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
Jan 3, 2025 - Construction Spending Flat
- The total value of construction put in place was unchanged in November compared to October, according to the US Census Bureau. Spending on nonresidential projects decreased by 0.1%, and residential spending rose by 0.1%. Within the nonresidential segment, pockets of spending growth included conservation and development, which saw growth of 9% over the previous month, followed by communication (+0.8%), sewage and waste disposal (+0.4%), highway and street (+0.2%), and power (+0.2%). Most other nonresidential segments saw flat or reduced spending in November. Private residential construction spending rose 0.1% in November over October, but a 1.3% drop in multifamily nearly offset a 0.3% increase in single-family spending. High mortgage rates may be putting downward pressure on construction activity, according to Reuters.
- US equipment rental revenue, which includes the construction/industrial and general tool market segments, is expected to rise in 2025 but at a slower pace, according to a recent forecast by the American Rental Association (ARA). After posting revenue of $78.2 billion in 2024, equipment rental revenue is expected to increase by 5.7% in 2025 and reach $82.6 billion. However, revenue growth is forecast to slow somewhat amid slower infrastructure and manufacturing spending as funding from the Infrastructure Investment and Jobs Act, the CHIPS Act, and the Inflation Reduction Act has peaked and begins to wind down. A bright spot is the general tool rental segment, which should see steady demand from improvements in the automotive and aerospace industries and gradual gains in housing, especially in the remodeling market.
- The Equipment Leasing and Finance Association’s (ELFA) Monthly CapEx Finance Index (CFI) showed that new business volume increased 8.7% to $10.36 billion in November 2024 compared to the same month in 2023. ELFA CEO and President Leigh Lytle said, “With strong balance sheets and healthy market conditions, the industry is well-positioned for growth, even if the Fed slows the pace of rate decreases next year. While challenges like a potential trade war could pose headwinds, easing regulations could spur equipment demand. Looking ahead, I foresee technological innovations by both lenders and end-users driving productivity and transforming the sector over the coming decade.”
- 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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