Green Builder Media CEO Sara Gutterman interviews Aaron Zarle of Kwikset about the garden-style multifamily boom, the millennial and boomer renters driving it, and the coming shift in 2025. Zarle also breaks down the difference between smart apartment platforms and access control, and how Kwikset's Unite system serves both developers and tenants.
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Sara Gutterman: Sara Gutman. I'm CEO of Green Builder Media and I'm here with Aaron S.R.O., national Builder manager, multifamily for ASA of America's Residential. First, let's just start with some multifamily trends that you're seeing. We are certainly seeing that a lot of our community scale builders and developers are placing more emphasis on, let's say, cottage multifamily, so maybe up to four stories.
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Sara Gutterman: Partly because of affordability concerns, partly because of density. Unfortunately, zoning changes are enabling them to focus more on those types of housing units. So talk to me about some of the trends that you're seeing in multifamily.
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Aaron Zarle: Yes, there the trends in development and multifamily, and really for the last several years have been in the garden style segment, the smile of the United States, where it's more more real estate, you know, ten buildings, pools, clubhouses, surface parking, things of that nature. That's been the trend in construction moving away from or downtown CBD type type construction.
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Aaron Zarle: Now you'll see, obviously you've got big markets like New York and LA where they're building new buildings or renovating them all the time. So those units are are big ones in those markets. But for the most part, the trend that you're seeing is, is in that area. And it lends itself well to single family builders that I think you guys might be a little more familiar with as it relates to their ability to build on that land and what would be the most profitable thing for them to do.
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Aaron Zarle: So you had single family builders that were sitting on land for a long time, and financially it made more sense for them to build multifamily properties because of rental rates and things. The way that the market was trending and increasing really over the past, call it 8 to 10 years in the multifamily space. Now we're going to start to see a downward shift in 25.
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Aaron Zarle: I think that's probably where you might want to go next. But the the growth in multifamily has been wonderful over the last 8 to 10 years, and it's been predominantly in that in that sector. And those single family builders have taken advantage of that.
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Sara Gutterman: Talking about demand, who are you seeing are the most active buyers in that garden style multifamily category?
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Aaron Zarle: Yeah. So tenant focused, you know their needs. I think the demographics are both millennial and boomer. That's been, I think the two growth areas for sure. And you've seen the trends and the reason why there has been the construction that there has been is because those two demographics would rather rent than own, at least at the time, you know, over the last 3 to 5 years due to their market factors and things of that nature.
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Aaron Zarle: I think that's still the case. I don't think that that part has changed. Again, the demand hasn't changed. It's just the the financial constraints of building properties associated with where rents have gone is what is going to lead to the downturn.
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Sara Gutterman: What are you seeing in terms of the evolution of smart home systems, both with respect to enabling technology development as well as demand?
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Aaron Zarle: Yeah, it's interesting. In multifamily electronics, you really kind of sit in two buckets. You either sit in smart smart apartment or smart home connected space like you mentioned, or you sit more in the requirement of wanting access control. And they're really actually different things now there. They're merging, certainly. And there are companies that are looking to combine those things.
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Aaron Zarle: But the the connectivity or the communication protocol between those two, call it platforms or services are very different. So blending them is the difficulty. Traditionally we'll see much more access control requirement in new construction, meaning common area access control, unit entry access control and things of that nature. Whereas, you know, wires are being, you know, run through walls in a pre-construction situation and in a renovation situation.
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Aaron Zarle: That's where we're seeing connected living or smart apartment have a higher adoption rate because they're not going to break through alls and run wire. They're going to put a hub in it. Every unit. They're going to put a smart lock and a light and a thermostat and say that their property that was built in 1998 is now smart, and that's fine, and that's wonderful.
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Aaron Zarle: But there are two different things.
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Sara Gutterman: Now, I know the Kwikset has recently come out with unite specifically for multifamily units. So tell me a little bit about that system and some of the solutions that it provides.
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Aaron Zarle: Yeah. So it is the first access control system by Kwikset. It is designed specifically for multifamily. Like you said, we have a pretty sizable market share in the mechanical world today in multifamily. We have wonderful relationships across the country, both developers and and our channel partners. So we basically use the market to to help them build the product.
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Aaron Zarle: I like to say that it's built for the market by the market, because we've been in the market for so long servicing the mechanical needs of these builders through these distribution channels. So the product itself is a, a an access control, basic access control solution for really the merchant builder, the developer that's building garden style properties. It gives them a very low cost solution as it relates to hardware.
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Aaron Zarle: It gives them really the biggest thing is the software usability and simplicity of how it is. It is able to be used so simply during every phase of the property, during the installation by the installer that's performing that task, the setup of of the software and the commissioning of the hardware, as well as the property manager, once they're overseeing the property and running it, the solution there, and then ultimately down to the tenant, providing them the things that they're looking for, the ability to share desk keys and other things like that.
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Aaron Zarle: So we feel that we've created a product that really meets a lot of the needs at a cost profile that is very attractive.
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Sara Gutterman: He through the the occupant experience, if they have a unite system.
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Aaron Zarle: So they have the ability to open their lock via two things a five that would be issued by property management or their mobile device, also issued via property management through an invite. But it leverages our app. We have dynamic DLL in our platform, meaning that you've got roughly right the extent of the range to interact with the lock.
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Aaron Zarle: So 28 to 30ft, you could be walking down the corridor, click unlock. And certainly by the time you get there be able to open. Open your door. You can provide as a tenant guest keys to really anyone, whether that's a significant other or a sibling, or a dog walker or a babysitter, anybody like that. You have full usability at the door.
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Aaron Zarle: There's there's not remote locking and unlocking, and that is by design. That is one of the things that developers told us, hey, we we want to make sure there's no liabilities here, but the tenant experience is using your phone really to provide access to, you know, your friends and loved ones and frankly allow you to gain access to your property.