RangeWater's Maverick community in Atlanta contains 325 apartments and 110 townhouses that range in size from studios up to four-bedroom, multi-level residences. The Class A rental project was designed to appeal to potential residents from graduate students and young professionals to families and empty nesters.
Courtesy RangeWater Real Estate RangeWater's Maverick community in Atlanta contains 325 apartments and 110 townhouses that range in size from studios up to four-bedroom, multi-level residences. The Class A rental project was designed to appeal to potential residents from graduate students and young professionals to families and empty nesters.

American Real Estate Partners (AREP) managing director Mark Taylor has spent a 35-year career at the delta where apartment development, property management, and achieving return on investment (ROI) for institutional investors meet.

From rightsizing development shops for the California State Teachers Retirement System (CalSTRS) to running regional operations for Bozzuto to his current role creating investor value by developing new and repositioning existing residential properties for AREP, Taylor recognizes a singular theme to the process of bringing new multifamily communities online.

“Everyone is looking for the silver bullet to be better, faster, and cheaper,” Taylor says. “At AREP that means we are studying everything, from off-site construction to mass timber hybrid slab installation to watching the Marriotts of the world push ahead of the curve in hospitality with preassembled elevators and modular bathrooms.”

That search for value in the development and construction cycle has recently brought AREP to the world of politics, or, more specifically, to new market study services from Washington, D.C.-based real estate data provider RCKRBX that provides developer scenario reports and comp analysis to help inform land and asset purchases, product type, and ideal target renter demographics.

“We don’t do commodity products, we look for bespoke locations where we can get higher returns to offset higher costs of land debt and construction,” Taylor says. “We have some pretty granular metrics and were focused on place before place was even a thing. So our analytics are around location, not program, and the developer scenarios have become a third leg to our market and site selection, and have helped us to set and achieve higher pro-forma rents, sometimes by 30%.”

Matt Tracy is the managing director of innovation and technology at Atlanta-based RangeWater Real Estate, where he’s been charged with identifying and selecting new technology for the developer and manager of 100,000 units across the Sun Belt and Mountain States. On the development side, he’s evaluating contractor-worn cameras for jobsite reality capture that can be migrated to building information modeling (BIM) platforms or other digital twins for design, construction management, and building operations.

What’s critically important for all phases of development and operations of new communities is the integration and installation of managed Wi-Fi networks, Tracy says, without which the IT of tomorrow, be it building tech like water leak sensors or management tech like maintenance requests, will be rendered mostly ineffectual.

“Managed Wi-Fi creates the network and Internet of Things (IoT) compatibility to fast-forward to the future of monitoring buildings and using predictive analytics to understand when systems are going to fail,” Tracy says. “Then you can take that knowledge and optimize maintenance on turns to avoid support calls after a new resident moves in. Planning those upgrades is more efficient versus being in reactive mode and also creates a better experience for the resident because they didn’t have to call maintenance at 4 a.m.”

Tracy says one of the more difficult challenges of adopting development technologies is true of trying to adopt any new technology in multifamily: convincing investors of the value and the ROI. In the case of managed Wi-Fi, the challenge is exacerbated by the difficulty of doing infrastructure retrofits and the tendency of most apartment developers negotiating 10-year contracts with their internet service providers.

“So if you don’t put it in on day 1, you have to wait a decade to change it, and without the digital foundation it becomes hard to try any new technologies,” Tracy says. “Who is going to adopt the new flashy $50,000 solution if it involves a $500,000 managed Wi-Fi upgrade?”

Taylor agrees that deeply rooted internal rate of return and arbitrage expectations continue to challenge new technology adoption from groundbreaking to disposition, particularly when formula-driven institutional investors are calling the shots. “Our institutional capital partners are wary of new technologies,” he says. “And everyone that does what we do is typically positioning to another institutional exit. You are positioning to how your takeout buyer interprets value, and that world is extremely formulaic, so when you are proposing something out of the box it is a much longer discussion.

At South Carolina-based Sands Cos., vice president of construction Hal Funderburk has found the use of Autodesk BIM and construction management platforms can increase project visibility, productivity, and efficiency as communities are built, but are dependent upon universal adoption by design build teams and still need qualified knowledge workers to double-check output and provide quality control in the field.

“You can have all the data you want, but if you don't have the right personnel pushing to get the job done in the field, the technology doesn't matter,” Funderbuck says. “We have committed to a training process to improve adoption and use of our technologies by subs and other stakeholders, because the capabilities are so promising. You can issue a request for information faster than you can send an email, get analytics to organize cost and profit and loss, and build schedules into the system, but it doesn’t work unless you get everyone trained and in the habit of using the technology.”

In addition to managing stakeholder adoption, multifamily developers looking to leverage technology across the design, build, and operations cycle need to satisfy the demands and desires of disparate user groups. Tracy says something as simple as leak sensors can face a convoluted path to adoption and installation that might differ from property to property.

“On the investment or asset management side you’ll be told that leak sensors add no value or ROI to the asset, but if you talk to insurance risk managers, they will make the argument that leak sensors pay for themselves in the first year, and if you are a resident that had a leak above your apartment that technology becomes very real and personal,” Tracy says. “That’s what makes development technology so hard: You have many stakeholders; they all have very different, polarizing requirements; and the person that ultimately controls technology spend is a banker that is making a final decision solely on ROI. In many ways the industry makes its money off of not changing, of just rinse and repeat.”