A UNIQUE DLENT

A hybrid of commercial and residential installation, working successfully in the lucrative multi-family dwelling market requires a delicate combination
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A UNIQUE DLENT

Aug 1, 2000 12:00 PM, Orrin Charm

A hybrid of commercial and residential installation, working successfullyin the lucrative multi-family dwelling market requires a delicatecombination of techniques used in both circumstances.

Although about a third of the US population lives in rented or multi-familyhomes, most systems integrators divide their work into either commercial orresidential, which usually means single-family homes. The multi-familymarket presents interesting opportunities and challenges for systemscontractors. "Multi-family" generally refers to apartments, condominiums,co-ops, townhomes, planned communities and student and military housing.Legally, it is defined as residences for more than two families. Probablythe most significant aspect of multi-family housing for a systemscontractor is that although the style and construction may resembleresidential housing, it is generally considered commercial construction.Consequently, it must meet commercial and residential code requirements.Its other significant aspect is that it is often much higher density thansingle-family housing, and offers unique economies of scale. The downsideis that the frantic and unusual scheduling of multi-family construction caneasily put an unprepared contractor out of business. At many multifamilysites, residents live at one end of the property, and grading andfoundation work is going on at the other end with every stage ofconstruction in between happening somewhere every day. Contractors oftenhave crews on these sites for months at a time.

Demographics

The demographics of multi-family residents make the market attractive.Despite the image of apartment dwellers as a low-income group with limitedsales opportunities, the reality is quite the opposite; renters by choiceare increasing. In 1998, the fastest growing segment of apartment renterswas those making $50,000 or more a year.

Apartments are also no longer housing primarily for the young. From 1985 to1995, the number of apartment residents aged 35 to 44 and 45 to 54 eachgrew substantially, while the percentage of under 35 year olds fell. (SeeFigure 1.) According to March 1997 Census data, 33.4% of the U.S.population (81,645,000 people) live in renter-occupied housing. Of that,31,504,000 live in apartment properties with five or more units.

As Table 1 shows, a significant percentage of apartment dwellers fits theideal high-tech consumer profile and has a significant income. Unlike ahomebuyer who has exhausted most of his resources in the process of buyingand moving into a home, a typical new apartment resident will see littlefinancial impact from the move, and is in a much better position to upgradethe amenities in a new home.

Amenities

Accordingly, many multi-family developers have seen the opportunity toattract new residents and retain older ones by offering a wide variety ofhigh-tech amenities. Traditionally, apartment developers offered suchfeatures as personal garden plots, lighted tennis courts, man-made lakes,picnic pavilions, outdoor fireplaces with seating, resort-style swimmingpools with pool-side food and beverage service, fitness centers, spafacilities, tanning beds, fully equipped business centers withvideoconferencing centers, after-school programs, on-site personal servicesand resident social activities. Now, a developer is likely to offer privatein-unit alarm systems that allow residents to view entry gates, pools andplay areas via CCTV, pre-wired entertainment centers with theater-qualitysurround sound, stereo loudspeakers and wiring in every room, media roomswith theater-style seating, video libraries and video-on-demand service,virtual apartment tours and online apartment applications, automated rentpayments and keyless entry systems.

These new amenities offer many new opportunities for systems contractors.InfiniSys now offers a technology assessment program that gives aTechApartment rating, showing the level of technology installed in amulti-family project. The TechApartment rating can be used to increase thecapital value of a property, potentially providing increased rents,additional revenue and greater resident occupancy and retention.

Networks

Only a couple of years ago, the concept of a home network was consideredlaughable. Today, it is an accepted trend, even though many people do nothave an application yet, and products are slow in coming.

When we talk about networks, we think immediately of a traditional datanetwork. There are, however, a number of other networks that already existin a home. The first network to appear in homes, natural gas, came aroundthe mid-1800s. Gas piping around the house allowed both light and heat,commodities that were lacking for centuries before. In 1900, Thomas Edisonand George Westinghouse started promoting the concept of electrical wiring.It was considered a novelty at first, but it caught on quickly. Indoorplumbing and flush toilets, which we hardly think about these days, werenot common until around 1910. Telephone wiring caught on quickly in the1920s. The next network to be built was cable television, which appeared inthe 1950s. Central air conditioning was not common until the 1960s.

Data networking, although relatively recent, is growing at an exponentiallyrising curve, again promoted by service providers seeking market share in ahot new technology. Especially in the multi-family world, deregulation andcompetition have fanned the flames even higher as developers look for thebest service deals in a newly competitive environment. The Cable Act andTelecommunications Act gave developers the freedom to shop for services andrevenue-sharing deals, where previously they would have left everything tothe local incumbent providers.

Infrastructure

The first step in providing technology-based amenities is to create aviable infrastructure. Unlike electrical wiring, which is closely regulatedfor life-safety reasons, communications wiring has been close to a designfree-for-all. Although standards exist, they are not legally enforceable,and they may vary with the choice or whim of providers. The recentlyreleased TIA 570A standards provide guidelines for twisted-pair (UTP),coaxial and fiber cabling, but they are too broad to provide a precisedesign.

Generally, a combination of UTP, coax and fiber will meet present andfuture needs of voice, data and video services, but over wiring isnecessary to provide for future media changes by service providers. Forexample, voice, data and video may be offered over fiber by one or moreservice providers in the future, and all three media may be used forhigh-speed data services. Further complicating the picture is the fact thata number of incompatible fiber types are currently vying for preference. Ingarden-style multi-building apartments, adequate spare underground conduitshould be provided for future needs.

In many cases, the local service providers will want to install and own thecable plant. While their offers may seem attractive to the developer, it isusually in the developer's best interest to provide the infrastructure andlease it to the service providers. For one, it gives the developer theadvantage in choosing among providers. Secondly, it allows him theopportunity to install a higher grade of cabling, or consider future needsthat the service providers do not offer. Conflicting schedules among theservice providers may make it impossible to coordinate common trenching andcable pulling, which may result in delays and disruptions to the overallconstruction progress. Multiple trenches also offer more possibilities ofcut or damaged cabling. Further, a firm offering electronic architectureand wide-area network design may be indispensable in coordinating the WANdesign and installation.

Other local services may also require communications networks - security,energy management, water submetering, CCTV and access control systems canall benefit from being interconnected. Recently, products have appearedthat allow these systems to communicate over an existing Ethernet network.Running only fiber between buildings reduces the problems with groundloops, signal attenuation and lightning and surge protection that commonlyplague copper networks.

At many sites, electrical power to each building may come from severaldifferent transformers, which can contribute further to ground loops andinduced interference in the communications networks. In some cases, theelectrical service entry may be at some distance from the communicationsminimum point of entry (MPOE), which can give rise to ground potentialdifferences between network and power grounds. The best solution is tolocate them close together. If this is impossible, a heavy ground conductorshould connect the entry points.

Although power service gear is generally designed to work at almost anyambient temperature, electronics are far less tolerant of temperatureextremes. Network distribution points should be environmentally protected,and they may require heating and ventilation to assure reliable operation.

When private contractors are used to install distribution systems, a pointof demarcation between the public and private portions of the network mustbe chosen. The choice of this location may be critical to ensure thatresidents can receive service in case of an outage. The developer will mostlikely be responsible for the private portion of the network, and theservice providers will usually charge residents for service calls if theproblem is found to be in the private portion. For this reason, the privatenetwork should be as bulletproof as possible and be rigorously testedbefore occupancy. Connection points must be clearly labeled, and it isstill likely that installation technicians will occasionally connectservices to the wrong cables. While 110, BIX or Krone blocks are generallypreferred for private data networks, many regional Bell operating companieswill insist on 66-type blocks for service connection because their fieldtechnicians are usually not equipped with tools for the higher-gradeconnectors.

Space in the Building Communications Gateway closet may be at a premium,and the rooms must be laid out carefully in advance to avoid first come,first served chaos at installation. Each service provider will probablyneed room for expansion, and equipment should be arranged to avoidexcessive cabling or crossovers between service cables. Power, groundingand ventilation needs must also be considered in advance. Service closetsshould not be shared with building maintenance or storage; that is aninvitation to service nightmares.

Distribution

Cabling is usually run from the gateway closet to a distribution point ineach unit. Several structured-wiring vendors have products designed formulti-family projects. The distribution box is designed to be low-cost,secure and capable of meeting the needs of multiple service providers.Components are basic, but they may include upgrade paths for futureservices. The cabinet should be as large as is practically possible toprovide space for future product sales. Basic systems will providedistribution for telephone, cable TV and data. More advanced products willalso support security, energy management, audio, data hubs or homeautomation systems. Some will also provide for future fiber-to-the-homeservices.

Wall outlets that support multiple services are preferred because they willprovide a neater appearance, easier cabling and more flexibility as theclient's needs change. Additional telephone-only outlets should be providedfor more convenient access. The telephone outlets should support multiplelines without rewiring of the jacks - as residents change, rewiring thejacks will be a problem. If possible, multiple RJ-11 type jacks arepreferable to a single multi-line RJ-25 or RJ-45 jack. Although TIA-570Arecommends TIA-568 wired jacks for telephone service, few residentialtelephone devices support this arrangement, and adapters are costly anddifficult to obtain. Roommates may want different lines to appear indifferent rooms; some of the distribution panels allow for this type ofrearrangements in the panel rather than at the outlet.

Dialer jacks for alarm systems ("security" is a dirty word in themulti-family business) can present additional problems where roommates arecommon, as with student housing. As roommates come and go, the primarytelephone line may change, and the line connected to the RJ-31 dialer jackmay be disconnected.

In many cases, the developer may want to offer a choice of video services -cable and satellite for example - and the wiring should accommodate both.DBS programming providers now use more than one satellite to accommodatethe number of channels; DirecTV now has HDTV and Spanish programming andmay use that satellite for local channels in some areas. This usuallyrequires additional distribution cabling, or special high-frequency cableand splitters if the signals are stacked on a common coax. In many cases,distribution is on fiber cable between buildings to reduce signal losses.

In-wall loudspeaker wiring is an attractive amenity for developers. Thiscan provide surround-sound capability, which is especially attractive ifyou are providing video services that support Dolby Digital or HDTVprograms. In-wall loudspeakers in bedrooms can provide a custom homeappearance and multi-room audio at a reasonable cost. Several manufacturersoffer in-wall loudspeaker designs that allow an inexpensive loudspeakerframe and grille to be installed during construction, and the driver panelcan be sold or leased to the residents later. Volume controls should beinstalled in each bedroom, and consider a volume control that also offersIR transmission. To avoid noise issues, loudspeakers should not be locatedin walls that adjoin other units. A wallplate for loudspeaker connectionsshould be located at the likely home theater or entertainment centerlocation in each unit.

Using the distribution panel for alarm wiring makes interconnectionsbetween alarm and communications systems easier. Some energy-managementsystems or smart thermostats can also be connected to the alarm system sothat the thermostat can be set back automatically by arming the alarmsystem. Some new products allow the energy and alarm systems to benetworked, allowing the management office to turn off HVAC systems whenunits are vacated or program systems remotely.

Construction

Distribution within multi-family buildings is often a challenge. Unlikeoffice buildings, which usually have a central core and plenty of space forhorizontal cabling pathways, garden apartments are often built like a setof blocks, with units stacked horizontally and vertically, and little roomfor cabling between them. Much of the distribution is through thefoundation slab, or run through the attic space and dropped between walls,as in a single-family residence. Because these are considered by buildingcodes to be commercial construction, wiring codes are more stringent thanresidential codes. Cabling must usually be riser-rated. Electrical,plumbing, HVAC and fire-safety systems usually get the choice right-of-wayfor distribution, and it is wise to stay as far from these trades aspossible.

Cable damage is a significant problem in multi-family construction.Although it is best to allow the other trades to complete their work beforeinstalling communications cabling, the frantic construction schedules oftenmake this impossible. More than one installer has found the drywallerstanding behind him ready to nail the drywall in place as soon as the cableis run, leaving no timeto inspect or test the work. Last-minute changes arealso quite common; what was the perfect pathway yesterday may be blockedtomorrow, and punch-out crews making last-minute framing changes can oftendamage cabling.

Consequently, it is often necessary to have a crew on site at all timesduring construction to be able to respond to problems immediately beforethey are buried inside the walls. The usual practice of schedulinginstallation in advance, to be completed in a couple of days, will not workin these situations. Because circumstances often delay construction andlead to frantic catch-up work, systems contractors should have reserveinstallers available on short notice. Builders will sometimes bring indouble or triple crews to catch up lost time, and the systems contractormay be forced to respond in kind in order keep up.

These issues have caught more than one contractor by surprise and can beexpensive or catastrophic. Be sure you have adequate trained manpower todeal with contingencies before bidding on these projects. Make certain allnecessary materials are in stock and, preferably, in-house before starting.

Provide secure space on site for inventory and storage of all constructionmaterials. Arrangements should be made in advance to handle site deliveriesof large quantities of materials - 6 foot (1.8 m) spools of cable andinnerduct and hundreds of distribution boxes, for example. Scheduledeliveries to suit the construction schedule, but expect the schedule tochange. Be sure your suppliers can adjust to changing schedules to avoidshortages or excessive material stockpiles. Security is critical; job-sitesecurity is often lax, and your materials are valuable and attractive.

Clubhouses

The clubhouse and leasing offices are another opportunity for systemscontractors. The leasing office will usually require a computer network andtelephone system. Many sites now offer business centers equipped withcomputers and office equipment. These computers are usually set up toprovide and demonstrate the high-speed Internet services offered.

On-site fitness centers are also common. These are often equipped with A-Vsystems, including personal listening systems. Many apartments also offerexercise equipment with Internet connections, allowing virtual-realityexercising or checking e-mail.

The clubhouse may also feature a home theater installation, either todemonstrate the capabilities installed in the apartments or as a residentamenity. These often include theater seating for a small audience, alarge-screen video system and surround sound.

Opportunities and challenges

The multi-family market offers many opportunities for systems contractors.The economies of scale and size of the projects can lead to large revenueopportunities. The business, however, is not without serious challenges.High credit lines, plenty of well-trained manpower and flexible schedulingare mandatory to be successful. Interfaces with service providers are morecomplex as they involve a large customer base. Further, the clients areusually not as technically well informed as commercial clients are -training of the leasing and maintenance staff is critical. Training ofresidents is also critical; customized user manuals and monthly residentmeetings are helpful in educating residents on system amenities andoperation. Consider engaging an outside firm to assist in areas that may beunfamiliar - negotiating service provider contracts, designing the overallsystem and developing training and marketing programs, and designing websites to showcase the features you offer. This is a very new business, buta contractor well prepared for the projects can find many profitable newbusiness opportunities.

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