The cardboard real estate boom has arrived

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According to new research from commercial real estate company Newmark, the rise of e-commerce is fueling yet another boom in factories and warehouses that manufacture and distribute packaging: plastic bags, soft envelopes and classic corrugated board are in increasing demand, as are the locations where these items are made.

“E-commerce requires seven times more boxes per dollar than a typical retail purchase,” says Mark Russo, associate director and lead author of the Newmark report. “With these statistics, you can understand why the packaging world is changing.”

Corrugated board is a big chunk of the boom, accounting for 80% of the packaging used for online orders. The report says the US produced about 407 billion square feet of corrugated board last year – enough to cover the combined area of ​​New Jersey, Connecticut and a small fraction of New York City. This is an increase from an estimated 390 billion square feet in the previous two years and represents the high point in a ten-year upward trend in paperboard production. Newmark expects growth to continue, with an estimated 3.5% annual growth over the next five years. More cardboard means more cardboard factories.

“We believe that for every additional billion square feet, an additional 250,000 square feet of industrial property is required. So we think it will have a pretty significant impact on the market over the next few years, ”says Russo. “I think this is the biggest trend that no one else talks about.”

Newmark tracks some of the world’s largest packaging expansions, with only the top 10 businesses from 2020 to 2021 to date with over 5.5 million square feet of packaging capacity. Russo says the facilities could occupy existing warehouse space or be newly built clusters of buildings, with some focused on manufacturing and others on warehousing goods prior to shipment.

As new buildings, they are aesthetically unremarkable, but they may soon become a more familiar part of the industrial landscape. The real estate boom in packaging can happen almost anywhere. Russo says that given the bulk of packaging products such as corrugated board, manufacturers want to be as close to their users as possible – most notably e-commerce warehouses. Most of them strive to be a day’s distance from their clients.

“It will be important to be close to the big e-commerce companies that are everywhere,” says Russo.

This growth is more likely in some locations, according to Newmark’s research. Lisa DeKnight, director of national industrial research at Newmark, said locations with good logistics infrastructure and close access to freight railways will be in high demand. “For example, in Dallas, where we are seeing a significant expansion of packaging, there is a large intermodal transport. [capacity for carrying and moving shipping containers], there is a great train access and there is land that can be expanded, ”she says. Uline, the packaging giant, recently expanded to 1.1 million square feet in Irving, Texas, and corrugated board manufacturer Green Bay Packaging expanded to 600,000 square feet in Fort Worth.

This expansion and more significant growth in the packaging industry will lead to more construction, development and jobs. But just like the e-commerce giant Amazon faced close scrutiny workplace practice In fulfillment centers, some packaging companies are known for their aggressive anti-worker activities. The family-owned company Uline is run by billionaires Richard and Elizabeth Whichlein. strongly anti-union and have spent millions supports right-wing politicians and one of the groups that spearheaded the January 6 attack on the US Capitol. Georgia-Pacific, another paper and packaging giant that recently expanded to half a million square feet outside Atlanta, is part of Koch Industries, a family-owned conglomerate anti-union right-wing billionaire donors.

It may be too early to tell whether the new jobs created by the expansion of these companies are good for the workers who are comfortable with them. But if the policies of these companies are any indication, the continued growth of e-commerce can fuel the growth of side industries with equal success. controversial work practices



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