Nest thermostats, keyless entry locks and electric outlets compatible with Google Home and Alexa platforms have become standard bragging points for developers marketing units in new apartment complexes.
Many renters welcome the devices’ promised conveniences, with industry research indicating they’re willing to pay a rent premium for them despite lingering questions about privacy and security. Landlords can employ the devices as a sort of virtual building superintendent, with the ability to monitor indoor temperature in vacant units or detect building system failures such as water leaks.
“It’s good for the resident, but it’s better for the operator,” said Shawn Mahoney, chief technology officer for Boston-based General Investment & Development, which owns more than 30,000 apartment units nationwide. “It’s all about running your property much more efficiently. Our way forward is all new construction is going to have some elements of this.”
A Steady Growth Trajectory
The smarthome device market comprises approximately 1,500 companies, according to an October report by Boston Consulting Group and researchers Quid.
Companies have received a combined $12 billion in financial backing, led by Intel capital and Amazon’s Alexa Fund. Security systems and audio-visual devices make up the largest share of the industry’s specialties, comprising 36 percent of the industry, the report said. The industry is projected to grow by 42 percent annually through 2022.
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The growth trajectory means device manufacturers have an opportunity to compile vast troves of data about renters. So far, that doesn’t seem to trouble many potential tenants. A January 2018 online survey by Entrata, a provider of tech services for multifamily landlords, found that a majority of respondents would be willing to pay at least $20 a month more in rent for smarthome features. Security cameras, keyless entry and smart thermostats led the list of sought-after features.
Steve Adams
Amid evolving standards in the fledgling industry, smarthome device manufacturers employ a variety of technologies and security protocols to collect and store user data. Opportunities for hackers to penetrate smarthome systems were spotlighted in a December study at the College of William and Mary, which tested the vulnerability of the Google NEST and Philips Hue systems.
Because many smarthome systems use a centralized data hub that connects with the internet as well as multiple devices in a home, opportunities exist for hackers to connect to one low-security device and gain control of another.
The most common technique would be connecting to the same public internet network as the homeowner, the study said. In one potential scenario, an acquaintance connects to the same WiFi network as the resident – for example, at a coffee shop or workplace – and gains access to their home network to disable a security camera.
Privacy Concerns Pair With Smart Devices
Then there’s the question of how smart device companies collect and store data, and whether they sell them to outside parties such as advertisers.
A 2018 survey of 13 smart home device companies’ privacy policies by North Carolina A&T State University researchers found that most did not disclose what data was collected, although most offered customers the choice of opting out from having their data shared with third parties.
GID’s Mahoney said the company typically notifies tenants in a lease addendum about what information is collected by smart home devices and how its vendor stores and disposes of the information, which is anonymized.
“We spent six months with privacy attorneys trying to get that right before we did anything,” he said.
In Massachusetts, a data breach notification law enacted in 2017 and updated on April 11 with additional reporting requirements could provide the impetus for landlords to review their security protocols.
“Because it’s new technology, you have to wait to be established what’s a reasonable thing for a landlord to do and how you secure it,” said Ed Hershfield, a real estate attorney at Greenberg Traurig in Boston. “How do you make it so someone can’t hack into a WiFi system if they’re walking down the street past the building? If the landlord didn’t do and a problem resulted, then a landlord could be liable.”
