Raphael Stevens

Some of the hottest migration destinations also happen to be home to the hottest regional inflation rates, according to Redfin.
Phoenix, Arizona, had the highest metro inflation rate at 10.9% and was a popular destination for homebuyers during the pandemic.
San Francisco tops the list of metro homebuyers who moved away and it had the lowest inflation rate in the country at 5.2%.
The financial benefits of moving to relatively affordable areas may eventually diminish over time.

Some of the hottest pandemic-migration destinations also happen to be home to the hottest regional inflation rates.
The relationship between migration and inflation has strengthened significantly as more people relocate from expensive coastal cities to more affordable metro areas, according to an analysis released by Redfin on Tuesday.

“We saw an acceleration of inflation happen particularly when we looked at the metro level inflation data. We saw right away that inflation was highest in Phoenix and lowest in San Francisco,” Redfin deputy chief economist Taylor Marr told CNBC.
For example, Phoenix saw prices of goods and services rise 10.9% in the first quarter from the year-earlier period, ranking it the metro region with the highest inflation rate in Redfin’s analysis.
According to Redfin’s migration data, Phoenix was also the second-most popular destination for homebuyers looking to move from one metro area to another in the first quarter, behind only Miami, Florida.
Meanwhile, San Francisco, which tops the list of metro areas that homebuyers moved away from during the first quarter, had a 5.2% inflation rate, the lowest in the Redfin analysis.

Inflation and migration in Q1 2022 data charted by Redfin shows the consumer price index’s annual change and the net flow of Redfin user migration.

The consumer price Index, which averages prices across America, rose by 8.5% in March 2022 from a year ago, the fastest annual gain in 40 years.

“We know a lot of people that we’ve been tracking throughout the pandemic have been leaving in places like the Bay Area and New York or D.C. on the East Coast. And they’ve been pouring into these hot migration destinations throughout the pandemic, like Phoenix, Miami, Tampa, Atlanta,” Marr said.
Atlanta, Georgia, had the survey’s second-highest inflation rate at 10.6% while Tampa, Florida, had the third highest at 9.9%.
Redfin’s analysis showed Atlanta ranked the 10th-most popular migration destination, and Tampa was the third-most popular migration destination.  
On the reverse side of the trend, New York City had both the second-lowest inflation rate at 5.4% and was the the top third place homebuyers moved away from. Similarly, Los Angeles clocked in at number two for residents relocating and generated a middle-of-the-road inflation rate at 7.8%. 
The influx of people moving into Phoenix, Tampa and Atlanta during the pandemic also has led to rapidly rising home prices in those regions. And that’s just one contributor to outsized inflation there.
“When people move to an area, it puts additional demands on local goods and services, such as restaurants, and that enables them to raise their prices,” Marr said.
Marr says the financial benefits of moving to relatively affordable areas may eventually diminish over time.
“Most of the people moving to these areas are moving there with higher budgets. They have higher incomes… So, the cost of living might be really affordable to someone who is moving into the area. But, for an existing resident who is already there, they might be feeling more of the pains if they haven’t had strong income gains and they are still facing higher prices,” Marr said.

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Starbucks said it will hike wages for tenured workers and double training for new employees as it seeks to beat back the union push from its baristas.
However, the coffee giant will not offer the enhanced benefits to workers at the roughly 50 company-owned cafes that have voted to unionize.
In total, Starbucks plans to spend $1 billion on wage hikes, improved training and store innovation.

A Starbucks barista fulfills an order in a South Philadelphia store.
Mark Makela | Reuters

Starbucks said it will hike wages for tenured workers and double training for new employees as the company and its CEO, Howard Schultz, seek to beat back the union push from its baristas.
However, the coffee giant will not offer the enhanced benefits to workers at the roughly 50 company-owned cafes that have voted to unionize. Such changes at unionized stores would have to come through bargaining, Starbucks said.

“So, partners will receive these pay, benefits and store-improvement investments at all U.S. company-operated stores where Starbucks has the right to unilaterally make these changes,” the company said in a statement. “However, at stores where workers have union representation, federal law requires good faith bargaining over wages, benefits and working conditions which prohibits Starbucks from making or announcing unilateral changes.” 
In total, Starbucks plans to spend $1 billion on wage hikes, improved training and store innovation during fiscal 2022, which ends in the fall. On Schultz’s first day back at the helm of the company, he suspended its buyback program to invest in workers and stores.
“The transformation will accelerate already record demand in our stores,” Schultz said on the company’s conference call on Tuesday. “But the investments will enable us to handle the increased demand — and deliver increased profitability — while also delivering an elevated experience to our customers and reducing strain on our partners.”
It’s Schultz’s third go-round as Starbucks CEO. He is working on an interim basis until the company hires a successor for the recently retired Kevin Johnson.
Schultz told store managers last month that the company was reviewing its benefits for workers. However, he said the new benefits legally couldn’t be extended to stores that have voted to unionize without separately negotiated contracts for unionized workers. The Starbucks union, Starbucks Workers United, filed a complaint with the National Labor Relations Board about his comments.

This marks the third wage increase to baristas’ paychecks since company-owned stores in Buffalo, New York, filed a petition to unionize. In October, under the leadership of Johnson, Starbucks announced two wage hikes that would bring its pay floor up to $15 an hour by August.
The latest round of hikes is for tenured workers and managers. Employees who have been with the company between two to five years will receive either a 5% increase or get paid 5% above the market’s start rate, earning whichever rate is higher. Workers with more than five years of tenure will get a 7% increase or get paid 10% above the market’s start rate, earning whichever rate is higher.
Starbucks also said it would double the planned investments in pay for store managers, assistant store managers and shift managers hired as of Monday. Those changes amount to one-time adjustments to base pay, and the employees would still receive the raises planned for fiscal 2023 this fall.
Starbucks also said it would double the amount of training that new baristas and shift supervisors receive based on feedback from employees during listening sessions attended by Schultz and other top executives.
More investments are also planned. The company said it will introduce credit and debit card tipping by late 2022, and it is planning equipment and technology enhancements, like upgrading in-store iPads and accelerating the rollout of new ovens and espresso machines.
Schultz’s willingness to wage an aggressive and expensive campaign against unionizing workers hasn’t drawn much support from Wall Street. Starbucks shares have fallen 19% since his return early last month.
Starbucks’ stock rose 3% in extended trading after the company reported its fiscal-second quarter results. Strong sales growth in the U.S. offset sharp declines in China, helping the company top Wall Street’s estimates for revenue and meet earnings expectations.

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NASA administrator Bill Nelson strongly backed fixed-price contracts with companies – and decried more variable cost-plus contracts as “a plague” on the agency.
Nelson’s emphasis on competition likely represents a boon for the growing swath of space companies looking to provide low-cost services to NASA.

The Artemis 1 mission Space Launch System (SLS) rocket
Frank Michaux / NASA

The head of the National Aeronautics and Space Administration on Tuesday discussed a dramatic shift in how the agency plans to issue contracts for its space exploration programs, citing success with cost-saving competitive bids.
NASA administrator Bill Nelson, testifying before a Senate subcommittee on the agency’s budget for landing astronauts on the moon, strongly backed fixed-price contracts with companies – and decried more variable cost-plus contracts as “a plague” on the agency.

Nelson’s emphasis on competition likely represents a boon for the growing swath of space companies looking to provide low-cost services to NASA, and a sharp curtailing for aerospace and defense contractors that traditionally benefited from cost-plus deals.
Fixed-price contracts set a maximum payout for a good or service, while cost-plus agreements result in the government paying for the cost of the work, plus additional fees, which can balloon over the course of the project.
The biggest difference between the contract structures comes down to who picks up the bill for delays or cost overruns: fixed-price assumes the companies building the systems absorb any unanticipated expenses, while cost-plus leaves NASA on the hook.
NASA holds agreements of each structure for the most expensive parts of its lunar Artemis program: The Space Launch System (SLS) rocket and Orion capsule designed to take astronauts to the moon’s orbit, under cost-plus contracts, and SpaceX’s Starship rocket to carry the astronauts to the lunar surface, under a fixed-price deal.
NASA has awarded numerous multi-billion dollar cost-plus contracts to a wide variety of contractors to develop SLS and Orion, primarily to Boeing, the lead contractor building SLS; Lockheed Martin, leading Orion development; and Northrop Grumman, supplying the rocket’s boosters.

Since 2012, NASA has spent about $20 billion to develop SLS, and more than $12 billion on Orion, according to the agency’s Inspector General. And, not including development funding, the cost of each SLS launch has ballooned eightfold since 2012: From $500 million to $4.1 billion, with the rocket’s debut delayed five years and counting.
By comparison, NASA has had steady success with major fixed-price contracts – most notably through its Commercial Crew program. Under Commercial Crew, the agency awarded SpaceX about $3.1 billion and Boeing about $4.8 billion over the past decade to develop spacecraft to deliver astronauts to the International Space Station.
With the debut of SpaceX’s Crew Dragon in 2020, NASA began purchasing transportation services for its crew from Elon Musk’s company. And, while Boeing’s Starliner spacecraft has yet to fly crew, the company has absorbed the costs of its delays, rather than NASA.
NASA estimates that, due to the competitive approach, the Commercial Crew program is saving the agency between $20 billion and $30 billion.
SpaceX last year won a $2.9 billion fixed-price contract from NASA to use the company’s Starship rocket to deliver astronauts from lunar orbit down to the moon’s surface. SpaceX was the sole winner in a competition against two other privately-led landers, from teams led by Jeff Bezos’ Blue Origin and Leidos subsidiary Dynetics.
Nelson’s comments on Tuesday come as he urges Congress to approve funds for another competition, to develop a second lunar lander. He emphasized that SpaceX won because its bid was “by far the most economical of the three,” but said the agency now wants a second lander because, “with that competitive spirit, you get it done cheaper.”
“We can leverage that money by working with a commercial industry and, through competition, bring those costs down to NASA,” Nelson added.

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Southwest Airlines will temporarily offer travelers free Wi-Fi on certain flights starting this week, part of a test to bring faster internet to more customers.
The free Wi-Fi on Southwest will be available from May 4 through June 10 on certain flights in the western U.S.

OntheRunPhoto | iStock Editorial | Getty Images

Southwest Airlines will temporarily offer travelers free Wi-Fi on certain flights starting this week, part of a test to bring faster internet to more customers.
The carrier has outfitted 40 of its Boeing 737s with upgraded hardware for its Wi-Fi service, according to a memo to employees sent Tuesday. Southwest’s Wi-Fi upgrades are the latest effort by an airline to improve connectivity on board.

Hawaiian Airlines last week said it plans to offer free Wi-Fi as early as next year via SpaceX’s Starlink service, which it hopes will bring fast internet to passengers on long trips over the Pacific Ocean. Delta Air Lines CEO Ed Bastian has repeatedly said the airline plans to offer free internet connection. The carrier trialed the complimentary access before the pandemic.
The free Wi-Fi on Southwest will be available from May 4 through June 10 on certain flights in the western U.S., Tony Roach, vice president of customer experience and customer relations, wrote in the memo to staff.
The airline currently offers Wi-Fi for $8 per day and says on its website that it blocks access to some high-bandwidth sites such as Netflix, HBO Max and Zoom.
“This trial will allow Customers to stream, browse, and engage on the internet at no cost just like other complimentary services,” Roach wrote. “Our goal is to evaluate how the new hardware improves performance while delivering a reliable internet experience used by a large volume of Customers.”
Southwest declined to provide more detail.
Correction: Southwest currently offers Wi-Fi for $8 per day. A previous version misrepresented the offering.

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Tim Hortons is anticipating Canadian same-store sales growth in the mid-to-high single digits in 2022 as its turnaround takes hold in its home market.
The Restaurant Brands International chain also said that it set a long-term goal for same-store sales growth of 2% to 3% annually.
The Covid pandemic served as another roadblock to its comeback as outbreaks in Canada led to more restrictions.

Restaurant Brand International restaurants’ Tim Hortons and Popeyes.
Randy Risling | Toronto Star | Getty Images

Tim Hortons is anticipating Canadian same-store sales growth in the mid-to-high single digits in 2022 as the coffee chain’s turnaround takes hold in its home market.
The Restaurant Brands International chain also said Tuesday during an investor presentation that it set a long-term goal for same-store sales growth of 2% to 3% annually. Tims reported Canadian same-store sales growth of 10.8% in 2021 and same-store sales declines of 16.5% in 2020.

Because of its large Canadian footprint, Tim Hortons typically accounts for more than half of Restaurant Brands’ revenue, but recent sluggish sales have weighed on the restaurant company’s overall results.
Over the last few years, Tims has shuffled its executive team, updated its coffee and breakfast offerings, and revamped its loyalty program in the hopes of once again driving sales growth in its home market. Even before the Covid pandemic, sales and traffic were stagnating as Canadians chose Starbucks or McDonald’s for their coffee instead.
“In Canada, it’s gotten more competitive over the last 10, 15 years than it was 30 years ago,” Restaurant Brands CEO Jose Cil said.
The pandemic served as another roadblock to its comeback as outbreaks in Canada led to more restrictions, although Tim Hortons President Axel Schwan said mobility is now returning.
“Canada had some of the longest lockdowns, really, in the world,” Schwan said. “Coming out of [the first quarter], we see a lot of momentum, traffic picking up, people getting out again.”

Earlier on Tuesday, the coffee chain reported same-store sales growth of 8.4%, falling short of StreetAccount estimates of 9.6%. Canadian same-store sales rose by double digits during the first quarter.
Executives laid out their strategy during the presentation to go “back to basics” to draw in customers. The approach focuses on its food and beverage offerings, digital engagement and the in-restaurant experience.
“Over the next few years, we will remain focused on expanding into high-growth dayparts and products, enhancing our leading digital ecosystem and maintaining our leading operations and optimizing our restaurant performance,” Schwan told investors.
Technology plays a key role in those plans, like rolling out digital menus nationwide for drive-thru lanes. In addition to being able to suggest menu items based on weather and other factors, those menu boards will display digital versions of Tims’ bakery cases. Executives noted that drive-thru customers typically buy fewer baked goods than customers who order inside, where pastries and other baked goods are showcased.
Shares of Restaurant Brands fell 2% in afternoon trading, despite the company topping Wall Street’s estimates for its first-quarter earnings and revenue.
Correction: Jose Cil is CEO of Restaurant Brands. An earlier version misstated his title.

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A liquefied natural gas tanker berth in Japan, on Dec. 17, 2021. Should Japan ever exit the Sakhalin energy projects in Russia and their stakes were acquired by Russia or a third country, this would weaken the effectiveness of Western sanctions and benefit Russia, Japan’s industry minister said on Friday.
Kiyoshi Ota | Bloomberg | Getty Images

U.S. natural gas surged Tuesday to the highest level in nearly 14 years as Russia’s invasion of Ukraine wreaks havoc on global energy markets.
Henry Hub prices jumped more than 9% at one point to a session high of $8.169 per million British thermal units (MMBtu) during morning trading on Wall Street, the highest level since September 2008.

The contract later pulled back from its high, ending the day at $7.954 per MMBtu for a gain of 6.4%.
Campbell Faulkner, senior vice president and chief data analyst at OTC Global Holdings, said the increase was sparked by a “flurry of tighter market conditions,” including the European Union considering a sixth round of sanctions against Russia that could include the nation’s energy complex.
In addition, production is down in the U.S., and gas in storage is 21% lower than at this time last year.
“Higher power burn this summer with zero coal gas … switching will reduce the amount of spare gas for storage infill which is pushing prices up in a classic commodity cycle (‘backwardation”) to get gas into the market now,” he added.

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Over the last two sessions, natural gas prices have jumped more than 8%, which follows a nearly 30% gain in April. The swift upward price action, which is also being fueled by surging demand for U.S. liquified natural gas, is adding to inflationary pressures across the economy. For example, consumers’ electricity bills are rising as utility companies pass along their higher input costs.

EBW Analytics also pointed to changing weather patterns as increasing demand for natural gas as warmer temperatures usher in air-conditioning season.
“A faster-than-expected turn hotter, however, is the principle bullish driver as traders jump on early-season heat in Texas — and any further weather model shifts hotter could set up a challenge of recent highs,” the firm added.
Energy was the top-performing S&P 500 group Tuesday, advancing more than 2%.
Francisco Blanch, managing director at Bank of America, also pointed to the rally in coal prices as fueling the surge in natural gas. He said that natural gas could head even higher.
“We have an energy crisis going on. I think one of the big issues that is going to help provide some relief is if we have a major economic deceleration, also known as a recession — but of course nobody wants that to happen,” he said.
“I’m pretty concerned about the state of the energy market. Hopefully we’ll see some supply responses. Hopefully producers in the U.S. and elsewhere will react to high prices, but there is no imminent relief for consumers,” Blanch added.

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Office demand, as measured by new tenant tours, jumped 20% in March from February and was up just more than 8% from a year ago.
The latest office vacancy rate in the first quarter of this year was 18.1%. That is down 18 basis points from a year ago and is the sector’s first annual decline in five years.
Regionally, the top gainers are Boston, Chicago, Los Angeles, New York City, San Francisco and Washington, D.C.

If you’re not back to the office already, you may be soon.
After a five-month lull, likely due to the extremely contagious omicron variant of the coronavirus, new demand for office space jumped in March. Barring another major setback in the pandemic, it will likely continue to rise, but offices themselves will undergo a makeover as demands from workers change.

Optimism in offices is already showing up in some stocks behind the office sector. As rents rise and vacancies fall, earnings are beating expectations.
Office demand, as measured by new tenant tours, was 20% higher in March than February and was up roughly 8% from a year ago, according to a recent report from commercial real estate technology platform VTS. The tours are considered a forward indicator of new leasing.
The office vacancy rate in the first quarter of this year was down 18 basis points from a year ago to 18.1%, according to Moody’s Analytics. It’s the sector’s first annual decline in five years and marked improvement from a vacancy rate of 18.5% at the height of the pandemic.
“Demand for office space this month is more in line with what we expect to see this time of year,” said Nick Romito, CEO of VTS. “Looking ahead I expect that we’ll continue to see demand ebb and flow in a typical seasonal pattern, but to really get out of the prolonged period of depressed demand we have seen as of late, we’ll need to see demand exceed seasonal norms over the course of many months.”
Demand is slowly driving up rents. Asking and effective rents rose 0.2% and 0.3%, respectively, during the quarter, the best performance since the beginning of the pandemic, according to Moody’s. Annual rent growth also reversed its downward trend.

Despite the surge, however, new demand for office space is still just two-thirds of its pre-pandemic average, based on the VTS metric. Boston, Chicago, Los Angeles, New York City, San Francisco and Washington, D.C. make up the best gainers, regionally.
And while the signs for the sector are optimistic, office-related stocks, largely REITs, are still mixed.
Boston Properties, Hudson Pacific, SL Green and Empire State Realty Trust are all still below pre-pandemic levels. For example, Hudson Pacific dropped 40% at the start of the pandemic and then slowly began climbing back. It is up 28% from the pandemic low but is still in the red year to date.
Some, like Boston Properties, have come climbing back over the past year. Boston Properties reported better-than-expected earnings for its first quarter Monday.
“While rent growth takes time, the demand for space gives BXP confidence that COVID is over, as tenants bring their employees back, which should accelerate the occupancy rebound, providing upside to earnings,” wrote Alexander Goldfarb, a REIT analyst at Piper Sandler, in a note to investors in March.
A new survey of 185 office-using companies in the U.S. by CBRE found 36% of employers said a return to office was already underway. Just over a quarter said it would be by the end of June. About 13% said a return to office was up to their employees, and 10% were still uncertain.
According to the VTS report, offices were still less than half full in April, at 43%. But that marked a pandemic high.
When workers do return to the office, they can expect to see significant changes, not just in cleanliness and air filtration, but in the way they go about their business.
CBRE’s survey found employers pointing to more in-office technology tools to enhance videoconferencing, as well as occupancy sensors and touchless options. There will be more so-called free address seating. Nearly two-thirds of companies said they intend to have open desk use rather than assigned offices or cubicles.
There will also be widespread hybrid work, with 70% of employers saying they intend to allow workers to be both in the office and remote. Nearly half said they want that to be an equal mix. Because of that, they expect more flexible office space. Just over half of employers said they will add different forms of that, from open desking to “dedicated floors indistinguishable from their traditional office space,” according to the report.
“That flexibility is desired for any number of reasons, including ability to scale up and down, give employees more choice over where to work or even just preserve capital,” said Julie Whelan, global head of occupier research at CBRE. “But the employees do benefit from being in productive space in good locations with typically very good amenities and experience.”

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