In a sign that the trend toward equipment renting is not slowing down, the American Rental Association says the rental industry can expect a compound annual growth rate of 4.9% over the next few years. ARA’s five-year forecast predicts that U.S. rental revenue will top $57 billion in 2020, a significant increase over the $47.6 billion estimated for 2016.
“The outlook for the U.S. construction and industrial rental-equipment segment remains positive and moderately strong through the 2016-to-2020 forecast period, while continuing to outpace GDP,” says Christine Wehrman, ARA’s CEO and executive vice president.
Rental of construction equipment will be a major driver of the expected growth in revenue, Wehrman told ENR. “According to the most recent rental revenue forecast, the construction segment is forecasting 4.5% growth in 2016, reaching $33.1 billion, and will exceed $40 billion in 2020.”
In terms of total investment in rentals, the ARA Rental Market Monitor forecasts construction and industrial rentals will average more than 25% growth over the next five years. Total rental investment is expected to exceed $12.6 billion in 2016 and grow to $14.5 billion in 2020.
ARA also expects strong growth in rentals beyond heavy iron, with construction-tool rentals continuing to expand. “Residential and non-residential sectors will lead the way for construction growth, which also contributes to the growth forecast for the general tool market segment, which is expected to exceed $11.6 billion in 2016 and will grow to more than $14.1 billion by 2020,” says Wehrman.
Analysts were concerned that uncertainty from the U.S. presidential campaign would impact confidence, but a strong residential construction sector has offset a slowdown in energy markets. “While the forecast has been adjusted to reflect changing market conditions, equipment rental is growing at more than double the rate of GDP growth, and that is a good sign for the industry,” says John McClelland, ARA’s vice president for government affairs and chief economist.