There’s a new battle in multifamily real estate and, no, it’s not about amenities. This new battle is the old favorite, location, and the new favorite, technology. At first glance, these two characteristics of buildings, where they are and what technology they utilize within, shouldn’t be at odds. However, the best locations are widely already occupied and with large, older buildings. The easiest buildings for technology to integrate into are those that are not yet built so that tech can be designed as a part of every nook and cranny. Do today’s renters have to choose between where they want to live and how they want to live?
Some of the most desirable locations within urban areas are in buildings much older than the residents moving in. These buildings have unique architectural features, character that cannot be replicated, structural integrity that would cost too much to construct today, sometimes the honor of hosting historic events, and they have all been upgraded to some extent or another. Whether it’s to meet new legislative or energy requirements or simply to offer what tenants want, these buildings have, can, and will continue to be modified.
Unless the investment outweighs the rewards, these older buildings will sit on desirable pieces of land downtown, near public transportation and employment opportunities, and entertainment outlets. These environments cannot be replicated outside of the city limits and these older buildings have always had the upper hand due to where their foundations lie. According to design and sustainability experts, few buildings can’t be transformed into high-performing structures.
Today’s renters are born and raised connected to the outside world. Convenience and instant gratification is not only expected but it’s required in order for something to be a success, whether it’s an app in beta testing, a shopping experience online, or the place one lives. These renters want to be connected to everything in real time and that includes entry into a building or access to other people, places, or equipment within it. They want everything to be done online, from payments to reservations to parking, and because they know that it can be done, places that aren’t able to support these modern methods are simply unappealing.
So, there is the issue. Old buildings are where renters want to be but don’t usually have the modern experience that they want. What’s more important these days? Some would say with the popularity of remote work, that location doesn’t have as much value for real estate as it once did. Today, people can live wherever they want and still have access to valuable employment. However, the data doesn’t really support that idea as New York is growing two times faster than in 2019, according to data from Unacast. In general, people are staying in or coming back to cities and looking for a modern experience in these existing older buildings.
This is a chance for existing building owners and landlords to upgrade their spaces to attract and retain new tenants. After many, many months of uncertainty, the people who truly want to be in the city are looking for four walls and a place to sleep. These same people want a modern experience. A building can install and integrate all types of technology but just because a building has tech available doesn’t mean that it creates a desirable or seamless experience. This characteristic is where old buildings have the chance to outshine any new construction.
The modern resident experience isn’t easily created. It’s often the result of many separate pieces of technology that offer a solution ranging from building access, visitor management, or package delivery to indoor climate control, room reservation, or service booking. Buildings that can connect these various features into a seamless experience for the user become the most advanced structures available, regardless of when the first brick was laid. “Multifamily amenity innovation is critical to the success and competitive advantage of apartment properties,” said Brian McAuliffe, President, CBRE Capital Markets. “It’s not enough to offer rooftop grilling areas or dog runs; owners and developers must think carefully about amenities and services that work together to create a cohesive community.”
The necessary hardware and software combination to make these experiences possible is not beyond the reach of existing, older buildings, and data for the payback of investment exists. According to a Schlage and Wakefield Research survey of 1,000 U.S. multifamily renters, 75 percent were in favor of a rent increase for upgraded home technology and 57 percent were happy to increase monthly rent by at least $20 to have tech-related amenities. The survey also found 86 percent of millennials were willing to pay 20 percent more for a smart apartment and 55 percent of Gen Ys would pay more for a smart locked unit.
Some may argue that technology-empowered elements of a place are amenities but they’re truly parts of an experience. Individually these services could be considered an amenity but together, they create a feeling of home, security, and modernization from the moment someone enters the building’s door and throughout their time inside their unit. Based on qualities like location, structural integrity, and even nostalgic reminders, older buildings can capitalize on the opportunity to modernize the experience within their walls. While it may seem easier to start fresh and build fancy features into the ground level of a building, you can’t beat the modernized original.