Following a strong performance in 2021 and 2022, the multifamily housing market has now reached an inflection point. Residential demand is beginning to decline after peaking at the beginning of 2022, and renewal rates are also starting to decrease. Because of this and the ongoing uncertainty around the economy, many property managers are turning to proptech solutions for support in streamlining operational costs.
Recent years have witnessed the highest value of investment on record for the proptech industry. This has been particularly prevalent in multifamily real estate. Can we expect this increased investment going forward? Or will proptech trends differ in 2023?
Here are the current tech trends driving the multifamily industry:
Consolidation and M&As
The rapid growth of proptech innovation in the multifamily sector will inevitably lead to an uptick in mergers and acquisitions (M&As) in the year ahead for property tech operators. With an unstable economic outlook, these operators will seek to consolidate solutions by being more selective with the companies they partner with based on their financial strength and longevity.
Likewise, property managers who are faced with increasing operational costs and staffing challenges will also be considering ways to consolidate their tech investments. Last year, commercial real estate executives across the globe planned to increase their investment in proptech by up to 12%. While still keen to adopt solutions that streamline their businesses, property managers may be reassessing the technology they’re already investing in. As a result, we expect to see them refining their tech stacks in 2023.
Automation vs. economic challenges
The economy in the US has been uncertain for some time. We’ve observed inflation in energy costs, labor, and materials – all of which directly impact the businesses of multifamily property managers. Those looking to combat these pressures will adopt proptech solutions designed to reduce operating costs, such as tech that improves efficiencies and streamlines energy usage.
Specifically, we’ll likely witness property managers choosing to invest in tech that automates day-to-day processes and allows for time reallocation toward other tasks. These technologies may include communication software, access solutions, and home monitoring systems, like smart thermostats, water management systems, and HVAC management.
With such technology in place, property managers are able to optimize their employees’ time for operational savings while also benefiting from reduced utility usage thanks to automated maintenance alerts and optimal energy/water usage in their units.
The turnover process after losing a resident can cost multifamily property managers up to $4,000. This is a humbling figure considering the financial challenges property managers are currently facing. Because of this, there will be a continued effort to elevate the resident experience, and property managers will rely on proptech solutions to achieve this.
For example, keyless access solutions, which can be managed remotely, enable property managers to offer prospective residents self-guided tours. Without the need for onsite employees during these tours, prospective residents have greater flexibility in viewing times, increasing opportunities for those with busy schedules. Smart locks also add to the experience of existing residents, who are able to remotely give access to dog walkers or visitors, creating a more convenient way of living.
Smart water management solutions will continue to develop and integrate into multifamily properties, given the cost-saving opportunities they offer (such as saving 10,000 gallons of water per year when avoiding small leaks – that’s equivalent to 270 loads of laundry). Automated monitoring systems can detect minor leaks and shut off the water supply with smart valves in more pressing circumstances, such as a frozen pipe. This solution enables property managers to act before costly damage is caused to their units.
We expect the tech’s analytics will continue to improve as adoption increases, leading to an even more intelligent system that can help reduce water waste and enhance community billing. As investment increases, there’s also likely to be increased participation from third parties (like insurance providers) when it comes to quantifying cost savings.
Curated tech stacks
Tech challenges, such as the integrations between various software platforms, are driving those in the multifamily sector to focus on curating their tech stacks. Many will therefore be looking for IoT solutions that can be connected to and managed on a single platform. The tech solutions should be able to work together seamlessly and complement each other.
This means multifamily property managers will take a step back to look at the wider picture and define their overall goals when selecting ‘point’ solutions.
While proptech investment and innovation have accelerated in previous years, we expect refinement in the solutions property managers choose to adopt in 2023. Faced with ongoing financial challenges and a decline in resident appeal, many will be consolidating and curating their tech stacks, choosing automation for cost savings, and focusing on elevating the resident experience.
To find out more on 2023 multifamily trends, read this Residential Tech Today article written by our Head of Marketing, Angel Piontek.