The Big Unit
Fledgling multi-dwelling unit sector promises big revenue for integrators with the credit and skill to keep up.
FOR MEDIABUSS Systems Inc., the advantage of the multi-dwelling unit (MDU) market is that there's simply more money in servicing the needs of the many than those of the few.
This AMX diagram shows how a condo-unit occupant outfitted with an AMX NI-700 Netlinx integrated controller and an AMX Modero MVP-7500 touchpanel can interface directly with the building's central server system to access internal services such as valet, concierge, and the information center. They can also send orders to outside merchants.
The Mamaroneck, NY-based systems integrator specializes in the design and installation of residential technologies including home theater, lighting management, motorized window treatments and climate control, as well as cameras and other security functions.
“We've been doing this for about 20 years or so, mainly doing big houses — 20,000- to 30,000-square-foot-sized homes — in upper Westchester County,” says Ray Hentz, director of business development for MediaBuss.
About a year and a half ago, however, the luxury condominium boom hit the New York area in earnest, as condo sales nationally spiked tenfold in 2004 to $13.3 billion. Today, high-rises are being built all over New York — 12,000 units a year are being added, in fact — many wired with fiber-optic backbones. The leading edge of the Baby Boom generation, which features a robust market of affluent retirees, is moving in. And developers are seeking an edge in competitive markets such as New York, Miami, and Las Vegas, and they're trying to differentiate their offerings with a variety of upscale amenities.
For MediaBuss and other tech firms, the MDU business had been born. Through its Concierge Direct division, MediaBuss recently began outfitting individual high-rise condo units with sophisticated AV systems with easy-to-use control systems.
Using an AMX Modero Viewpoint 8400 touchpanel, for example, occupants in one of these luxury high-rises can control everything in their home — from their AV system to their lighting to their window covering. Beyond that are a whole range of concierge services — and not just those relating to the building's management. For example, occupants of the 182 residential units in New York's Plaza Hotel can use their MediaBuss-installed touchpanel to order services and products from local merchants — such as a bottle of wine from a local liquor store — through a web-based vending system.
Beyond in-unit services, building management also falls under MediaBuss' purview — the company's MDU contracts often call for it to wire AMX master control systems that handle everything from security cameras to door access.
“This has kind of changed the scope of our business,” Hentz says of the MDU market. “Instead of chasing all these clients all over the countryside, we have all of the clients in the same building. Now we're out there reaching out to developers, architects, and general contractors.”
Scott Norder, executive vice president of business development for AMX — the pro AV manufacturer most aggressive right now in developing the MDU market — won't hazard a guess as to how much revenue this fledgling service sector is generating for AV systems integrators right now. He did say, however, that AMX's amenities solution division is now one of the company's fastest growing units.
“This business could ultimately become the lion's share of AMX's revenue,” Norder says, adding that the number of luxury residential high-rises planned for the coming decade will ensure growth. “Many buildings that are already sold-out are just being constructed. The pipeline of the business we've developed in this area for the next seven or eight years is multiple of our current revenue stream.”
A typical luxury high-rise development features around 150 units, he explains, and revenue for a systems integrator usually falls in the range of $4 million to $8 million, depending on how many services occupants and building management purchase. Margins are typically a bit narrower than the typical single-family residential install, but an integrator more than makes up for it in volume.
Currently, there are only 22 integrators that AMX partners with in the MDU market — all are part of what Norder calls “an elite program” of companies recruited from both the residential and commercial sectors that have the credit lines and project management acumen needed to service this sector.
“It's a very fast-paced business that requires a lot of attention to detail and scheduling,” says Brad Weintrab, a principal for Chicago-based custom home technology solutions design and installation company Integrisys Group, which generates 90 percent of its revenue servicing MDU clients in partnership with AMX.
According to Weintrab, the MDU business blends skill sets from both the residential and commercial sectors. “You're building networks for both residents and property management companies,” Weintrab explains. “And you're working with each of them to determine the amount of control they want. Some building management companies may want an access-control system, for example, while others might not because they have a 24-hour door man.”
Building codes and specs are primarily residential, but the pace of the integrator's work has to keep up with the workflow of the building's general construction, and must do so far quicker than that of the typical single-family home install as a result. “It's vastly different from a single-family home,” Weintrab says. “In the MDU market, you don't have the luxury of time. Once they lay the floor down, they move really fast. And if you miss something, there's no going back and saying, ‘I need you to open this dry wall up.' ”
Norder adds: “Few residential integrators have ever done 150 units at the same time. And even a lot of commercial integrators don't have all the right characteristics in terms of how to work with all the general contractors and handling all the permitting and scheduling. They also have to understand that they're dealing with 150 individual owners and all the changes that can come up during the process.”
Should an integrator wish to enter the MDU market — either by approaching AMX or making overtures directly to a condo developer —Norder says a credit line of at least $400,000, or 10 percent of the value of the project, is also a necessity. Indeed, payment will hardly be steady, with respective building-management and residential contracts paid out in different ways over expansive time periods.
“Your initial capital outlay can easily be a couple of hundred thousand dollars, and it could be two years before you start seeing any money coming in,” Weintrab explains.
MediaBuss' Hentz agrees. “Right now, the business is in its infancy — nobody has seen the money yet, and the contracts are still out there,” he says. Still, the opportunity is out there, as well.
“It's like we're the first guys out there selling cell phones,” he says.
Daniel Frankel is a Los Angeles-based freelance writer. He can be reached at email@example.com.