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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Quarterly Insight, 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 18-19 workers, and generates $7-8 million in annual revenue.
- The commercial equipment and machinery rental industry consists of about 8,500 firms that employ 158,000 workers and generate $67 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
Coronavirus Update
Apr 7, 2022 - Manufacturing Growth Expected To Continue
- The Institute for Supply Management (ISM) projects a 6.5% revenue increase for the manufacturing sector in 2022. Lessors of commercial equipment are likely to benefit from a strong manufacturing sector. The ISM noted in its Semiannual Economic Forecast released in December 2021 that 65% of its respondents expect 2022 revenues to top 2021 revenues, with 15 of the 18 manufacturing sectors tracked by ISM pegged for revenue growth. Manufacturing continues to perform at a strong level.
- Demand for coal by electric utilities is surging because global economic recovery from the coronavirus pandemic has unleashed power demand beyond expectations. Coal stockpiles at US power plants were depleted in 2021, and coal mining firms are stepping up production amid higher domestic and export demand. US coal production is forecast to rise 4% in 2022 and 1% in 2023, according to the US Energy Information Administration. Commercial equipment rental and leasing firms supplying the coal mining industry are likely to benefit from what some analysts expect will be a rapid coal production increase.
- Workplace occupancy, an indicator of demand for office equipment, has been slow to rebound, even as pandemic conditions have eased. During the first week of December 2021, about 40% of workers had returned to offices in the ten cities monitored by security firm Kastle Systems. By March 30, 2022, the percentage of workers in the office was 42%. Hybrid working models are expected to be the new norm, with long-lasting impacts on office occupancy. “It’s hard to imagine, when you look at office workers who can do their jobs remotely, that those numbers are going to get above 60% to 65% nationwide,” said Brian Kropp, chief of human-resources research for advisory and research firm Gartner.
- Total construction spending increased 0.5% in value month over month on an adjusted basis and 11% in value year over year on an unadjusted basis in February 2022, according to the US Census Bureau. Residential construction spending increased 1.1% month over month and 16% year over year in February. Nonresidential construction spending decreased 0.1% month over month but rose 6.6% year over year in February.
- Commercial bankruptcy filings decreased 11.2% month over month in January after a 4.8% month over month increase in December 2021, according to Epiq Bankruptcy Solutions. New Chapter 11 filings, including Sub Chapter V, decreased 46.6% year over year in 2021. “January 2022 new filings continue to be well below pre-pandemic levels,” said Chris Kruse, senior vice president of Epiq Bankruptcy Technology.
- Total construction spending increased 0.2% in value month over month on an adjusted basis and 8.83% in value year over year on an unadjusted basis in December 2021, according to the US Census Bureau. Residential construction spending increased 1.1% month over month and 14% year over year in December. Nonresidential construction spending decreased 0.7% month over month but increased 4.4% year over year in December.
- Employment in the commercial equipment rental and leasing industry increased 9.3% year over year in December 2021 but was down 7.6% from the pre-pandemic month of December 2019.
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