"We also believe that the secular shift to rental may have at first been driven by macro-economic uncertainty, but that once customers turn to rental, they appreciate the flexibility and convenience it provides and appreciate the added value," Kneeland adds.
As ENR ">has reported in the past year, there is strong evidence to support why contractors are renting more and buying less. One driver is the uncertainty of even having future jobs for new machines. Another driver is a lack of liquidity, though obtaining cash to buy has loosened, experts say. Also significant is the need to manage regulations, such as engine emissions, which is very challenging for mixed fleets and especially those with a large geographic footprint.
Another factor may have more to do with the maturity of the construction business itself. "Actual equipment spend makes up a fairly small proportion—a low-single-digit proportion—of the actual expense on a construction project, and rental companies tend to be better managers and allocators of the fleet than the construction companies themselves," says McArdle.
McArdle points to global rental data that shows rental penetration is much higher abroad. For example, contractors rent more than 70% of the time in the U.K. and in Japan. Some equipment will still be purchased: Contractors often have a need for larger and more specialized machines, and not all of those machines fit well into a general-purpose rental fleet, McArdle notes.
Still, McArdle and others see much room for rentals to continue to grow in North America.
"Our view—and obviously the view of the rental companies—is that those gains will be held and that contractors will continue to see the upside of rental versus ownership," he says. "As we look forward to a recovery, in probably 2014-15, it will be interesting to see whether it holds true that the gains that were made really set a new normal."