Smart Home Living Remains Poised for Growth in Multifamily — If Nothing Else Changes
While some analysts report that rent prices in the multifamily sector have been flat, that isn’t necessarily a bad thing. For example, Nareit (National Association of Real Estate Investment Trusts) recently reported that Multifamily REITs performed well in 2024, outpacing the broader REIT market.
The supply side has now pretty much caught up with demand nationwide (except for the South, where demand remains high), evidenced by a noticeable reduction in the amount of permits and construction completions, noted Mitch Karren, chief product officer at software platform Elevate OS (formerly known as Elevated Living) and a speaker at last week’s panel discussion Looking Forward: Growth for Multifamily Tech webinar, organized by Parks Associates.
That reduction is estimated to linger into 2026. “The market is saying that [2025] is going to be the low point of construction, and by ’27 we should pick back up a bit. Demand has been so high because housing affordability on the purchasing side has been unattainable for a lot of Americans and it’s still better – financially – right now to rent.”
With so many Americans putting off their home-buying plans and choosing to rent for a longer period of time, smart home amenities are ranking higher on the list of must-haves for today’s renters and property managers.
Early Smart Tech Adopters Bolster Confidence
Recent research shows both consumers and property developers are feeling more confident about spending on smart home tech amenities.
The real estate market works on a longer timeline, often two or three years out, Karren explained. “The decisions you make today, for instance, on a new development, won’t get installed for several years, depending on the state. The decisions that were made right after the pandemic, in 2022 and 2023, we are just seeing [those systems installed] now. As such, in terms of new construction, we’re seeing a lot of great decisions made in that they’re putting in the right Wi-Fi, smart access systems and smart home technology; they’re doing the whole gamut,” he said. “I feel good about the space and that developers are now educated enough to make good decisions on what to put in. I honestly couldn’t have said that three or four years ago,” he stated.
“From a raw tech perspective, what’s exciting to me – whether it’s a door lock, thermostat, an access control system, or Wi-Fi – is that we’re on generation three or four of these products,” Karren observed. “We’re seeing great mature products now, whereas five or seven years ago, we were on gen one and two. Almost every door is online now, and the new Wi-Fi systems we’re putting in place can handle thousands and thousands of devices. I’m super confident, not just in terms of the adoption, but in the actual tech that’s being deployed now.”
Panelist Pratik Dhebri, vp/product management for AvalonBay Communities, one of the largest publicly traded multifamily/rental housing REITs, outlined the benefits of smart tech for property owners. “There are various areas in which technology can not only drive efficiencies within the business, but also provide new rental revenue streams. Bulk internet is one such example, where it can lead to increased revenue for multifamily operators, and at Avalon, they were certainly taking full advantage of it,” he said.
On its latest earnings call, AvalonBay Communities revealed that its value-add resident services have helped the bottom line by reducing operating expenses. Bulk Wi-Fi is offered at 90 percent of the REIT’s portfolio and smart access/locks are provided at 70 percent of its communities.
AvalonBay has had great success with its “technology package,” according to Dhebri, which includes internet services, smart access, and the opportunity to offer smart thermostats, smart refrigerators, home security cameras, and other smart appliances. “This is about embedding technology to provide a much better living experience for our residents. Smart home tech is a nice amenity for them,” he said.
As for continued growth in the multifamily space, Karren believes that once the mid-market and small companies see that the REITs have had success with implementing smart tech, they will follow suit. “I think there is a lot of growth opportunities Wi-Fi and smart home. And on the inverse of that, where those may generate a lot of ancillary income, they might also help out with operational efficiency,” he said.
Panelist Earl Browning III, director of sales for EnviroSmarts water detection system, noted that the company’s technology notifies property managers/operators if it detects a leak. The immediate notification allows managers to act quickly to remedy the situation and limit the potential damage that would occur if a leak went undetected for a long period of time.
“There are a lot of growth opportunities in Wi-Fi and smart home, but getting people to adopt these products and use them in the right way is a hurdle. Smart products need to be simple and scalable,” Karren remarked.
Added panelist Rob Paver, vp/business development for Boldyn Networks, smart home is a valued amenity for multifamily residents, whether that’s allowing them to control their thermostat remotely or providing them with a smart refrigerator. “Everything is connected now. It’s a matter of the property manager deciding what they want to accomplish and figuring out how to get there using technology,” he explained. “There are all of these technologies out there, but it comes down to which ones can your property support and which ones can your budget support. There is no silver bullet technology solution. They all have a useful application, but it’s a matter of figuring out which one is right for your property — because if tech is not properly deployed, it becomes not only an expense but something that doesn’t drive value.”
The Challenges
Adding PropTech and smart home systems to a multifamily property can help streamline company operations and provide an enhanced resident experience, but there are stumbling blocks.
“I think whenever you see the rent growth flatten, that kind of trickles down to people tightening their budgets overall,” Karren said. “And when budgets tighten, people start drawing a line on what they’re going to adopt tech-wise and what they may not adopt [until later]. I know that may not sound optimistic, but regarding the companies offering PropTech solutions, they need to prove out that their solutions can either drive ancillary income or reduce operating expenses,” he noted. “You’re seeing owners, operators, and developers really sharpen their pencils and have a better take on the timeline for achieving ROI and whether this [tech] product is truly being adopted by these companies and being used by the residents. You’re seeing better due diligence around products — and that’s great for the industry.”
Nearly every business sector is affected by labor shortages these days and property management is among them. “When a property manager hires a maintenance technician, that person needs to learn three, four, or five products just for their tech stack — and that can be difficult for them,” Karren said. “And the same goes for the property managers themselves. We work with a lot with regional managers and I often hear that the property manager needs to move from one property to another and each property has a completely different tech stack. A constant theme we hear is: ‘There is a lot of great tech out there, but it’s really hard for me to jump online and learn 15 things and track 15 logins. Can I have it in one single app?’”
To combat app fatigue, Elevate OS provides a white label app that is customized and branded to the property or portfolio and can include instant accessibility for sending a maintenance request, connecting to concierge services, smart home functions, and access (door) control.
The time has come for property owners and operators to stay up to date with what residents need and expect and technology is an important part of the equation.
“I think a few things are forcing multifamily operators, including AvalonBay, to look at technology in a different way,” Dhebri stated. “What consumers expect from technology has changed dramatically over the last five years. The pandemic had this unintended consequence of everyone being able to do everything on their cell phone, including ordering groceries, and other day-to-day tasks.” AvalonBay is looking to automate some of the processes involved in renting a home, such as being able to tour a unit or being able to have automatic approval of a rental application instead of waiting for a property manager to get back to them, or having 24/7 support that can immediately assist a resident who is unable to get into their room [due to key access failure]. These types of services will require the addition of AI, which is the next frontier for the property management space, according to the panelists.
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