RETCON 2024: Tackling Tech
From smart buildings to sustainability, panelists discussed the evolving role of technology in multifamily.
Multifamily-focused panelists at RETCON 2024 discussed the role that technology plays in the sector. Despite the array of innovations that have given operators, brokers and marketing professionals more options than before, the prevailing sentiment was that property-and goal-specific circumstances will ultimately decide which tech is appropriate in any given situation.
Conversion conundrums
Mitchell Moinian, a principal at the Moinian Group, discussed how to approach multifamily conversions in New York City as a science. For Moinian, the biggest impetus for both penciling and completing conversions of vacant office buildings were the 421 programs, the most recent of which expired in 2022. “We’re hoping that a 421 program comes back soon, because this was always the impetus to get things done in the city,” Moinian explained. “(Right now), the state does not have any incentives, and it’s a big problem.”
The biggest material obstacles to new conversions, despite the millions of square feet of vacant space around Manhattan, are the project’s physical features, which often have office-specified cores, shells and floor plates that are prohibitive to multifamily development. To navigate these difficulties, Moinian advises developers to approach conversions with the same mindset as any other development. “The conversion angle is speed and timing to deliver, which lead to reduced construction costs and boosts to sustainability efforts,” Moinian said. “Once you get all fancy and try to do a Frankenstein job, you throw everything out of whack,” he added.
Still, even this process is easier said than done. “Take notice of those buildings, and how much longer they take to complete than when the developers said they were going to finish,” Moinian noted. With strategic competence in mind, what is equally important to selecting the right property and project execution is the right financial partners and backers, according to Moinian.
Smart Buildings and multifamily: realistic, yet practical
In a similar approach to Moinian, several multifamily owners and operators discussed the appeal of integrating smart technologies into new and existing communities, advising attendees that the most meaningful integrations are matters of circumstance. Here, the deciding factors are a building’s type, location and age. “You have to be proactive in understanding the potential risks,” explained Andrew Kuminsky, CEO of GiGstreem. “It could be a cellular signal that is weak in particular areas, or if you are connecting a new thermostat to an old mechanical system, what will that look like?”
Sometimes, there may even be barriers that developers and owners may encounter in the retrofitting process, be it in installing smart locks in doors or integrating artificial intelligence into the work order fulfillment process. These may present themselves in both the construction and installation processes. “You are always going to find issues; impenetrable bedrock or asbestos.” advised Andrew Beach, senior vice president of community technology and innovation at Mill Creek Residential Trust.
Due to these nuances, the definition of a Smart Building often differs at the micro level. “It’s not about sticking a Nest thermostat on a wall; the definition will differ between a garden style in Omaha and a high-rise in Manhattan,” Kuminsky added.
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At the same time, choosing what tech to integrate is also a matter of renter preference, especially where retrofits are concerned. Many renters seem to expect Smart home packages and community-wide Wi-Fi connectivity to exist not so much as amenities, but baseline features akin to appliances. “I always use the example of airbags,” explained Susan Gerock, senior vice president of information technology and chief information officer at Elme Communities. “At one time, only luxury cars had airbags, and today every car has them.”
Carrots and sticks
Considerations of circumstance can also decide both the scope and efficacy of a given community or firm’s sustainability effort. Energy savings serve as a carrot, while fining excess and unnecessary carbon emissions is the stick.
One incentive is the inclusion of electric vehicle chargers at many properties, which are often seen as low-hanging fruit for developers. Samuel Bordenave, CFO at SWITCH Energy, discussed a “cellphone model,” towards installing and using the chargers, giving renters the ability to charge their vehicles overnight, or move in and out of parking spots at their convenience.
Local legislation and the ability to collect money from federal grants are another variable when it comes to chargers, with many states mandating their inclusion. Certain state have “specific incentives at the utility level, there are “some generous incentives”, Bordenave said. “It’s a great moment to add chargers and get a lot of it paid for by someone else.”
Where electric power and thermal efficiency is concerned, multifamily owners and operators find that energy efficiency solutions are best integrated when they entail substantial cost savings and boosts to NOI. At the same time, going against compliance regulations can cause steep fines, and many buildings are not even capable of decarbonizing.
Michael Gilbert, director of proptech, cleantech and decarbonization at Fairstead Ventures sees this as the case when evaluating the impacts of initiatives such as Local Law 97. “Efficiency always has a good (impact on NOI), but with current tariffs, decarbonization can drive up operating costs, and decrease asset value.” For some owners and operators with limited budgets and brainpower, decarbonization can have deleterious effects on both operating costs and asset valuations. “If you run the math, gas is six times more efficient than electricity,” Gilbert said. “It’s a lot more expensive to do space and water heating on electricity than gas right now,” he added.
