A growing reluctance among millennials to plant roots in home ownership and skilled job-seekers looking to be more agile and flexible as they chase opportunities combined to make last year was one of the healthiest in history for the multifamily housing market.
Latch, the leader in smart access systems, took advantage of this unique moment in time to convene a remarkable panel of industry innovators. In the ensuing conversation, these leading figures discussed where the industry was and where it was heading. Their key insights, recounted below, will serve to guide us now at the start of 2019:
Technology “Changes Everything”
Dan Bythewood, president and managing partner of La Cité Development, LLC immediately took to task the idea of real estate being an immutable hard asset. “I think that everyone is changing their perspective on real estate from a historically and traditionally based housing and/or development model,” observed Bythewood, “It was sticks and bricks. It was relatively simple. Until now.” Alluding to Latch’s technology benefit, which, by allowing secure access to services like package delivery and housekeeping, basically turns a door lock into a concierge service, Bythewood continued discussing how good tech is helping to transform real estate, “We’re the first generation of people that have so much that is going on in terms of technology. That changes everything.”
The “Temporary Hotel” And Other Found Revenue Possibilities
For CEO of WhyHotel Jason Fudin, it started with WeWork—the shared workspace provider that offers flexible sub-leases to small businesses and individuals. “Everyone in the institutional real estate business watched WeWork, a company that owns no real estate, take a huge amount of business.” While at Vornado Realty, Fudin started developing a similar model for the multi-housing market. “We built the concept under Vornado,” explained Fudin, “and then spun it out as an independent venture-backed company.” The result was WhyHotel, a turnkey popup hotel operating within residential new-builds. “When someone builds a high-rise rental apartment building, it’s delivered vacant and takes at least 24 months to fill up.” While it’s filling up, “we take half that building (100-plus units) before it delivers, furnish the units, have an on-site 24/7 team and run that vacancy as a temporary hotel. It’s found money.” Meanwhile, Brookfield is approaching the same concept through Niido, an AirBnb-style model. “We are buying communities in partnership with Niido,” said Matt Smith, Managing Director, Brookfield Property Partners. “Our feeling is AirBnb is here to stay.”
Cool Ideas Are Not Enough
To drive this point home, Smith painfully recalled the original iPad Docking System, a piece of tech that was supposed to revolutionize the common area space. ”Everybody’s going to want to bring their phones and their iPad and use them in the amenity area to power the music systems,” said Smith, “Except no one wanted to. You can go to dozens and dozens of apartment communities and you’re going to see outdated docks that were probably never used. That scares me. It scares me to get things that are going to be immediately outdated.” Bythewood adds, “’Bad tech’ is just random ideas that don’t pan out. It might be a cool idea but it doesn’t mean it creates more NOI value inside the building or a better experience for individuals.”
A Customizable Experience Increases Occupant Comfort
According to Derek Banta, director of global innovation at UPS, “UPS is looking into the IOT space and one of the things about it is ‘go at your own pace.’ So with this idea, in-unit delivery or in-home delivery of packages can go with whatever somebody’s comfortable with. This connected world enables customers and consumers to get packages on their terms and their space.” Unlike the UPS pushing your neighbor’s buzzer, “Drivers may know that someone is home in 4B, buzz and say, ‘Hey, UPS. Can you buzz me in?’ We look at that from the operational efficiency perspective and see how Latch can improve that. If, for example, the driver has the code when he walks up, that’s a much faster experience and a better consumer experience.”
Your Building Has the Potential to Make Its Occupants More Successful
Smith said that Brookfield is working with tech concierge service providers that connect its residents with local services to run errands, making lives easier for very busy people. Steve Davis is Executive Vice President of Strategic Development for Valet Living, a service company that takes out trash, walks dogs, and cleans apartments. “We hire 8,000 people a year,” he said, “mostly part-time.” It’s a 25-year-old company that got started during MLB’s spring training season, collecting trash for after a New York Yankees and Tampa Bay Rays exhibition. Recently the company started working from an app. “Easy to order, easy to manage,” said Davis. Concierge service has tangible benefits, La Cité’s Bythewood is intrigued by the butterfly effect such an amenity—and technology in general—can have on a resident’s future success. For example, for those staying longer at work to position themselves for a bonus, he said, “Latch allows people to stay in their office, call Amazon, go through Whole Foods to deliver perishables into your refrigerator, because our property management people will be there.”
Good Partnerships Are Still the Lifeblood of Success
“One thing we have found,” said Corey Metzman, director of partnerships at Latch, “is the number of stakeholders and the complexity between the owner, the operator, the resident, guests coming in and out, service providers like UPS, and the fact that all of those components have to relate, is incredibly difficult.” When these components do come together, such as the partnerships that Latch has formed with companies like Brookfield, La Cité, WhyHotel, UPS and more, it goes beyond the immediate need. “We have a venture arm that is trying to invest hundreds of millions of dollars in technology startups,” noted Brookfield’s Smith. “They only look at companies that one of our business lines wants to do business with.”
In summary, Latch’s Metzman noted that service-based amenities are transforming apartments from mere shelters into partners, ones that actually foster their residents’ success. Additionally, multi-housing creates an opportunity to expand concierge services and labor-based amenities. These will continue to evolve and become more and more vital as this year progresses. Because when occupants feel comfortable and services are able to quickly and efficiently address their needs, you get more than just a multifamily building.
You get a community.