Gainesville, Florida, where we installed a jumbotron TV at the luxury pool lounge area and utilize keyless fob entry for all community and amenity spaces,” said Jennifer Friend, Director of Property Management, Jacobson Equities. “Students are particularly amenity sensitive renters.”
Jacobson and Pierce Education Properties are both using internet-enabled locker systems, digital doorman for service requests and electronic rent payment options in their student housing communities. Pierce is also tinkering with smart thermostats. “We’ve recently upgraded one of our communities with smart thermostats, enhancing resident comfort and reducing our utility costs, as these devices optimize heating and cooling based on resident routines,” said KrisAnn Baker Kizer, VP, Leasing and Marketing, Pierce Education Properties.
Deciding on which tech offerings to feature is a function of resident requests and trying to keep up with the competition. “We survey our residents on a regular basis to see what we can offer them in terms of new services, technologies or upgrades,” said Kizer.
Rise of EVs
The Biden Administration is encouraging the switch to electric vehicles through tax credits as it seeks to have EVs make up at least 50% of new car sales by 2030. To keep those EVs rolling, it aspires to build a national network of 500,000 electric vehicle chargers. Multifamily owner-operators understand what is at stake for communities across the nation.
“Bell Partners is in the final stages of contract negotiations with a nationwide provider of EV chargers,” said Cindy Clare, COO at Bell Partners. “This partnership will enable us to expand and expedite the installation of EV chargers across our portfolio.”
Bell has identified charging stations as a key amenity, right up there with fitness rooms and swimming pools. The possibility of generating ancillary income derived from chargers remains a question mark but Bell believes the writing is on the wall.
“EV charging will provide a competitive advantage among prospective renters who drive electric vehicles in the short run,” said Clare. “In the long run, having reliable and readily available EV charging will be a necessity.” The federal government is also having a major effect on upgrading the technology of multifamily HVAC systems and putting solar power in play.
A Gusher of Money
The Inflation Reduction Act is spurring a move toward heat pump and roof-mounted photovoltaic solar arrays—even in multifamily. Affordable housing communities are the biggest potential benefactor of the programs and are forging ahead.
According to the National Housing & Rehabilitation Association, the legislation provides $9 billion in funding from the Department of Energy to the states for switching to high efficiency electric home heating systems and water heaters via a rebate plan. Multifamily affordable housing qualifies for double the rebate as compared to market-rate properties.
The Environmental Protection Agency is sitting on $27 billion targeted at nonprofits, housing finance agencies and community development groups to provide loans for carbon reduction projects. Another $8 billion is going to states, local governments, community-based organizations and nonprofits for emission reductions.
The Solar Investment Tax Credit has been boosted to 30% with bonus credits that could increase the rate for multifamily projects to 50%.
Rise of the Heat Pump
Uncle Sam loves heat pumps as they create heating and cooling without burning any fuel inside the units. The Hudson Valley Property Group (HVPG) owns and operates affordable housing communities in seven states. The firm is tapping into the stream of federal funds to cut heating bills at their Jackson Terrace property in Yonkers, N.Y., by installing next generation radiators.
Per their statement, “This smart radiator cover allows [residents] to regulate temperatures within their units and provides ownership with a reduction of heating costs. We’ve seen a 7% savings using a degree day metric. This product is eligible for utility rebates and IRA investment tax credits.”
HVPG is also running a pilot program on toilet leak sensors in another New York-based community that purports to save between 15% to 30% on owner-paid water bills. Initial estimates indicate that return on investment is less than 18 months.
The big news from Hudson Valley is their moves into solar power. Per their statement, “HVPG has participated in the installation of solar panels at multiple locations utilizing owned, leased and community based solar opportunities. Solar has allowed for HVPG to reduce the reliance upon the grid to power HVPG properties without negatively impacting residents.”
Going Solar
Using tax credits to add solar systems into affordable and market-rate communities is happening in several locations including Washington, D.C. “We don’t have a lot of land to build solar farms or to build a solar community,” said Jean Nelson-Houpert, interim-CEO, CFO, DC Green Bank. To compensate for the lack of cheap land, the bank joined a project that is focused on building carports in multifamily communities equipped with PV panels on the roof.
The bank provided $3.75 million to the capital stack belonging to Enterprise Community Partners, a nonprofit developer working on installing 2.2 megawatts of solar panels at four affordable housing properties in D.C., an investment of $12.4 million.
Multifamily owner-operators interested in adding solar as a way to cut electricity usage and attract residents enamored with lowering their carbon footprint have until recently been stymied by the conundrum of dividing up electricity usage and panel placement amongst individual units.
Taurus Investment Holdings, a Boston-based private equity real estate firm, is exploring the possibilities of “greening” multifamily through technology by setting up Renu Communities, a subsidiary that specializes in decarbonization techniques. Renu has also been swapping out electric furnaces and outdated AC systems with heat pumps while also dabbling with solar on selected projects.
The two firms have teamed up with an Australia-based energy company, which has pioneered a system that makes multifamily solar more feasible. “You no longer have to worry about shading on one set of panels or another, you can build one array and evenly distribute the power amongst multiple apartments,” said Adam Clark, Director of Asset Management, Taurus Investment Holdings.
The system works relatively the same as a PV system on a house. The panels produce electricity that is funneled into the unit. During times when the panels are producing more power than the home needs, the excess power can be sent onto the grid in exchange for credits from the utility providers. During the times when the sun isn’t shining, the home draws power from the grid.
Monetizing tech upgrades is still a work in progress. Competition, the need to stay current and reducing maintenance headaches are the driving forces. “New equipment reduces the need to repair and/or replace amenities throughout the property, which diminishes the burden on managers and their staff,” said Allen Aldridge, Senior Vice President/Co-Director, Asset Management, KBS. “In addition, these upgrades enhance residents’ lifestyles—increasing their satisfaction levels and lowering turnover rates—and help to attract new residents to the property.”
Scott Sowers is a frequent contributor to units.