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.

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.

Capital-Intensive Operations

The commercial equipment rental and leasing industry is capital-intensive, and firms typically have significant investment in fleet holdings.

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

                                    Nov 5, 2021 - Rising Coal Demand may Boost Revenue
                                    • 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 in August were down almost a third from the start of the year, and were at their lowest in at least 24 years. 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, was 36.8% for the seven-day period ending on October 27, down from 36.9% on October 20 but up from 36.2% on October 13, according to building data from security company Kastle Systems. The Houston, TX, metropolitan area had the highest occupancy on October 27 at 50.6% and the San Francisco metropolitan area trailed all others tracked at 25.1%.
                                    • Commercial bankruptcy filings decreased 6% month over month and 67% year over year in September, according to Epiq Bankruptcy Solutions. Commercial bankruptcy filings decreased 32% year over year for the first nine months of 2021. “The bankruptcy new filings volume and chapter mix trends will likely change over the coming months with the Federal and State programs like the eviction moratorium expiring on September 30, 2021,” said Todd Madsen, senior director of Epiq Bankruptcy Analytics.
                                    • Rental equipment industry revenue will increase about 1.5% year over year in 2021, according to the American Rental Association. Revenue decreased 11.7% year over year in 2020. “With the government stimulus programs and the rollout of the vaccine, people are beginning to have more confidence. The equipment and event rental industry often recovers from adversity more quickly than the industries it serves, and it looks like this is happening again,” said John McClelland, Ph.D., ARA vice president for government affairs and chief economist.
                                    • Total construction spending decreased 0.5% in value month over month on an adjusted basis but increased 7.9% in value year over year on an unadjusted basis in September, according to the US Census Bureau. Residential construction spending decreased 0.4% month over month but increased 19.2% year over year in September. Nonresidential construction spending decreased 0.6% month over month and 1.2% year over year in September.
                                    • Industry employment increased 5% year over year in August but was down 10.5% from the pre-pandemic month of August 2019.
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