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 20 workers, and generates nearly $10 million in annual revenue.
- The commercial equipment and machinery rental industry consists of about 8,500 firms that employ 172,100 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
Apr 4, 2024 - Industry Growth to Soften
- Amid a slowdown in some segments of the construction sector, commercial equipment rental and leasing industry growth is expected to soften in 2024. The commercial equipment rental and leasing industry posted year-over-year growth of 8.8% in 2021 and 20.4% in 2022 before declining to 4.5% growth in 2023, according to Inforum and the Interindustry Economic Research Fund, Inc. Industry growth is expected to moderate further to 2.2% in 2024, then grow by about 4.5% per year through 2027, according to Inforum and the Interindustry Economic Research Fund, Inc. Total construction spending in 2024 is expected to grow about 2% compared to 2023, led by nonbuilding structures, according to construction consultancy and investment banking firm FMI. Spending on residential projects is forecast to drop by 3% in 2024. Despite weakness in the office and commercial segments, FMI expects spending for nonresidential buildings to rise 8% in 2024.
- Demand for building design services rose in February from the prior month, but remained in contraction territory, according to a March report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) rose to 49.5 in February compared to January’s reading of 46.2. A reading of 50 or more indicates growth in architectural billings. The score for new project inquiries rose to 56 in February compared to 53.8 in February, and the index for the value of new design contracts increased to 51.1 from 49.7. The AIA’s Chief Economist, Kermit Baker said, “There are indicators this month that business conditions at firms may finally begin to pick up in the coming months. Inquiries into new projects grew at their fastest pace since November, and the value of newly signed design contracts increased at their fastest pace since last summer. Given the moderation of inflation for construction costs and prospects for lower interest rates in the coming months, there are positive signs for future growth.”
- Demand for building design services rose in February from the prior month, but remained in contraction territory, according to a March report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) rose to 49.5 in February compared to January’s reading of 46.2. A reading of 50 or more indicates growth in architectural billings. The score for new project inquiries rose to 56 in February compared to 53.8 in February, and the index for the value of new design contracts increased to 51.1 from 49.7. The AIA’s Chief Economist, Kermit Baker said, “There are indicators this month that business conditions at firms may finally begin to pick up in the coming months. Inquiries into new projects grew at their fastest pace since November, and the value of newly signed design contracts increased at their fastest pace since last summer. Given the moderation of inflation for construction costs and prospects for lower interest rates in the coming months, there are positive signs for future growth.”
- The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25) showed new business volume rose 4% to $7.9 billion in February 2024 compared to the same month in 2023. The MLFI-25 reports economic activity from 25 companies that represent a cross-section of the $1 trillion equipment finance sector. January’s business volume decreased 15% compared to January’s $9.3 billion. Year- to-date, business volume increased 4.9% compared to the same period in 2023.
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