There’s gold in the urban MDU market, as long as you don’t rush into it.
There are some calls a custom company doesn’t want to miss. Like the call from the successful young Manhattan finance whiz (and mad audiophile) who has purchased not one but two floors’ worth of Manhattan real estate in a desirable location just off Park Avenue and has enlisted a noted architectural firm to gut and re-design the space as a luxury bi-level apartment. That’s the kind of call that could lead to a sweet contract, to important industry connections and even to publicity in leading architectural magazines. But as Andrew Sevin and Al Patel, owners of Enhanced Home, a home automation company based in Westchester County, N.Y., found out, it’s also the sort of call that can lead to a series of challenges never seen in suburban installs. The luxury condo market provides opportunities to differentiate and to challenge your business.
Challenges, for instance, like talking an interior designer into speakers that will actually be seen, trying to get a large amount of A/V equipment into a way-too-small freight elevator, and hiding wires in a home with no basement, crawl space or attic…just to name a few. There are many more, as custom retailers all over the country are now discovering. In an age when single-family housing starts are down but high-end, high-rise condo and condo/hotel hybrids have proliferated, low-voltage dealers are realizing it’s a profitable time to look up. The “vertical” or MDU market seems more ready than ever for a wide array of “techno-menities” (a phrase developers like to use when differentiating their properties). Automation professionals willing to learn the language of builders, developers, architects, designers and wealthy, urban retrofit clients are looking at considerable business opportunities, but they all agree that the MDU market is best approached carefully and, if possible, long before the concrete trucks pull up to start pouring out floors.
For Sevin and Patel, the 2005 call from Steve Sullens, the enthusiastic Manhattan apartment owner looking to integrate his thousand-album record collection into his new, 5,000-ft., architecturally significant loft was the first of a series of conversations they knew were essential before they took on the job. Their immediate next step was to invite Sullens and his architect, Peter Pelsinski of the firm SPaN (Stonely Pelsinski and Neukomm LLC), up to Patel’s home in Westchester, where Sevin and Patel could give them a hands-on demonstration of a variety of home automation technologies.
“Our client Steve made the introduction,” says Pelsinski. “He was the one who said, ‘Why don’t you talk to these guys? At the time, we already had a fairly aggressive idea about what we wanted for the space, but Steve and I went up together. We wanted to kick some tires and listen to some things.”
When the two Mannhattanites arrived at Patel’s home (his business partner Sevin calls it “Westchester’s smartest house”), they were wel- comed with a two-hour show of sorts, a home automation demo packed with plenty of “wow factors” that enticed both the client and the architect to consider much more than just whole-house audio.
“We introduced the idea of video distribution,” remembers Patel, “and they saw Kaleidescape for the fist time, which made a big impression.”
Such an impression that both the client and the architect were ready to involve Enhanced Home in plans for a home cinema, music room, home office, media den, any number of control touch-points, and a mechanical lift that could hide a flat panel television behind a staircase on the property.
“With Al and Andrew, it was a very good dialogue,” says Pelsinski. “Suddenly, Steve was signed up.”
The partnership came not a moment too soon, it turned out, because Pelsinski’s firm, which was also handling the interior decoration, had already begun to implement their design vision for the space. “Custom floors and cabinetry of exotic, imported wood had already been made for some of the rooms,” says Sevin. “There was no way we could tear down or drill into woodwork of that quality.”
Enhanced Home’s design team brainstormed their way through the luxury apartment, hiding control panels (in places like the headboard in the master bedroom), using wireless solutions where they could (like a Slingbox for distributed video from the office to a roaming laptop) and nego- tiating with the SPaN team to allow some some visible components too.
“We told ‘em, you have to show something!” says Patel, referring to solutions like pre- mium stand-alone speakers for the music room and a touch- screen control computer that came to sit on the kitchen counter. “At first, they didn’t want to see anything.”
After a fair amount of give and take, Pelsinski eventually came around.
“I’d say this is all a learning curve for architects,” he says. “We want to design home theater as an architectural experience…I’m starting to think it’s not so much about hiding technology anymore. It’s about integrating it to enhance the design. Products make a statement. You have to love them.”
After two years of work, Patel and Sevin left their Manhattan client with what’s likely the smartest apartment in his neighborhood and, perhaps even more importantly, went on to work on a number of other city projects with Pelsinski’s firm. Enhanced Home still does plenty of suburban single-home work, but they continue to cultivate relationships with urban architects and designers too.
“We recently joined the ASID and the AIA,” says Sevin. “I want to learn design language and I want to educate too. Our business will be stronger than ever if I can keep architects and designers as up to date as possible on what’s available. I send them brochures, take them to lunch.”
Hot Times in the City
Why schmooze the city folk when there’s talk of a condo glut in the real estate market? A number of reasons. First of all, things aren’t so bad at the top tier of the market, where luxury condos are still going up and still changing hands at a nice rate as well. As Sevin puts it, “I don’t think there’s a hous- ing bubble at the $5 million dollar level.”
Industry watchers agree. “During the height of the housing market, back in 2004-2005, everybody was buying a condo (or three!) to sell for a profit,” says Bernard Markstein, senior economist at the National Association of Home Builders. “Even as the market turned bad in ‘06, they just kept building high-end condo projects. The hotspots may have changed, but there are still plenty of opportunities to distinguish yourself in the luxury market.”
Markstein says Manhattan, Boston, Chicago, Las Vegas, Phoenix, San Diego and Miami are all “still building [luxury MDUs] and running wires,” as are cities in the Northwest (Seattle, Washington, Oregon) and Texas. He feels that some cities are currently overbuilt, like Philadelphia and D.C., but he says that just means that developers are looking to do more to pitch their properties as “unique.”
That’s another reason a “condo glut” is not a bad thing for the low-voltage industry: the need for differentiation.
Bill Schafer, Crestron’s director of channel development says he’s seeing a huge urban draw for custom business right now. “Developers are leveraging with technology,” he explains. “There’s not a bigger marketing flag you can wave right now than, ‘This is a green building!’ and our products help make a building green.”
Linnea Johnson, market manager for Residential Towers at Lutron agrees. “The untapped area of the market right now is using all these technology solutions for energy savings. And not just for saving money (because let’s face it, these people are spending millions on condos already), but for saving the environment. That’s what sells.”
Schafer and Johnson say another big differentiator is the idea of an electronic concierge. MDU buyers, whether they are looking for a vacation home in a coast-side high rise or a retirement nest in a swank building that operates much like a hotel, are increasingly drawn to a new slate of services being developed by a number of vendors right now, services like grocery delivery, house/pet sitting, dry-cleaning pick-up, restaurant/theater booking and car-fetching.
One such vendor is Vertical Integrations Group (VIG), which is providing these “technomenities,” in partnership with automation companies, for a number of Trump high-rise projects going up in Miami. VIG vice president Scott Evans says touchscreens allow his company to deliver hotel-style room service to homes. “One of our tag lines is, ‘We bring the neighborhood to your building,’” says Evans. “People can order pizza without having to look up the number. We’re finding valet services incredibly popular too.”
Caution! Building Zone
Installers have exactly what developers need and affluent condo-buyers want, but delivering the goods is a complicated proposition. Victor Cypher, who teaches a course called “MDU Sales and Development” for CEDIA, has learned from experience. His integration company, EVtek, has done automation for three buildings in Chicago: Huron Street Lofts, the 1120 Club and Fountain Square. Each had over 50 units.
“It’s a lot harder than a single family home,” says Cypher, who’s also involved with a dozen urban retrofit projects as well. The main challenge, he believes, is scheduling.
“If you get a contract to put the whole low-voltage infrastructure in a building, you have to be very aware of when that building is going to go up,” he says. “You have to keep track of this, attend weekly construction meetings, and talk design with the architect….they’ve all got electricians telling them that low-voltage is no big deal. It’s an afterthought for them. But in all actuality, next to picking out kitchen cabinets, it’s the thing people want the most and they don’t know it until they get in!”
Cypher says builders and electricians have to be alerted that an installer is going to need 3/4-inch conduits put in when the floors are poured. “The way MDUs are built, they pour cement as they go up or they use steel planks. You have to get that pipe in the floor while it’s being poured or you’re done!…With a steel-plank building, you put all your pipes in the floor for the unit below. Then, they put down a two-inch topcoat of cement to level it off. If you come in afterwards, it’s very, very expensive to core through the cement.”
Cypher says there’s no real way to “future-fit” a building, though the developers will often try to sell condo-shoppers on the idea that their building is ready for any of the new technologies that are down the pike. The best way to safeguard, they say, is to run wide-enough conduit that can handle whichever co-ax cables will be all the rage in the next few years. The many new wireless systems offer MDU retrofit opportunities, but, as Cypher says, “there’s still an awful lot of wires necessary for a good wireless system to really work.”
Experienced MDU integrators stress that each new high-rise or urban retrofit project will have it’s own share of unique challenges, from 100-year-old plaster walls to a doorman who refuses to let your delivery truck idle in front of the only entrance. Each install requires so many meetings and negotiations, not to mention networking with everyone from the electrician’s union to multiple interior designers, that business begins to feel more like corporate diplomacy than pulling wire. To those that persevere, however, there’s a burgeoning opportunity in cities across the nation.
Even architects, once reluctant to play with A/V guys, see the wave coming. “We have increasingly technology-obsessed clients,” says Pelsinski of SPaN in New York. “It’ll be interesting to see who [among vendors and dealers] sorts that out. It’s going to radically change how people live in their homes in the next 10 years.”