Will Massive Retail Job Cuts & New Tech Trends Transform the Rental Market?

Will Massive Retail Job Cuts & New Tech Trends Transform the Rental Market?

2 min read
Sterling White

Sterling White is a multifamily investor, specializing in value-add apartments in Indianapolis and other Midwestern markets. With just under a decade of experience in the real estate industry, Sterling was involved with the management of over $10MM in capital, which is deployed across a $18.9MM real estate portfolio made up of multifamily apartments. Through the company he founded, Sonder Investment Group, he owns just under 400 units.

Experience
Sterling is a seasoned real estate investor, philanthropist, speaker, host, mentor, and former world record attemptee, who was born and raised in Indianapolis. He is the author of the renowned book From Zero to 400 Units and the host of a phenomenal podcast, which hit the No. 1 spot on The Real Estate Experience Podcast‘s list of best shows in the investing category.

Living and breathing real estate since 2009, Sterling currently owns multiple businesses related to real estate, including Sterling White Enterprises, Sonder Investment Group, and other investment partnerships. Throughout the span of a decade, he has contributed to helping others become successful in the real estate industry. In addition, he has been directly involved with both buying and selling over 100 single family homes.

Sterling’s primary specialities include sales, marketing, crowdfunding, buy and hold investing, investment properties, and many more.

He was featured on the BiggerPockets Podcast episode #308 and has been contributing content to BiggerPockets since 2014, with over 200 posts on topics ranging from single family investing and apartment investing to mindset and scaling a business online. He has been featured on multiple other podcasts, too.

When he isn’t immersed in the real world, Sterling likes reading motivational books, including Maverick Mindset by Doug Hall, As a Man Thinketh by James Allen, and Sell or Be Sold by Grant Cardone.

As a thrill-seeker with an evident fear of heights, he somehow managed to jump off of a 65-foot cliff into deep water without flinching. (Okay, maybe a little bit…) Sterling is also an avid kale-eating traveller, but nothing is more important to him than family. His unusual habit is bird-watching, which he discovered he truly enjoyed during an Ornithology class from his college days.

Education
Sterling attended the University of Indianapolis.

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Will massive retailer job cuts and emerging technology change the rental property market and who landlords should be renting to?

American retailers are slashing jobs. Disruptive technology is likely to change the U.S. job market faster and more substantially than we’ve ever experienced before. How might that affect rental property investors?

U.S. Retailers Hit Hard

Some retailers seem to be getting it right. A few, like Amazon, are even broadening their physical store footprints. But overall, online shopping and the enhanced profitability of online companies is taking a huge bite out of American retail.

Related: 5 Real Estate Jobs That Have Been Made Obsolete by Tech (& 4 That Haven’t)

According to Bankrate.com, at least these 17 major retailers are closing stores in 2017:

  1. Payless Shoes
  2. JC Penney
  3. Macy’s
  4. Sears
  5. Kmart
  6. The Limited
  7. Abercrombie & Fitch
  8. HHGregg
  9. BCBG
  10. Crocs
  11. Gander Mountain
  12. CVS
  13. Chico’s
  14. The Children’s Place
  15. Wet Seal
  16. Whole Foods
  17. Bebe

These cutbacks and others mean the closing of hundreds of retail stores and the slashing of thousands of jobs.

New Tech to Kill More Jobs

The above is just the tip of the iceberg, especially when you factor in new technology, which is eliminating jobs in thousands more physical retail shops, offices, warehouses, and industrial companies. Mark Cuban even says that many tech jobs are no longer safe due to the development of AI. Some estimates put the number of jobs to be made redundant over the next few years as high as 80 percent. That’s 80 percent fewer jobs available!

How Will These Trends Impact Rental Housing?

Landlords must stay alert to trends like these. Obviously, if there is a massive pull back in local jobs and services, tenants may have a hard time living up to their lease agreements. In some cases, it may just be a matter of them running a month behind as they secure new work. For others, it may be very difficult to find local jobs that match their qualifications.

buyers-market

Related: 4 Ways New Technology is Changing How Real Estate Investors Communicate

Protect Yourself

Do not invest in a location where your only source of tenants is at a local grocery store, factory, or even a local mall. It’s always smart to underwrite your deals conservatively. So, do not buy a property that is barely cash flow positive and where there’s no room to increase rents. The moment rents drop, you’re in trouble.

Summary

The above means that some landlords may want to be a little more careful in who they target as renters. It is also worth tracking successful retailers and how they are hiring. Amazon is another great example, announcing it will hire thousands of work from home employees this year. For those landlords who want to stay safe, it is also important to remember that when the economy and job market get tough, the demand for affordable housing and destinations only grows. So, acquire rentals in the right areas and select tenants carefully, and you should be fine.

How do you think the shift in the U.S. retail sector, along with other tech trends, might change the rental landscape?

Weigh in with a comment!