Boomers Scale Down But Still Want Integrated Home AV/AUTOMATION
Millson Technologies’ Vancouver territory was largely insulated from the worst of the housing disaster of the last three years, especially the “ultra rich” for whom a condo like this one might be a fourth or fifth residence.
There are 78 million Baby Boomers in the U.S.– over a quarter of the country’s total population– and they’re looking for real estate bargains as they downsize into post-child-rearing residences.
According to one study, 66 percent of real estate professionals surveyed reported an increase in home purchases from the “empty nester” demographic over the last three years, with the desire to downsize as the reason cited by them as the reason for the move, according to more than half of those brokers. Furthermore, almost half of those downsizing are buying condos, the report states.
The Boomers are a tech-savvy cohort, and it may be an inferential connection but 48 percent of home automation dealers expect an increase in revenues in 2010, according to a recent Irish market analysis, a forecast based on GDP growth (2.8 percent) and a rebound in luxury goods manufacturing.
David Frangioni, owner of Audio One/Frangioni Systems in the Miami area, is very familiar with the recent dynamics of the luxury condo market. “This is a strong trend right now,” he says of buyers flocking to South Florida to purchase highend condominiums at bargain prices, and it has stimulated AV and automation systems sales and installations. However, that scenario comes with a built-in paradox for the integrator. “The quality of the condo unit has not changed from three years ago,” Frangioni noted. “But what was a $2 million condo three years ago is now a $1 million condo, and the people who are buying them have the expectations of a $2 million condo for the systems but are only budgeting for a $1 million condo. It’s become incredibly challenging to find solutions for this kind of client. The budgets are literally half of what’s needed.”
There are solutions. When confronted with this budget vs. expectation situation, Frangioni sits with the client to prioritize system features. If music isn’t a huge issue then not all rooms get distributed audio; if they can live without motorized blinds, those are left out of the design, or only added to certain rooms.
Another tactic is to employ some of the more cost-effective systems solutions that have come on the market in recent years, including new price-point-level systems from traditional high-end manufacturers, like Crestron’s Prodigy, or ZigBee-enabled solutions from companies like Control4. But, Frangioni says, the integrator has to clearly communicate to the client the fact that these less expensive solutions aren’t going to offer the same level of functionality or performance as the top-of-the-line systems products can. That can be especially hard when the newly purchased residence is a second home and the client has a full-blown Creston or AMX system in their main residence.
Wireless solutions can offer some additional savings in terms of less cabling to run, but Frangioni says that the savings are relatively small, particularly in newer buildings that had more cabling installed during construction. More of concern is how wireless in condo buildings can create crosstalk problems for Wi-Fi, distributed AV, and control signals. “We have to be very careful with wireless in condo buildings,” he cautions. “We go into them with a spectrum analyzer and look for problems before we even start to work. Wireless can be dicey in a private home where you have distance between you and your neighbors; in a condo, it’s 10 times more likely to cause potential problems.”
The larger challenge, Frangioni says, is to resolve the clients’ budgets with their expectations. “They’re thinking like $2-million clients, but they’re not budgeting like them,” he said. “In this kind of market, it’s as much about psychology as it is about technology.”
Up, Up, and Away
Richard Millson, president and CEO of Millson Technologies, says that the real estate market in his Vancouver territory was largely insulated from the worst of the housing disaster of the last three years, especially the “ultra rich” for whom a condo there might be a fourth of fifth residence. But below those strata he’s found a growing number of empty nesters selling single-family residences (or several of them, at discounted prices) to buy up in terms of a luxury condo residence. They are bringing with them a level of demand for systems that would be expected in the single-family market but that is pushing the envelope in condos, including both home theaters and separate media rooms, and whole-house audio and video distribution.
“These are amenities that historically haven’t been offered in condos by developers because of the costs involved,” said Millson, whose business model has been to pre-sell his systems services as the builders pre-sell their units, giving him the opportunity to get wire into the walls as part of the original construction and making systems integration considerably more cost effective.
However, the slowdown in new-construction sales has pushed some of the business toward retrofitting existing condos. That’s compelled Millson to look more seriously at wireless systems solutions from companies like Control4 and Sonos. “Those are useful for a number of applications, but if you need to do HDMI over distance, you’re not going to be able to go wireless,” he said.
And when it comes to wired propositions, Millson says he encourages firsttime condo dwellers to go for remote-controlled motorized window treatments. “That’s the number-one thing I recommend, because if people have not lived 200 or 300 feet in the air before, they are going to experience the sun in a whole new way,” he explained, adding that he further recommends blackout curtains be added to deal with the artificial ambient light that surrounds urban communities.
David Frangioni, owner of Audio One/Frangioni Systems in the Miami area, is very familiar with the recent dynamics of the luxury condo market. He says it has stimulated AV and automation systems sales and installations like this project.
Millson says a condo is usually better off being thought of as an island within the larger building, self sustaining and independent of the building’s own systems except for entry access video and audio from a front lobby. “We’ve found that keeping the automation within the unit is the best,” he said. “We’ve seen it tried and seen it fail; there might be no one take over the management of a buildingwide system, and the building management itself isn’t qualified or doesn’t want to do it.” Millson did, however, cite the 1,500 condo units that comprise the recently constructed Olympic Village in Vancouver as an example of a building-wide integrated systems success. Those condos share energy-saving and measuring systems.
Millson predicts that as Boomers age, they will increasingly want to age in place, and the density of condo living combined with the increasing sophistication of systems that are now adding healthcare monitoring and management could combine to create a perfect opportunity for electronic systems integrators.
“We predict that that’s going to be a growth field for us,” Millson declared, referring to the convergence of home automation and personal medical systems services, which will be able to act similarly to personal luxury services. Many of those services have been overtaken by smartphone apps like Yelp!, but it may be a while before people can have their blood sugar monitored on an iPhone. “The demographics are driving it there,” Millson said.
Partnering with Developers
Robert Kaufman, CEO of Audio Command Systems on New York’s Long Island, sees a future that has systems integrators working more closely with high-rise developers. Builders have realized the allure that systems holds for upscaling, downsizing Boomers, and he’s in discussions with one developer to put an electronics amenities package into a sales demo unit. The system, which will offer basic HVAC and lighting control, will be upgradable, offering the builder an upsell path and the integrator the potential for a long-term client. The difference, and one that acknowledges the current realities of the real estate market, is that Kaufman would be putting the systems into the demo unit on spec. “The market’s coming back, especially in places like New York, Florida, and L.A.,” he said, “But no one wants to make the entire investment themselves.”
A New Frugality, Even in NYC
Michael Goodrich is president of Spectra AV in Manhattan, which may be the least negatively affected major real estate market in the country. But while Manhattan is a destination for those still looking to make their mark rather than downsize, even there the new frugality that’s driving the makeover of the condo market is evident. Goodrich says that he has noticed only nuanced changes in the level of integration work wanted by his clients. “They still want music in every room, but now it’s every room that ‘makes sense’ to them. They’re not putting speakers in the back hallway where no one goes,” he noted. “When they want an eight-zone whole-house audio system, they don’t want it to go to 10 zones. Integrating the wine cellar into the house automation system, they’re not doing that anymore. They want Apple TV instead of Kaleidascape. The customer has become more value minded, even the very, very highend customer. And that’s a good thing. For everyone.”
Stop Banging on the Wall
Room acoustics are a specialty of John Storyk, who now works on more projects like this one since acquiring Miami’s high-rise integration specialist Maxicom.
Acoustics remain an important part of any home theater installation but the topic takes on additional challenges in high-rise and condo buildings.
Room-within-a-room construction used to isolate the theater or media room from the rest of the unit tends to be far too expensive to implement in condos. John Storyk, an acoustician and principal in Walters- Storyk Design Group, which last May formalized its home theater design operations with the acquisition of Miami systems integration specialists Maxicom, still believes that there is a broader market for acoustical treatment solutions in condo environments.
The current wave of re-sales of bargain-priced properties will only fuel that trend, he says. “People are coming to this market from homes where they also had or have home theaters, and they’re not going to want to forego them here,” Storyk stated. “It’s one of the reasons we’re in this market.”