The Dawn of the High-tech Era

Computer technology is changing both the marketing and operation of apartment communities, and easing the lifestyles of residents.

Five years ago, people looking for apartments to rent would search in a newspaper's classified section. While this method of finding the perfect pad is still practiced, renters are increasingly going online to find a new place to live.

"Right now I think we're getting about 20% of our leads coming through the Internet," says Bill Paulsen, CEO of Charlotte, N.C.-based Summit Properties, which owns 68 apartment complexes totaling 18,000 apartments. The company, with an additional nine new communities under construction, has an interactive Web site to help with the renting process.

"It's a very powerful marketing tool," notes Paulsen. "Before they're going to go out randomly looking for an apartment, people are going to get on the Internet and try to narrow down the choices.

"We feel like it's just essential we have first-class, accurate and candid information on the Internet so that people can make an informed choice," says Paulsen. "My personal belief is that the Internet has to be brutally honest for it to work. It's not a place where you can hide the goods."

Summit is in the process of completely revamping its Web site, to make it easier to modify and update in the future. The company plans to have online service requests and online leasing. Today, Summit's Web site primarily is brochure ware.

For example, a person planning to relocate to Raleigh, N.C., can go to the Summit Web site, click on "Raleigh," click on a certain area of the city, and find floor plans and price ranges. The floor plans include 360-degree virtual tours. Paulsen admits Summit Properties' Web site is still a search-and-find process, but says the goal is to make it totally interactive.

Other large rental property companies are moving online as well for rental application processing. Denver-based Archstone Communities Trust is in the process of designing a paperless rental system.

"We have a general Web site today," explains Dan Amedro, Archstone's CIO. "But, we're developing some new Web applications. One is called Online Lease. This will give us the ability to completely lease an apartment over the Internet." According to Amedro, Archstone hopes to have the new system up and running within the next two years.

Online customer service It's not enough to merely have a Web site. Like every conventional industry moving online, having an effective Web presence really comes down to old-fashioned customer service. As online inquiries from potential renters increase, companies must ensure those inquiries are being answered in a prompt manner. For many companies, this has meant hiring additional staff.

"We recently hired an Internet marketing coordinator to ensure timely response to Internet inquiries," says Greg O'Berry, senior vice president of Chicago-based AMLI Residential Properties Trust, which has 70 properties in seven metropolitan areas (Chicago, Indianapolis, Kansas City, Atlanta, Dallas, Houston and Austin, Texas). "The volume has grown so much that we are devoting specific resources to making sure we have a timely response system so that people sending e-mails hear back from somebody.

"In the industry, that has been a problem," says O'Berry. "Because the Internet is somewhat new to people, people are inquiring about apartments on the Internet and they don't hear back."

Whether renters are searching online or thumbing through newspapers, they are still looking for the best bang for the buck. In rental terms, that means the most amenities for the best price. But the very definition of amenity has changed radically in the last five years. Whereas once central air conditioning, parking and a dishwasher might be considered important amenities, today it is all about the digital information highway. People want their high-speed Internet access, and they want it now.

"We have people that are out there that are making rental decisions based upon the availability of [Internet access] at a property," says O'Berry. "The demand from residents and prospects has grown dramatically in the last six to nine months.

"Obviously, we don't want to lose prospects or residents over the availability of that service. So it's very high priority for us in getting high-speed Internet service to all our residents. We are in the process of closing a transaction with a broadband vendor to implement the service across the remainder of our portfolio by the middle of 2002," O'Berry adds.

AMLI is prioritizing high-speed installation based on whether public utilities, such as phone companies or cable franchises, in each of its markets are making high-speed Internet access available. For example, high-speed Internet access through a digital scriber line (DSL) is available in some areas from the phone company, explains O'Berry. In those cases, high-speed Internet service is already available onsite, and therefore installation is not given the highest priority.

"We're placing the highest priority on properties with the highest demographics and therefore generally the highest demand, and then on properties that do not have high-speed Internet available to them through the phone company or the cable company," says O'Berry. Virtually all of AMLI's properties in Austin, feature high-speed Internet access, while technology lags behind in cities such as Kansas City, Chicago and Houston, he adds.

"We believe this is going to be an increasingly important service for residents," says Amedro. "Before too much time goes by, it will be one of the key things people ask about when wanting to lease an apartment unit."

Archstone started installing high-speed Internet systems in its units 18 months ago. Last year it announced a partnership with Broadband NOW!, a Dallas-based communications company.

According to Amedro, Broadband Now! can be delivered through cable modems or DSL if the right kind of copper wire infrastructure exists.

Wireless technology, says Amedro, was slow in becoming as reliable as it needed to be for service. But Amedro believes Broadband Now! has turned some corners. Archstone has deployed several wireless systems in the last few months, and Amedro says the systems are working quite well.

Using one company to install high-speed Internet systems on Archstone's properties has allowed Archstone to streamline the process. Approximately 30% of Archstone's properties now have high-speed Internet access.

"We're very happy with it," says Amedro. "More services can now be provided digitally, like phone service and video on demand. I think as time moves forward, the power of having broadband capability and content will become more consumer apparent."

But wait, there's more Providing high-speed Internet service to customers is only part of the total equation. Many real estate companies are in the process of creating their own Web hubs. Soon tenants will be able to order utility hookups, request maintenance service, or post announcements on virtual bulletin boards.

Archstone is developing what it calls "Web Communities," which will give it the ability to Web-enable its core business. At this point, explains Amedro, Archstone is not trying to get into the world of e-commerce, but trying to understand how it can interact with residents in a Web-enabling fashion.

New e-businesses are moving into the real estate niche, providing online services unimaginable a decade ago. One such company is San Francisco-based OpsXchange, which specializes in providing business-to-business procurement solutions for the real estate industry.

"We provide an integrated supplier network that brings buyers and suppliers together and we provide this ASP (application service provider) technology to people who want to enable their own e-market places," explains Kevin Lee, marketing communications manager for OpsXchange.

OpsXchange allows buyers to engage in real-time electronic transactions with a multitude of suppliers through a trading hub. According to Lee, the company's proprietary technology also maintains industry relationships, such as contract pricing, while allowing suppliers to promote their own brands within the hub.

Since OpsXchange is a hosted application, customers do not have to incur the costs of building and maintaining their own infrastructure. The procurement application, according to Lee, is easy to customize and use.

"We don't necessarily aggregate buyer demand," notes Lee. "We really just focus on the process of buying and selling."

Wireless metering Wireless technology in rental real estate is not confined to Internet applications. For decades, utilities such as water have been virtually impossible to meter. At best, water consumption was factored into the lease, or a "fair-share" assessment was billed to each tenant. In all cases, there was zero incentive for tenants to conserve water.

At least one company is changing that. Wellspring Wireless Utility Services, a division of San Diego-based Wellspring International, offers a wireless metering system that can accurately track water consumption.

"With close examination, we noticed there was a trend for owners to shift utility expense through submetering," explains Wellspring President Brian Brittsan.

After entering the submetering arena, Wellspring noticed that roughly half of U.S. apartments could not be submetered, explains Brittsan.

The problem with most multi-story buildings is that they are plumbed in a manner where the water is distributed through vertical riser pipes. For example, the toilet on the fifth floor feeds into the same pipe as the toilet on the seventh floor.

Typically, there are multiple points of water entry coming into each apartment, making traditional metering virtually impossible.

Wellspring's Aqura system provides flow sensors at every entry point and transmits not only water volume consumption, but also water temperature, thus enabling tenants to be billed not only for water used, but also for the hot water energy.

While tenants not accustomed to receiving a hot water bill each month might not appreciate the new metering technology, it actually rewards those who conserve water and energy.

In addition, the system requires no upfront capital investments from property owners.

"From day one, it's a net cash positive arrangement," says Brittsan.

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