Earlier this week, the CEO of Lefrak Organization, Richard Lefrak, stated, rent prices for New York luxury apartments need to drop as much as 15%. He says this because; at this point, there are more luxury apartments in the market then people are demanding. This leads to increased competition, which leads to dropping prices. Simple Economics.
The problem is, luxury apartment landlords have a certain expectation for the return on their investment. As a landlord of New York luxury apartments, how do you keep your apartments filled at the rent rate expected? So far a popular way New York City landlords are accomplishing this is by offering free rent for several months. You see many apartments offering two months free. But we all know, in New York City, there are people that can afford higher rent. So what’s the problem? Every luxury building is too similar. Nothing is differentiating them so why pay more for one versus the other? So obviously renters choose the luxury apartment at the least expensive price or most months free. Enter Smart Home Automation.
Most landlords have not ventured into true automation for their rentals. They may say their building is green, but that is not what this technology is about. It is about improving tenants way of life. That is something that can be a differentiator and sold at a premium.
One landlord, we are working with is doing just that. He owns a building in a very popular area of Manhattan. His building was built in the 1920s but there are a lot of new buildings being built right next to his. That has impacted his ability to compete. Adding Smart Home Automation to his units, he’s now better able to sell the value of his building. The features are different from other buildings and apartment seekers want them. Also, this investment will be paid off in a year or so because of the increase in rent he was able to charge. This is huge.
Think about it, if you are giving away two months of free rent are you competing the wrong way? What if instead of giving away two months of free rent you invested that into making the unit more appealing? Is competing on the price the right way to beat luxury apartment competition? If you ask me I think the answer is to invest in technology that people want in their lives. It’s the same reason people add an updated kitchen. Smart Home Automation is a hot topic for consumers today and adds significant value to any home.
Is this something you are seeing? Let me know. I would love to speak with you more about how Digital Home can help you compete in the New York luxury apartments market. Feel free to message us or comment below.
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