The Impact of Institutional Ownership on Optech

The strong, longer-term financial performance of Multi-Dwelling Rental Units has attracted non-individual investors such as LLPs, LLCs, real estate corporations, and others to the market. According to the Rental Housing Finance Survey, non-individual investors’ share of rental properties increased 9 percentage points over the past two decades to 27 percent in 2022.

The growing presence of non-individual investors in some market segments has important implications for adopting new technologies to improve overall efficiency. Larger corporate property owners are more likely to have professionally connected properties with digitalized management processes, which can increase efficiency and reduce costs for property owners. It is important to note that when it comes to capex decisions involving technology decisions, property owners, not managers, make investment decisions. Most suppliers are going after the National Multifamily Housing Council (NMHC) top 50 property owners. Currently, there is no list of the top 500 property owners, which makes it harder for suppliers to pursue the smaller owners.

As shown in the graph below, Yardi tracks buildings with 50 or more units approved or under construction. The majority of new constructions are over 200 units.

Today residents live in smaller units but with bigger amenities. As a result, residents increasingly spend time in common areas for work and play and expect seamless connectivity in those areas.

In our report Multi-Dwelling Rental Units in the United States – Managed Wi-Fi: From Amenity to Necessity – July 2023, we build market projections for connectivity services up to 2028.

The in-depth report is based on a unique online survey of 150 property owners and service providers, interviews with leading service providers active in the market, and market sizing projections for managed Wi-Fi or WiFi as a service (WaaS) nationwide for 2023–2028.

While only 1 percent of MDU properties currently provide managed Wi-Fi and 15 percent enjoy bulk internet, managed Wi-Fi is expected to become a multi-billion dollar business by 2028. The market is driven by several factors, including a boom in large rental constructions and new generations of residents expecting quality Wi-Fi throughout the property at all times. Despite the cost and complexity of retrofitting brownfield properties, the market opportunity for managed WiFi is very large, especially for MDUs with over 100 units.

If you want to discuss the report or your consulting needs, you can meet us at the upcoming Optech conference in Vegas on November 1-3 and book an appointment at https://calendly.com/maravedisllc/optech-meeting-las-vegas