One unique market for smart space solutions is that of smart apartments and MDUs. Smart apartments feature smart amenities for residents, community management solutions, and building automation solutions. These solutions are growing in popularity among MDU property managers and owners in the US and Europe. In Europe, this is noted by investments in property management software, such as Plentific, which raised $100M in funding from Brookfield Asset Management, Highland Europe, and Target Global, among others. Also recently a property technology (proptech) firm based in London, Lavanda, was funded $7.25M.

• 34% of MDU property managers in the US reported offering internet-connected or smart home devices to residents in at least one property that they manage.
• 57% of MDU managers report having a lighting control system in their largest property; 26% have an energy management/monitoring system; and 13% have a smart home device or IoT platform/hub
• 44% of properties with energy management systems incorporate internet-connected devices such as smart thermostats and smart lighting into the system for remote monitoring and control

The use cases and deployments targeting the smart apartment space are similar to solutions targeting the hospitality space. However, there are unique factors in the MDU market that introduce additional complexities and challenges.

Dual Perspectives: Residents and. Property Managers

Many smart home solution vendors perceive MDUs as a potentially lucrative channel for new business, while traditional MDU technology vendors are making investments to rapidly expand their service offerings, including through acquisitions and IPOs. This market does have unique challenges, for in smart apartments, unlike in other verticals, solutions providers are serving two different clients – the property manager and the residents. The wants and needs of these groups may differ, as do the solutions that best serve them.

Property managers and owners that have installed smart home solutions report significant benefits from these solutions. The top benefits include increased rental revenues, improvements in operating efficiencies, and an increased ability to attract and retain residents.

Over a third of MDU residents are willing to pay an additional 15% per month in rent for smart amenities.

At present MDU owners and managers are less likely to note lower property insurance costs as a benefit, but this will likely increase as the market develops and matures. According to The Wall Street Journal, insurance premiums for apartment communities in the US rose by 33% in 2020 alone. Smart home platform providers can partner with more insurance companies to offer lower insurance premiums to property managers on the basis of the lower safety risks associated with smart home device implementation. This too will drive higher returns on smart home device investments for property managers and drive higher adoption rates for device and platform vendors.

Internet and Smart Home Technology as Emerging MDU Amenities

Parks Associates’ consumer surveys find that internet access is a top amenity for MDU residents, while smart home device offerings are emerging as a key differentiator for properties. An increasing percentage of properties – greenfield and brownfield – are looking to deploy new high-speed internet solutions paired with smart home and home automation products.

Reliable, high-speed broadband is now a must-have for MDU residents.

While the majority of MDU residents acquire broadband service for their units directly through providers via a retail service model, a growing number of properties offer managed high-speed internet access (HSIA) as an amenity. However, given recent FCC rulings on resident choice in MDU environments, MDUs are no longer able to enter into exclusive or graduated revenue-sharing agreements with ISPs and are no longer able to participate in sale-and-leaseback agreements. Vendors working to deploy IoT solutions into MDUs must be prepared to support a mix of deployment models, including multiple internet-service providers or even tenant-owned devices.

MDU residents making use of property-provided devices are keenly interested in use cases related to safety and security, as well as energy management. 43% of US MDU residents report using smart home devices, including a mix of property-provided devices and devices the resident purchased at retail. Consumers prefer to monitor and control their devices through a single user interface, and top solutions will support a BYOD approach.

As data security and privacy continue to be an important concern for smart home users, both apps and voice controls pose different pros and cons of use. Manufacturers desiring higher adoption are well advised to focus on privacy-focused policies, capabilities, and product design, particularly for camera-equipped devices.

• 60% of property managers report that they can monitor the data from smart home devices installed in individual units
• 38% also report that they can adjust any device at any time. Platform vendors providing smart home devices typically restrict these capabilities for property management companies in order to prevent the invasion of resident privacy and rights.

MDU residents are more likely than consumers living in single-family homes to own smart home products, with residential owners of units in condominiums or townhomes particularly likely to use smart home technologies. Over 42% of MDU unit owners report that their property pre-installed at least one smart home device. However, most renters, by contrast, have fewer BYOD and self-install options. MDU residents looking for a more complete smart home experience must select a unit with devices pre-installed, but just over 10% of renters living in MDUs report that they are currently living in a unit with a pre-installed, property-provided smart home device.

65% of MDU owners and property managers allow residents to self-install only approved devices.

Almost two-thirds of prospective MDU residents report that pre-installation of smart home devices is an important factor when selecting their new apartment. Over half of MDU renters are willing to pay extra for an apartment with smart capabilities and amenities, which would also include a system that allows them to add their own devices without limitations or needing approval.
Given the tech-positive tendencies of MDU households, there is considerable room for smart spaces solutions to grow in the MDU rental market.

This is an excerpt from research published in partnership with Technicolor. The #research whitepaper addresses the demand and growth of IoT edge solutions in smart buildings and smart spaces. It investigates top verticals and use cases such as smart apartments and MDUs, retail and warehousing, and hospitality and building management. It looks at common challenges and best practices in deploying solutions into these environments, examining new open solutions compatible with many different networking technologies. 

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