The multifamily dwelling unit (MDU) market is a rapidly growing segment of the residential technology sector, presenting a wealth of opportunities for custom integrators. As the cost of land and housing continues to rise, single-family homes are becoming increasingly out of reach for many buyers, particularly millennials and Gen Zers. These younger generations are also more tech-savvy and are seeking homes with advanced amenities. This convergence of factors is driving strong demand for custom installation services in multifamily environments.
The Rise of MDUs
MDUs encompass a wide range of structures, from duplexes and triplexes to high-rise buildings with hundreds of units. According to the National Association of Realtors (NAR), there were a record 545,000 multifamily housing starts in 2022, up 15% from 2021 and 56% over five years. This growth is expected to continue, with MDUs projected to account for 44% of all housing starts in 2023.
Opportunities for Integrators
Integrators can capitalize on the MDU market by providing a range of services, including:
- Infrastructure and common area installation: This involves installing access control systems, video surveillance, outdoor audio, video walls, audio for common areas, and wide area wireless networks.
- Base package deployment: This involves equipping individual units with a standard package of technology, such as thermostat control, smart locks, shade control, and lighting control.
- Upsell services: This involves offering additional amenities to individual tenants, such as upgraded home networks, additional touchpanels, distributed audio, security, additional TVs/video, and lighting fixtures.
Challenges and Considerations
While the MDU market offers significant opportunities, it also presents certain challenges. Integrators must be able to:
- Manage the scale of MDU projects: MDU projects can involve hundreds or even thousands of units, requiring careful planning and coordination.
- Meet with individual buyers/tenants: Integrators need to be able to effectively communicate with and sell their services to individual tenants.
- Deal with cheap, uneducated builders/developers/property managers: Some builders and developers may be unfamiliar with the value of technology and may be unwilling to pay for high-quality installations.
Strategies for Success
Integrators can succeed in the MDU market by following these strategies:
- Develop a deep understanding of the MDU market: Integrators need to understand the different types of MDUs, the needs of different types of tenants, and the unique challenges of working in this market.
- Specialize in MDU projects: Integrators who specialize in MDU projects can develop the expertise and experience necessary to succeed in this market.
- Build relationships with key decision-makers: Integrators need to build relationships with developers, property managers, and individual tenants.
- Offer a comprehensive suite of services: Integrators who offer a wide range of services can meet the needs of a broader range of clients.
Conclusion
The MDU market is a rapidly growing and lucrative opportunity for custom integrators. By understanding the market, developing the necessary expertise, and building relationships with key decision-makers, integrators can position themselves for success in this exciting segment of the residential technology sector.