New multifamily construction is at a ten-year low. This slowdown is widely expected to last until 2027, given current market conditions – high financing costs, a worker shortage, potential tariffs impacting the cost of materials, among other barriers. At the same time, the market is increasingly competitive – a historic amount of new inventory hit the market in 2024, with more on the way in 2025 – some 1.5M new residential units across both years.

With the slowdown in construction – and new competitors coming online – owners and operators are looking to new areas to create enhanced value and justify rents. This includes optimizing their existing assets.

New Trends in Retrofitting PropTech

Retrofitting is gaining momentum in multifamily housing. While many companies deploying proptech and smart building solutions into multifamily properties report that new construction is the bulk of their projects, demand for retrofitting is soaring – especially for solutions that can be deployed in place without requiring additional renovations.

In fact, in Parks Associates’ 2024 study of multifamily owners and operators, nearly 90% reported plans on deploying, upgrading, or replacing tested smart building solutions in the next 12 months on at least one of the properties they owned or operated. Nearly three quarters report plans to upgrade an existing solution in a current property.

Plans on Purchasing, Upgrading, or Replacing Smart Building Solutions Within the Next Year

The reasons for this trend are multifactor:

  • The value of proptech and smart building solutions in improving operating efficiencies, reducing costs, and attracting and retaining residents is becoming increasingly well-understood among investors
  • Existing properties are seeking to compete with the historic amounts of new inventory hitting the market
  • Owners and operators are seeking to justify rent increases by improving the value proposition for residents
  • New construction is slowing and investors are seeking other avenues for generating returns on their investments

Retrofitting proptech improves property longevity and asset value, allowing for improved cash flow. Owners and operators have reported seeing numerous benefits from their investments into proptech and smart building solutions.

Participants in Parks Associates’ 2024 reported their smart building deployments had an impact varying between 15-20% on average for tested metrics.

Average Reported Impact

Property Technology and Smart Building Benefits

Property technology offers many different benefits in multifamily housing, ranging from providing valued amenities to tenants, to increasing operating efficiencies, reducing costs, and enabling new use cases.

Smart Building Benefits

Improve rents
  • Meet the expectations of residents and prospective residents
  • Provide valued amenities and features and an elevated lifestyle
  • Offer safe, secure, and convenient living

Increase efficiencies
  • Automate time-consuming menial tasks such as buzzing in visitors or guests, or setting the thermostats in vacant units during a freeze
  • Reduce need for maintenance worker to pull keys to enter residential units or other parts of the property

Reduce costs
  • Identify and mitigate water leaks before they cause catastrophic damage
  • Reduce the risk of kitchen fires through automatic shut-offs
  • Control energy consumption in common areas and empty units

Improve safety and security
  • Reduce and prevent unauthorized persons from entering the property
  • Keep records and audit trails of who accessed secure areas and when
  • Identify loiterers and potential thieves in sensitive areas of the property

 

This is an excerpt from Modernizing Multifamily Housing: Retrofitting Access Control, published in partnership with Kwikset. This white paper explores how owners and operators are responding to shifting conditions by retrofitting solutions, particularly access control, into their existing properties. It provides insights into how retrofitting is being used to justify rents, increase asset value, improveoperational efficiencies, reduce cost, and improve resident satisfaction.

It examines how new access control solutions are being used to lower total cost of ownership compared with mechanical systems and how companies are deploying these technologies into even unconnected properties.