—— U.S. Industrial Real Estate Deals Fall 30%; Nearly Two-Thirds of Americans Live Paycheck to Paycheck; Ford Cuts EV Prices to Compete with Tesla; Blackstone Evicts Tenants to Boost Returns; Twitter Pays First Interest on Buyout Loan; U.S. Stocks Slip Ahead of Fed Meeting; Impossible Foods to Cut 20% of Staff
1. U.S. Industrial Real Estate Deals Fall 30%
According to the latest U.S. industrial real estate report by CommercialEdge, rents for industrial properties across the country are rising. Although new projects hit record levels, supply shortages remain severe. However, the market is expected to normalize in 2023, and industrial properties remain a high-quality investment category.
Data from the report shows that in 2022, investors purchased $88.3 billion worth of industrial facilities, down 30% from $125.7 billion in 2021.
Over the past three years, the average sale price for industrial buildings surged 59%, from $83 per square foot in 2019 to $132.
In 2022, the U.S. added 450 million square feet of industrial space across 118 markets, with particularly strong growth in Dallas, Chicago, Phoenix, and Southern California. These figures may continue to rise this year.
Peter Kolaczynski of CommercialEdge said that although demand has declined over the past six months, investors still favor high-quality new facilities.
Despite a 30% drop in industrial real estate transactions in 2022, overall market demand remains relatively healthy.
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2. Nearly Two-Thirds of Americans Live Paycheck to Paycheck
According to a joint report by Pymnts.com and LendingClub, as of the end of 2022, 64% of Americans—about 166 million people—were living paycheck to paycheck, an increase of 9 million from the previous year.
Among them, over 8 million people earn more than $100,000 annually. In December, 50% of six-figure earners said their pay barely covered their living expenses, up 9% from a year ago.
In recent years, American households have gradually depleted the savings built up during the pandemic. Inflation has significantly increased living costs. Lydia Boussour, chief economist at EY Parthenon, said consumers are now increasingly reliant on credit cards, and their recovery outlook remains uncertain. As stock prices and real estate values fall, conditions may worsen.
Inflation-adjusted disposable income remains below pre-pandemic levels, indicating that consumers have seen little real income growth over the past three years.
Over 9 million more Americans are living paycheck to paycheck, including many earning over $100,000.
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3. Ford Cuts EV Prices to Compete with Tesla
This week, Ford announced an average price cut of $4,500 for its Mustang Mach-E series to match Tesla’s recent discounts.
Previously, Ford acknowledged that selling the Mach-E still meant losses, and this latest price cut aims to prevent further profit margin erosion. The company plans to boost production by 67% this year.
Industry analysts expect the EV market to slow significantly this year, with brands having to engage in price wars to win customers.
Marin Gjaja, Ford’s Chief Customer Officer for EVs, said competitors are cutting prices, and Ford must respond to remain competitive.
Tom Narayan, an analyst at RBC Capital Markets, predicted more rounds of promotions from automakers, with Tesla’s campaign triggering a domino effect in the industry.
Ford’s share price fell as much as 2.4% today following the news.
The base Mach-E price dropped $900 to $45,995, while the top-tier GT version was cut by $5,900.
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4. Blackstone Evicts Tenants to Boost Returns
According to court filings in Georgia and Florida, Blackstone has filed lawsuits each month since August against dozens of tenants who failed to pay rent on time. In addition, its advisors have notified local governments of potential large-scale evictions in certain areas.
During the pandemic, many states passed laws banning evictions. Now that those regulations have expired, Blackstone—one of the largest landlords in the U.S.—aims to evict non-paying tenants to improve property returns.
During COVID, Blackstone acquired billions of dollars worth of apartment buildings, suburban homes, and other residential assets. Most of these were purchased through its $69 billion BREIT fund.
Last month, Blackstone Real Estate chairman Nadeem Meghji reassured employees during a video call about the fund’s stability, aiming to calm internal and investor concerns.
With eviction moratoriums ending, Blackstone may evict hundreds of tenants behind on rent.
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5. Twitter Pays First Interest on Buyout Loan
Sources say that last Friday, Twitter paid the first $300 million interest on its buyout loan, following Elon Musk’s acquisition. The loan’s seven lenders include Morgan Stanley, Bank of America, and Barclays.
Due to widespread concerns over Twitter’s financial health, the company’s ability to make payments has been closely watched.
In October 2022, several banks lent Twitter $13 billion to help Musk finalize the $44 billion deal. The debt includes $7 billion in bridge and unsecured loans. Twitter must pay $1.5 billion in annual interest, distributed quarterly.
In Q4, Twitter’s revenue fell 40% year-over-year, and many advertisers left the platform after Musk took over.
Musk has revealed that Twitter has $1 billion in cash but may see $6 billion in outflows this year without cost controls.
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6. U.S. Stocks Slip Ahead of Fed Meeting
The Federal Reserve is set to hold a policy meeting this week and announce its latest rate hike. With investors turning cautious, U.S. stocks declined today. The Nasdaq 100 posted its biggest drop since December 22, and the S&P 500 also recorded its sharpest loss in nearly two weeks.
Meanwhile, U.S. Treasury prices fell and yields rose, with the 10-year yield climbing to 3.55%.
The Fed is widely expected to raise rates by 25 basis points on Wednesday—its second consecutive smaller hike. However, investors remain focused on the Fed’s tone during the press conference. U.S. stocks had a strong January thanks to easing inflation.
Still, Morgan Stanley strategist Michael Wilson warned investors not to chase the rally and to avoid fighting the Fed.
A busy week of economic events and data could drive significant market moves.
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7. Impossible Foods to Cut 20% of Staff
Sources revealed that Impossible Foods plans to lay off about 20% of its 700 employees.
Founded in Redwood City, California, the plant-based burger and sausage company had already offered voluntary separation packages last year. In October, it laid off 6% of its workforce.
The privately held company recently reported a 50% year-over-year increase in retail revenue in 2022. In September, CEO Peter McGuinness said the company had a very healthy balance sheet.
Impossible Foods rapidly expanded into supermarkets and restaurants in recent years. But with falling demand for plant-based meat, the company now faces serious challenges. According to market research firm IRI, frozen plant-based meat sales dropped 15% in 2022, with revenue falling 14%.
The appeal and demand for plant-based meat have dropped significantly since the peak of the pandemic.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.