The multifamily industry is presently experiencing a paradigm shift and a revolution with the entry of technological advancements such as artificial intelligence (AI) and demographic shifts. This is disrupting the real estate industry as corroborated by an NMHC “Disruption” report from 2018. Even going through any industry blog, you will most likely come across various mentions of AI. It is a popular topic within the industry and is gaining more traction specifically within the multifamily industry.
When it comes to AI, do I mean robots? To be clear on the impact of AI, we must first understand what AI means, how it relates to the real estate industry and, finally, the different areas that AI is impacting in the multifamily industry.
Defining Artificial Intelligence
In a nutshell, AI is a type of technology that draws logical conclusions or simulates human intelligence in order to parse data contextually. AI uses sophisticated algorithms and analysis to provide educated information about events in the future. It also provides analysis that is used to trigger precise and accurate actions based on analytical findings.
Coming back to the industry, AI has the ability to provide real-time data that can help management teams engage in strategic decision-making, marketing and overall operations. The global AI market was valued at nearly $40 billion in 2019 and is projected to hit more than $733 billion by 2027. This would be a growth rate of about 42%.
AI’s Impact On Multifamily
There is no doubt that AI is breaking through into different areas in the world including real estate, from tenant amenities to property management, etc. As the founder of a multifamily investment firm, here are five areas where I’ve observed AI is impacting the industry.
1. Property Management
AI has impacted the way property management is carried out. The chance for human errors coming into play can lessen via the use of advanced apps and services that help managers manage their daily activities. Also, I’ve noticed that property managers are less likely to miss a call with the aid of AI and don’t have to worry about running client applications. There is room to create apps, customize them and link tenant smart home technology like Alexa, Google Home or Siri to help report issues, pay bills, manage contacts and many other actions.
2. Smarter Units
Many homes presently have smart appliances and AI to help residents connect better with their homes. For instance, you can easily connect your smart appliances to a smart home technology like Alexa and carry out things using a simple voice command or by the wave of your hand. Having smart units for the multifamily industry adds a unique selling point for any real estate professional or owner. This would greatly appeal to the current generation of millennial and Generation Z renters. In many markets, adding a smart home feature such as Alexa, Google or Nest has allowed my company to capture premiums as high as $50-$75 per month on units, adding significant value to our assets as well as generating higher returns.
3. Predictive Marketing
Recent research by Epsilon revealed that 80% of consumers would rather make a purchase from companies that give a more personalized experience than those that don’t. This boils down to proper marketing data on the side of the company to deliver customer-centric marketing to their customers. In times past, marketers within the industry depended on generic parameters like date of birth, gender and location to appeal to clients. Today, due to the advancements brought in by artificial technology, companies can deliver more personalized, deeply technical and customer-centric marketing by using digital analysis to estimate the behavioral patterns of customers and the most effective way to market to them.
4. Energy Savings
You cannot detach sustainability and efficiency from the millennial and Generation Z age groups. This is where AI plays a crucial role in helping to make multifamily buildings more energy efficient. Furthermore, regulatory bodies require investment properties to be more transparent about their energy consumption. With the introduction of AI-dependent tools like smart thermostats, these parameters can be tracked easily in a unit and can be used to adjust the consumption accordingly. Also, AI can be used to implement efficient energy distribution based on the building type, the season and the weather.
5. Building Maintenance And Monitoring
Recently, AI has been harnessed to ensure maximum efficacy for a building. This involves AI predicting and analyzing issues to prevent occurrences like electrical outages, leakages, clogs, etc. This can help maintenance teams work proactively in preventing issues rather than reactively. On the part of tenants, they would avoid inconveniences and disruption. On the part of the landlords and investors, they would avoid emergency expenses and unplanned costs. Further, these can be utilized to make better decisions using logic algorithms for “replace versus buy” expenditures.
The multifamily industry has seen a lot of advancements due to the entry of AI and other technological advancements. Apart from property management, smarter units, predictive marketing, energy saving and building maintenance, AI has also improved the way decisions are made in the multifamily industry. I’ve found that there is better access to in-depth analysis of customer data to inform the decision on how to reach out to customers. This has greatly impacted the multifamily industry alongside the growth in the overall real estate industry.
Any operator in the space would do well to explore how they can utilize AI within their operations to gain unrealized efficiency by implementing this technology. By forgoing access to data and decision logic, owners could be missing out on massive gains for their investors.