Nashville Property Management Blog

Robots and Renters

Joseph High - Friday, August 2, 2019

It is amazing to consider the amount of change that technology has brought since the recession of 2007-08. Instead of calling a cab, we started using new phrases like, “Oh don’t worry, we can always Uber downtown.” Yet, one of the most dominating conversations in the past decade has been the way that technology is changing the way that people work. 

This is a multi-faceted conversation, but the two biggest topics are that wages have struggled to keep up with prices and jobs being eliminated by automation. There is a never-ending stream of articles speculating what the future of work will look like or what jobs to avoid in the future. The country is now gearing up for an election cycle with a $15 minimum wage as a key component of their platform. Yet, despite all the noise surrounding the topic, what does the future of work look like? How does it impact real estate investing? 

A recent report was published by the McKinsey Institute that boiled down the future of work to some concrete insights (If you have some free time on your hands, check out the 124-page report).[1] We have taken the liberty of picking the ones that are most important to real estate investors. The insights are as follows:[2] 

  1. The US economy is actually a collection of regional economies. These regional economies are anchored by dynamic cities. The report states that the top 25 cities in the country were responsible for two-thirds of job growth since 2008. 
  2. The future holds more of the same. By 2030, 60% of job growth could be concentrated in the 25 cities and their surrounding areas. Spoiler alert: Nashville is one of those top 25 cities.[3] 
  3. Jobs are going to be automated in the future. It is estimated that 15 million jobs that are currently held by those between 18-34 could be automated by 2030. 
  4. So-called “niche cities”, reveal the blueprint to success since 2007-08. “Niche cities” have experienced the second highest rate of net-migration (the number of people moving in minus the number of people moving out). The recipe for their success is that they have reputable universities, lower costs of living, and a high quality of life that draws both residents and companies. Examples include cities like Provo, UT and Bend, OR. 
  5. Americans are moving less than before.[4] Generally speaking, Americans are moving to a location that is similar to where they had been living previously. As an example, a technology worker in San Francisco, CA is more likely to move to Boston, MA than Wichita, KS.
  6. Automation is not as scary as you think. The goal of automation is to enable people to work more efficiently, not eliminate jobs. Workers will able to provide more value in their time spent working.

What do these trends tell us about real estate investing? 

  1. Regional economies are going to continue to drive the country forward. Different regions of the country will grow at different rates. In past decades, investing in real estate was treated like Starbucks coffee. You could expect your overpriced latte to be the same in Orlando, FL as it would in Spokane, WA. Moving forward, it is imperative that investors recognize that will not be the case anymore. 
  2. In response to affordability issues, companies have begun relocating operations to more affordable areas that have a well-educated workforce and a high quality of life. Nashville is a prime example of this. Compared to other locations where technology firms are expanding from, Nashville is less expensive. For example, home prices in San Francisco from April 2009 to April 2019 rose from $715,900 to $1.36 million. [5] Investors should be on the lookout for markets that possess the qualities that companies and residents are seeking. 
  3. Real estate markets that are already strong will continue to have low rental vacancy rates unless they become too expensive. Property values should continue to climb in these markets. That continued stability comes at a price. Lower tier markets must either become a more attractive place to live and do business in or slip further into irrelevance. 

Here at PMC, we are not only optimistic about Nashville but the entire Middle Tennessee area. Nashville’s blend of affordability, quality of life, skilled workforce, and emphasis on education will continue to make it a dynamic and growing city that is attractive for both investors and renters.


[1] André Dua, Bryan Hancock, Susan Lund, Brent Macon, James Manyika, Scott Rutherford, and Liz Hilton Segel, “The Future of Work in America”, McKinsey Global Institute, July 2019. 

[2] Spencer White, “10 Things You Need to Know about Automation and the Future”, The Basis Point, July 15th, 2019. 

[3] Myelle Lansat, “Top Up And Coming US Cities - Austin, Nashville, Denver”, Business Insider, August 12th, 2018. 

[4] Dan Kopf, “The Share of Americans Hit a Record Low”, Quartz, November 30th, 2018.