Creating New Income Streams for Your Multi-Family Project
Multifamily developers and owners know they need exceptional amenities to compete. With experts predicting an increase in national vacancy rates in response to increased project supply, it’s essential that property owners and managers position themselves to attract and retain residents. Yet this need to invest in amenities is tempered by rising construction and capital costs coupled with rent growth that’s trailing historical averages, according to Fannie Mae.
It’s tough enough for property owners to maintain a profitable net operating income (NOI) without investing in new solutions. However, the right resident technology solutions can actually contribute to NOI. When property owners own and control their technology infrastructure, they can create additional streams of income and provide residents with exceptional amenities.
Investing in your own technology infrastructure isn’t just good for attracting and retaining residents – it can also increase monthly revenue and improve your overall property value.
Technology-based income streams
Traditionally, multifamily property owners contract with an internet or telecom service provider who will run the network cables to each resident’s unit. Once a resident is added to the service, property owners may receive a one-time bonus from the utility to incentivize this ongoing relationship.
One disadvantage to this approach is that property owners have no control over the service delivered. They cannot guarantee high-speed internet, for example, as that lies between residents and the third-party provider. But there are many potential advantages for property owner who invest upfront in installing their own network. By owning the fiber or copper infrastructure, and controlling the services delivered through that cabling, property owners can guarantee a certain level of service quality. They can also now lease service to residents, turning this upfront investment into the means for securing recurring monthly revenue.
Savvy multifamily owners and operators will find that by owning their technology infrastructure, they can monetize a wide range of services – and significantly increase their revenue per square foot. A few of these potential income streams include:
- Internet services: By owning you network infrastructure, you can serve as your residents’ internet service provider and secure the income generated by this utility service. When using a private label for this service, property owners also expand their reputation among residents as a leading-edge provider of resident technology solutions.
- Telecom services: By owning your network infrastructure, you can serve as your residents’ telecom service provider, including voice and internet services, and secure the income generated by these services.
- Apps: Resident apps are growing in popularity. These apps engage communities and elevate offerings by connecting residents with one another and additional services. Some solutions feature concierge marketplaces that allow residents to request additional services – think furniture assembly, TV mounting, or house cleaning – for a fee. Landlords can also implement revenue sharing opportunities for promoting local business owner and service providers on the app.
- Security: Technology innovators have turned to subscription services as a way to elevate their revenue stream after the initial sale. When property owners outfit their units with security systems, they can create an additional revenue stream by offering a subscription service to their residents.
- Automated parking solutions: By integrating parking controls into your building systems, it becomes that much easier for property owners to charge for parking while automating much of the service. Parking automation can also make it easier to sell or lease spaces to non-residents, such as nearby business owners, who wouldn’t have access to the multifamily building itself.
Owning technology infrastructure puts property owners in control of the quality of services they deliver. By owning their infrastructure, property owners gain the ability to scale up service offerings when they’re ready, bringing in new revenue without adding to their operational costs. To further simplify this process, property owners can hire a third-party to manage their resident technology service offerings, should they so desire.
Planning for network infrastructure flexibility
Securing WiredScore certification for your building is another opportunity to expand the value of your network infrastructure. WiredScore certification demonstrates that properties are “tech-enabled and future-ready.” It lays out criteria that helps property owners feel confident that their network infrastructure will be able to meet future digital demands. Scores are based on criteria such as access to multiple internet service providers, designing telecommunications spaces of sufficient size to support future technologies, and designing pathways large enough for all the cabling related to the systems.
WiredScore certification also helps landlords and developers leverage their digital connectivity to lease properties faster and realize greater value from their property. Research by WiredScore and Moody’s Analytics CRE found vacancy to be, on average, 3.8% lower for certified buildings. And a European Commission report determined that smart buildings can add $0.10 per square foot in lease value and yield 5% to 35% higher sales values.
Even without certification, a knowledgeable network consultant can apply WiredScore principles to lay the groundwork for a flexible technology approach. Alternatively, property owners ready to take the next step can pursue SmartScore certification, which demonstrates best-in-class design and buildings that offer exceptional user experiences and are fully future-ready.
Take control of your technology infrastructure
Residents are recognizing the incredible range of technology-driven amenities available to them. Remote coworking spaces, rich audio-visual experiences from the community room to the rooftop terrace, and a vast range of in-home resident technology offerings are all proving attractive to today’s residents. But it’s primarily those property owners who have a plan for using their technology to grow their NOI who can invest in these cutting-edge solutions for attracting and retaining residents.
While there may be more technology available than ever, it’s also never been easier to own and operate your own network. CRUX Solutions specializes in helping property owners future-proof their physical environment and identify additional streams of income. To learn more about how you can leverage your technology infrastructure, contact us today.