Apartment firms should continue to invest in broadband if properties are to remain competitive.
As apartment executives know all too well, the technology landscape is changing rapidly—and constantly. Cable firms are rushing to deliver phone service, phone companies are starting to provide video programming, and American consumers are being bombarded with offers for new content and services for everything from their television to their cell phones. With so many possibilities, it's hard for a multifamily company to decide what it should do regarding technology at its properties.
A recent National Multi Housing Council report on technology usage in rental housing should help. According to the survey, done by SatisFacts Research in 2006, apartment residents express some strong preferences regarding video, voice, and data services. Among the findings: Landlines are clearly on their way out, renters of all income levels expect broadband connections, and contrary to industry belief about the appeal and convenience of offering a bundled technology package to residents, those residents would rather make those decisions themselves—even if it means multiple providers—without their apartment company's help. GET READY FOR REPEATERS
One of the clearest conclusions of the NMHC/SatisFacts report, which surveyed 14,000 apartment residents, is that the wired home phone's days are numbered. Only 58 percent of the renters surveyed have a landline phone, and even fewer—38 percent—consider it their primary phone.
As more renters adopt cell phones as their primary phones, the ability to get a cell signal may become a significant factor in their decision to renew their lease or recommend a property to friends. This means that apartment owners as part of their due diligence and development planning should ensure that their properties have adequate reception, that the properties do not block cell reception, and that they are not in a particular cell service provider's “dead spot.” Many mid- and high-rise apartment owners are struggling with this issue. One option is to purchase large-scale cell phone repeaters for properties to improve the strength of cellular signals; office building owners and public transit systems often do this very thing. However, these fixed stations are relatively expensive and can cost hundreds or even thousands of dollars per floor to accommodate each cell network. (A repeater only works for its own network; if an apartment property wants to boost the signal for multiple cell providers, it will need a repeater for each one.) Unfortunately for multifamily firms, the data suggests that an investment in repeaters may be necessary to attract and retain residents going forward.
INTERNET FOR EVERYONE The Internet has become deeply embedded in renters' everyday lives, regardless of age or income level. According to the survey, 78 percent of renters have a computer at home, and 85 percent of those have Internet service. Somewhat surprisingly, lower-income households demonstrate the same involvement with technology, with 78 percent of lower-income rental households also reporting a computer at home. A majority of older apartment residents are active users as well.
No wonder high-speed Internet service ranks 3.44 on a scale of 1 to 5 in terms of importance when selecting an apartment community, not far below rent and location in importance. Significantly, those renter households that have high-speed Internet access use it a lot. Three-quarters say they use their home Internet connection seven days a week. Heavy usage is not only proof of a high demand for the service; it also provides opportunities to connect with residents through portals and other high-technology options. When it comes to the Internet connection itself, cable modems remain the most popular broadband connection among renters (50 percent of respondents), compared to 31 percent for DSL and 13 percent for dial-up. Only 3 percent said they are currently using wireless or WiFi provided by the property, but that low usage figure apparently reflects a lack of access rather than a lack of interest. Fully 69 percent of residents with Internet access said they would like their community to offer wireless hotspots, but only 12 percent report that they currently live in a property that does.
GAMES PEOPLE PLAY Five years ago, sharing photos, viewing videos, and playing online games located around the world were not part of the average person's Internet experience. But that's changing fast. Phenomenal growth in two areas in particular—streaming video and online multiplayer games—hold important implications for apartment owners who are considering their future technology offerings because users will want fatter, faster Internet connections through which to upload and download ever more intensive content.
Call it the YouTube.com effect. An astonishing 56 percent of consumers surveyed on the subject nationwide say they've watched video on the Internet.
These trends hold true for Internet games. Thirty-four percent of the apartment residents surveyed by NMHC played games online in the last month. This figure only hints at the coming tide of gamers at apartment properties. According to the Pew Internet and American Life Project, 65 percent of college students reported being frequent or occasional gamers in 2003. Many of them play online role-playing games such as Second Life or World of Warcraft. As gaming and video streaming become mainstream activities, it is clear that today's college students will be tomorrow's bandwidth hogs in America's apartment homes.
Gamers aren't all twentysomethings; 44 percent of gamers are over 35 years old, according to the Entertainment Software Association. Of these large numbers of gamers, nearly half—44 percent—are Internet gamers.
The take-home lesson for apartment firms is that, in the future, apartment properties may be “branded” and labeled as much for their Internet services as they are for their curb appeal. It will be imperative that owners anticipate and plan for this broadband demand if they hope to capture their share of the 78 million echo boomers hitting the rental market.
RENEWAL IMPACT Of course, the big question for most apartment firms is whether renters will base their rental decisions on the technology a property offers. The answer? For now, price, not amenities, remains the single most important factor on which initial rental decisions are made. An overwhelming 94 percent of renters said in the survey that decision was not affected by the property's Internet, video, or telephone offerings.
However, technology appears to be much more important in lease renewal decisions. Half of the renters surveyed said the availability of high-speed Internet service would have a major impact on their decision to renew. Just behind high-speed Internet access in terms of importance was cell phone reception, with 47 percent rating it as a factor with a “high” or the “highest” impact on their renewal decision.
‘NO THANKS' Residents reject package deals of voice, video, and data services from apartment firms. For many years, apartment owners have—apparently incorrectly—assumed two things. First is the idea that convenience-oriented renters would like assistance from their apartment property when choosing telecom services. Second is the notion that residents would highly value having a single provider for all their voice, video, and data needs. Despite the prevalence of exclusive access and exclusive marketing agreements for technology services, 70 percent of the renters surveyed by SatisFacts for NMHC report that their community did not offer or promote any phone, video, or Internet services to them at the time of initial leasing. Of those of renters who already have telecom service, 70 percent said they do not want their community to “assist in signing up for telephone, cable/satellite television and Internet services.”
Though expectations are that the leasing agent would engage prospective renters about voice, video, and data services, that's seemingly not the case. The good news is that most residents do not find this to be a problem. Most are satisfied with the experience; 58 percent said it was either “satisfactory” or “very satisfactory.” Renters may also want to shop around for the best price and service options or prefer to work directly with the service provider for their phone, Internet, or cable service.
Neither are renters willing to accept a bundled tech package from telecommunications companies, despite the capital and effort these firms have invested in providing such services (i.e., cable providers offering phone and Internet access). While 80 percent of residents were aware that they could receive more than one service from a single service provider, only 15 percent said they were “likely” or “very likely” to do so.
When it comes to the importance of having a choice of providers, renters were of two minds. Although 70 percent of residents did not have a choice, 41 percent said that having a choice in providers would have a “high” or “very high” impact on their renewal decision; 34 percent said it would not.
