Multifamily cycles traditionally have been measured by a baseball game’s progress. The maturation of a cycle – when markets are about to top out amid a setting sun – is typically compared to the eighth or ninth inning. Conversely, the start of the cycle is like the fresh cut grass on the diamond, a smoothed infield and the renewed start of the first inning.
The state of technology is another ballgame. The sizzling fast, changing pace of technology is on a beeline to extra innings rather than facing the third and final out. With the continuum of technology, every inning now looks like a new ballgame.
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Not surprising, technology is reshaping businesses and the way we do every day things. Its presence casts new light on everything within a broad swath, and it satisfies and frustrates in the same breath. Its limitlessness is mind-boggling and sometimes can’t be contained, at least immediately, yet its allure harbors new opportunity for a better way.
Technology’s power seems immeasurable. The speed of computing, the amount of data and network bandwidth available, doubles every year or two as it keeps reaching new heights. What are the implications of such a fast-paced change of technology for real estate assets that last 50 years?
No question, technology is impacting the business world, multifamily included. Recent studies have shown that the life expectancy of S&P 500 companies is shrinking because many are too slow to adopt the new order. The old guard is slowly moving off the leader board - Amazon, Google, Apple and Microsoft - who are driving innovation, are setting up residency.
Real estate transformed with smart spaces
In real estate, tens of billions of capital dollars are being invested in the Proptech space, one that is anchored by a handful of market-based technologies. These technologies are creating smart homes, more efficiencies in construction, reshaping financial transactions and helping to drive the collaborative economy.
Consumers are the natural disruptor because they use technology differently. Millennials grew up on technology and Gen Z, right behind them, is cutting its teeth with automation and imagery. Half of today’s workforce is comprised of Millennials and that’s expected to grow 25 percent in the next few years.
Today, five technology trends that have long-lasting potential are redefining multifamily. The renter and operator experiences are transforming through immersive experiences, artificial intelligence, smart spaces, the shared economy and one of the newest disruptors, blockchain.
Let’s take a closer look at how they are impacting the rental housing space and what appears on the horizon:
1. Immersive Experience
In recent years, immersive experiences have been created in multifamily and commercial spaces. Prospective residents are experiencing 3D walkthroughs of apartments and offices without ever setting foot in the space. Augmented and virtual reality are enabling more personal experiences and is expected to take this concept to new levels. The future holds an interactive experience that enables the prospect, for example, to hold up his or her cell phone to an area of the property and see amenity details and pricing or how furniture styles look in the space.
2. Artificial Intelligence
Going well beyond Alexa, artificial intelligence is making a big leap through identity verification. It’s already popping up at airports in the security line, where facial recognition kiosks are confirming passenger identities quicker than a TSA agent can check mark a boarding pass. For multifamily, facial recognition can be used to verify guests or service personal coming on and going off the property. AI is already being used in the screening space. Also, automated conversational interfaces like Alexa and Google Home are poised to be everyday personal business assistants for property management operators.
3. Smart Spaces
With billions of devices now IOT-enabled, more will start happening with smart spaces. This technology has more potential than just turning on lights, locking doors and opening blinds with the touch of a cell phone. Access control in multifamily is fast becoming the next space, enabling residents to book (and pay for) clubhouses, amenity spaces, services and other features. An automated system for access control should interact with the property management system. Through customization and personalized of amenities and personal preferences, property management companies can grow ancillary revenue through things like internet access, greater security control, access points and other features.
4. Shared Economy
The shared economy concept, which is expected to accelerate over the next few years, is allowing multifamily to optimize revenue per square foot through flexible spaces. Many in the industry are discussing the potential for converting spaces to short-term rentals using technology platforms that are already well-situated in the rental arena. A driver is the gig economy, which is powered by younger workers who work from home and desire shared work spaces just a few steps outside of their apartment door. Apartments now offer space where residents can work, hold meetings and collaborate. It’s another ancillary revenue opportunity for property managers.
Blockchain is a disruptive technology that tackles every day complex problems through instantaneous and verifiable recording of transactions. It is the record-keeping technology behind the cryptocurrency Bitcoin. With blockchain, once information is stored it’s stored forever and fully accessible much faster than traditional methods. This will speed buying and leasing processes, as well as others. Blockchain will certainly affect how residents pay rent or purchase services at your property. This trend perhaps has the most potential to be a game-changing disruptor.
Smart spaces and share economy are just brief examples of how technology is changing the way we do business and dictate future success.
One thing is certain, like death and taxes. Technologies are changing, and we have two choices: We can be afraid of it or embrace it.
Article by Alok Tyagi, Chief Technology Officer, RealPage, Inc.