Cardboard demand could fuel an industrial real estate boom

As e-commerce rises, so does the need for packaging

National /
Aug.August 02, 2021 04:00 PM
The rise of e-commerce, fueled by the pandemic, has created unprecedented demand for cardboard-producing facilities. (iStock)
The rise of e-commerce, fueled by the pandemic, has created unprecedented demand for cardboard-producing facilities. (iStock)

In the industrial real estate sector, e-commerce is the rising tide that lifts all boats — even those made of cardboard.

As consumers and retailers alike rely more heavily on e-commerce during the pandemic, the demand for packaging has increased too, from cardboard boxes to plastic bags and padded envelopes. With production increasing, more cardboard factories will be needed in the coming years, according to Fast Company.

Corrugated cardboard represents around 80 percent of packaging used in online orders. According to research from Newmark, almost 407 billion square feet of corrugated cardboard was produced in the U.S. in 2020, up from 390 billion square feet in both 2018 and 2019.

Newmark predicts that number to increase by around 3.5 percent annually over the next five years. Every additional billion square feet of cardboard produced will require 250,000 square feet of additional industrial real estate space, Newmark estimates.

“We think that will have a pretty significant impact on the market for the next few years,” Newmark’s Mark Russo told Fast Company. “I think it’s the biggest trend that nobody’s talking about yet.”

New or expanding warehouses and facilities for cardboard production are likely to be located near e-commerce warehouses to guarantee quick deliveries. Having good infrastructure for logistics and freight rail access nearby will be key factors in determining where the boom is felt. Dallas was cited as one city that could experience particular growth.

E-commerce is largely fueling the current industrial real estate boom. In the first quarter of the year, nearly 100 million square feet of space was absorbed within the industrial and logistics market. By the end of May, a record 376 million square feet of warehouse space was under construction in the country.

[FastCo] — Holden Walter-Warner





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