Commercial Equipment Rental and Leasing
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 8,500 companies in the US rent or lease commercial or industrial equipment and machinery directly to businesses. Major categories for rental or leasing revenue include miscellaneous types of commercial or industrial equipment (manufacturing, medical, audio/visual, theatrical and motion picture, modular/mobile buildings, energy/power generating); construction, mining, and forestry equipment; transportation equipment; and office equipment. Firms may also sell new or used equipment, supplies, and parts.
Capital-Intensive Operations
The commercial equipment rental and leasing industry is capital-intensive, and firms typically have significant investment in fleet holdings.
Variable Equipment Market Value
Fluctuations in market value for rental or leased equipment affect a firm’s fleet management effectiveness because companies rely on the sale of used equipment as a source of revenue.
Industry size & Structure
The average commercial equipment rental company operates out of a single location, employs 23 workers, and generates nearly $10 million in annual revenue.
- The commercial equipment and machinery rental industry consists of about 8,500 firms that employ 193,000 workers and generate $82 billion annually.
- The construction, mining, and forestry sector accounts for about 37% of firms and 50% of industry revenue. The miscellaneous (manufacturing, medical, audio/visual, theatrical and motion picture, modular/mobile buildings, energy/power generating) sector accounts for 58% of firms and 46% of revenue. The office machinery and equipment sector accounts for 5% of firms and 4% of revenue.
- The industry is concentrated; the top 50 companies account for about 55% of industry revenue.
- Large companies include Aercap Group (commercial aircraft), United Rentals, and GATX. Large firms may have international operations.
Industry Forecast
Commercial Equipment Rental and Leasing Industry Growth
Recent Developments
Dec 2, 2024 - Construction Opportunities, Challenges for 2025
- Construction industry economists and other experts outlined the potential opportunities and challenges the sector faces in 2025 during a November webcast hosted by construction software firm ConstructConnect. Moderating inflation is a key tailwind for the construction sector, as prices for most inputs have fallen. Lead times for many products have also dropped, except for certain types of electrical equipment. Construction industry observers also anticipate the incoming Trump administration will curb regulations, which could speed up project starts. However, Donald Trump’s plan to implement tariffs could increase prices for construction inputs and possibly spark a trade war. The Trump administration is also expected to be less supportive of projects funded through Biden-era programs, including the Infrastructure Investment and Jobs Act, the Chips and Science Act, and the Inflation Reduction Act. The construction sector also lacks enough workers, a condition that could worsen amid a Trump crackdown on immigration.
- The Equipment Leasing and Finance Association’s (ELFA) Monthly CapEx Finance Index (CFI) showed that new business volume increased 5.1% to $10.5 billion in October 2024 compared to the same month in 2023. ELFA CEO and President Leigh Lytle said, “The October CapEx Finance Index revealed an exceptional start to the fourth quarter for the equipment finance sector. While the Federal Reserve’s 50bps rate cut provided a boost, the real story lies in the sector’s fundamental strength. Borrowers and lenders alike demonstrated resilience, with healthy credit approvals and robust balance sheets. Looking ahead, this momentum positions the sector to confidently navigate the challenges of 2025, whether it’s a slower pace of rate cuts or ongoing inflationary pressures.”
- The missing-middle segment of the US multifamily housing construction market saw its biggest gain in 17 years in the third quarter of 2024, according to The National Association of Home Builders (NAHB). The missing middle, which consists of housing properties with 2-4 units, has been weak since the Great Recession. However, in the third quarter, there were 6,000 construction starts for projects with 2-4 units, more than double the amount in Q3 2023. The missing middle’s share of overall multifamily construction was just over 6% in Q3 2024, down considerably from about 11% that was typical between 2000 and 2010. While the NAHB notes that missing middle developments will likely continue lagging absent zoning reforms, the recent increase is encouraging.
- After two years of high interest rates and home prices hindering home sales, the US housing market is expected to improve in 2025 and 2026, according to a November forecast by National Association of Realtors chief economist Lawrence Yun. New home sales are forecast to increase by 11% in 2025 and 8% in 2026. Existing home sales are expected to rise 9% year-over-year in 2025 and then climb 13% in 2026. Key demand drivers include a healthy labor market and population growth. The average 30-year fixed-rate mortgage over the past 52 weeks has ranged between 6.08% and 7.44%, according to Freddie Mac. Yun says he believes mortgage rates will be near the bottom end of that range in 2025 and 2026.
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