Cardboard Demand Fuels Industrial Property Boom

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The rise in e-commerce fueled by the pandemic has created unprecedented demand for cardboard businesses.  (iStock)

The rise in e-commerce fueled by the pandemic has created unprecedented demand for cardboard businesses. (iStock)

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

As consumers and retailers increasingly rely on e-commerce during the pandemic, the demand for packaging has also increased, from cardboard boxes to plastic bags and soft envelopes. With the increase in production, more cardboard factories will be needed in the coming years, Fast Company said.

Corrugated cardboard makes up about 80 percent of the packaging used for online orders. According to research Newmarkthe U.S. produced nearly 407 billion square feet of corrugated board in 2020, up from 390 billion square feet in 2018 and 2019.

Newmark predicts that this number will increase by about 3.5 percent annually over the next five years. Newmark estimates that for every additional billion square feet of cardboard produced, 250,000 square feet of additional industrial property will be required.

“We think this will have a pretty significant impact on the market over the next few years,” Newmark’s Mark Russo told Fast Company. “I think this is the biggest trend that no one else talks about.”

New or expanding warehouses and cardboard manufacturing facilities are likely to be located adjacent to e-commerce warehouses to ensure fast delivery. Having good infrastructure nearby for logistics and access to freight rail will be key factors in determining where the boom is feeling. Dallas has been named as one of the cities to experience particular growth.

E-commerce contributes greatly to the current boom in industrial real estate… In the first quarter of the year, almost 100 million square feet of space were developed for the industrial and logistics market. By the end of May, the country was building a record 376 million square feet of warehouse space.

[FastCo] – Holden Walter-Warner

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