Standing Out in 2024: How Retrofits Can Compete Against New Supply

Owners and asset managers in 2024 are up against a market where supply outpaces demand.

In markets with ballooning supply, it’s harder than ever for existing properties to stand out — not just against other existing buildings, but against the increasing number of new builds entering the market.

Further, times of growing supply mean declining rents. Softening rents are eating into revenue, making it difficult to maintain a strong bottom line.

Maximizing returns with core plus and value-add investments requires strategically implementing the right upgrades.

Historically, asset managers have gravitated toward upgrades that modernize the look and feel of the building. Adding amenities like fitness centers and swimming pools has been par for the course.

But today, successful owners are shifting their focus to a new differentiator: smart tech. As an attractive amenity with cost-cutting capabilities, today’s next-gen smart tech platforms stand out as an effective shield against 2024 market conditions. Beautifying the property’s landscaping might not hurt, but it won’t substantially move the needle in terms of converting prospects and retaining existing residents—nor will it help reduce your operating expenses.

You have a lot of choices when upgrading an existing asset. But few upgrades are as cost-effective as a next-gen smart technology platform.

Most notably, next-gen smart tech has the power to reduce operational costs better than other upgrades. At a time when raising the rent isn’t an option, the next best thing is to cut operating expenses. Gyms and cosmetic unit upgrades won’t achieve that, but smart tech can save $36,000 annually at the average 250-unit community.

Smart tech is uniquely able to reduce current expenses and protect your property from new and unexpected costs. For example: Using technology to keep building-wide temperatures at safe limits won’t just prevent a $157,000 insurance claim for damage caused by a burst pipe—it’ll also limit the number of insurance claims you file overall, which could protect your premiums or prevent your building from falling into the secondary (and generally more expensive) E&S insurance market.

Additionally, implementing the right smart tech doesn’t require capital-intensive upgrades — in fact, a next-gen tech platform has a payback period of less than two years. Over-investing in surface-level amenities like upgraded kitchen appliances or aesthetic exterior renovations ends up costing you a lot with little return. This is particularly true when you’re competing against an increasing number of new builds, which already have ultra-modern countertops and fresh exterior landscaping.

We’ve established that smart tech is more cost-effective than other upgrades, but how exactly does it benefit a building in markets where supply is high and rents are low?

Lowering operating expenses is always top of mind, but especially so at times when rents are softening. Unlike cosmetic upgrades, the right smart tech has the unique ability to reduce operating costs.

Considering that 82% of renters seek smart tech, adding it to your building is a great way to capture demand. And when competing against new construction that already has smart tech built-in and is offering months of rent concessions, it’s a must.

But not just any smart tech will do. Devices that don’t add convenience or comfort to residents’ daily lives will go overlooked, as will devices that are overly complicated or lack reliable connectivity.

Residents today have endless rental options, many of which are offering enticing concessions. As such, thoughtfully implementing intuitive smart tech that prioritizes residents’ convenience and comfort — like property-wide access control and smart thermostats they can adjust remotely — is the best way to affirm you’ve accounted for their wants and needs.

But don’t overlook how the technology gets installed. Even the most engaging smart tech won’t win residents over if the installation process is disruptive and unwieldy. Prove that your property respects its residents by choosing an experienced and accountable partner who will ensure a non-disruptive experience before, during, and after installation.

Achieve all this and you’ll have successfully cemented your property as the best place for current residents to continue calling home.

Hand-in-hand with cutting costs is smart tech’s ability to automate manual processes so staff can redirect their attention to more impactful revenue-driving tasks — like marketing the property to make sure it stands out to prospects.

Retrofitting a building with smart tech achieves more than just giving residents a collection of shiny devices in their unit. When done right, smart tech creates seamless experiences for both residents and staff, which boosts resident acquisition and retention rates while improving operational efficiency and trimming expenses.

When shopping for a smart technology platform, choose one with high device connectivity uptime and superior hardware, from a provider committed to high-quality installation and ongoing support.