High-Speed Internet Access Gives New Lease to Apartments
Alex Oldham has a high-speed Internet connection at work, and he wanted one for his computer at home, where he sometimes works. The trouble is he was living in an apartment that wasn’t wired for speed.
His complex in the Bay Area town of Foster City became one of the first in a pilot program by owner BRE Properties Inc. to get high-speed wiring and a private Internet site, called an intranet, with a host of services for tenants.
The program was promising enough that BRE, one of the state’s largest apartment landlords, is rolling out upgrades at thousands of its units statewide.
Landlords, in fact, are starting to jump on the broadband bandwagon, setting up intranets and even providing monitors and keyboards in some cases. Only 1% of rentals nationwide have high-speed packages, but industry analysts say most major property-management companies have plans to install such systems.
With more computer-savvy Gen-Xers and -Yers filling up their complexes, owners have found that they have to move their properties, especially the high-end ones renting for more than $1,000 a month, into the Internet Age.
The effort also turns owners into Internet service providers and gives them fees and commissions amounting from 5% to 15% of revenue generated, analysts say.
BRE officials say their company’s services will help keep tenants satisfied and keep them from moving. The online package will include an intranet Web site that lets tenants, for example, request repairs, make rent payments, reserve tennis courts, chat with other tenants and order from local advertisers.
“It’s becoming a required amenity,” said Steve Carlson, chief executive of Velocity High-Speed Internet in Walnut Creek, which installs high-speed wiring for BRE and others in the industry. “If we don’t offer it, people will go elsewhere.”
While telephone, cable and other companies can offer high-speed Internet connections to tenants, they typically don’t offer Web sites exclusively for any one rental community. Even so, apartment owners already are finding it tough to sell their Internet packages at $35 or more a month when tenants can pay much less--or nothing--for a connection through slower dial-up modems.
Some owners have found that they can sign up only 25% to 35% of their tenants for high-speed connections and intranet portals. Typically, landlords need 40% or more to make their investments worthwhile, said Thomas Tracey, a regional manager for ReFlex Communications Inc. in Seattle.
“It’s going to take longer than people think” to get the base of customers needed, said Tracey, whose company offers Internet services for apartment buildings.
Some, like Oldham, aren’t impressed with the Web site services.
The 32-year-old computer network engineer wanted a broadband connection when he moved into Foster’s Landing 18 months ago. He signed up almost as soon as BRE offered the service. But he generally ignores the community’s Web site.
He used the Web page to order maintenance crews to repair a bathroom fan and a towel rack. They were fixed within a day of placing each order.
“But I don’t know how much different it would be than picking up the phone and making a claim,” he said.
To succeed, landlords will have to persuade harried residents that faster Internet connections and their own private Web site will save them time, said Steve Lefkovits, vice president of National MultiHousing Council, a Washington trade group.
“It has to be attractive to people, and they have to want it,” he said.
Several companies are doing their best to lure customers.
Sares-Regis Group is including a no-frills computer in every unit of a luxury complex under construction in Irvine. From the community’s home page, tenants will be able to order maid service, arrange for dry-cleaning or register for a water-aerobics class.
“We believe this is the next thing that people want,” said Rob Parker, a vice president at the Irvine firm.
Tenants at Archstone Communities, a Denver company that operates 75,000 units nationwide, will be able by next summer to order movies, renew leases or pay rent online and order merchandise at a discount through agreements with national retailers, said Dan Anedro, chief information officer.
BRE Properties, which is based in San Francisco, is installing high-speed wiring and Internet programs in about 4,500 rentals in Southern California.
For residents without computers, a set-top box and a keyboard will be installed offering limited Internet access and e-commerce functions through the television.
At the Foster’s Landing Web site, for example, tenants can print out discount coupons to nearby businesses or order groceries. They can send e-mail to other residents, post bulletin board messages for a baby-sitter or learn from the manager that the swimming pool is closed for cleaning. They soon will be able to pay rent online and order live video as the Web site continues to expand.
Service orders from tenants also can be sent online and relayed to wireless Internet devices clipped onto the belts of maintenance crews. Work orders pop up on portable screens and include even parts numbers and tools needed to compete the job.
Residents can track the status of orders online, and receive e-mail confirming that repairs have been completed. The service in the pilot program in Northern California has resulted in a significant drop in phone calls to the office, freeing up the office staff, said Karen Dorshkind, community manager at Foster’s Landing.
As consumers incorporate computers more into their lives, they will require such services, property owners say. Consumer Internet use continues to rise, even in the real estate industry.
The number of vacant rentals leased over the Internet by Western National Property Management Co., for example, has grown to 8% from 2% since 1997, said Steve Donohue, the company’s president.
The Irvine firm, which has 22,000 units, is planning to roll out high-speed and Internet services within the next two years.
The key, Donohue said, is grouping the right combination of Internet services onto a home page that will be easy to use.
“If we can find the services they want and make it easy to get information,” he said, “they will free up more time for themselves, and I think there will be an explosion in usage.”