In 2015, the equipment rental industry in the United States is expected to show significant growth with combined revenue of the three segments — construction/industrial, general tool/homeowner, and party/special event — increasing 9.2 percent to reach $39.0 billion, according to the American Rental Association’s (ARA) latest forecast from the ARA Rental Market Monitor™.
The forecast, updated by IHS Economics, formerly IHS Global Insight, in late October and recently released by ARA, also calls for an increase in U.S. equipment rental industry revenues of 7.7 percent in 2016, 8.5 percent in 2017 and 9.3 percent in 2018 to total $49.8 billion.
An expected increase in total construction expenditures each year is one of the main factors that can impact rental revenue growth, which has exceeded the growth rate of the industries it serves during the last few years.
“The U.S. equipment rental market is expected to continue its upward trajectory and show strong growth through 2018. The 2014-2018 compound annual growth rate (CAGR) of 4.2 percent is projected for real total construction, with real nonresidential construction growing 2.8 percent and real residential growing 6.4 percent. This will drive rental revenue growth in the construction and industrial equipment segment and the general tool segment,” according to the latest economic analysis from the ARA Rental Market Monitor.
The overall expected growth of the equipment rental industry each year from now through 2018 exceeds the 7.3 percent growth rate in 2014 and is led by the construction and industrial equipment segment, which is expected to increase revenue by 9.8 percent in 2015, followed by 7.9 percent in 2016, 8.6 percent in 2017 and 9.0 percent in 2018.
The general tool segment also is expected to show significant growth during the forecast period with increases of 9.0 percent in 2015, 8.1 percent in 2016, 9.8 percent in 2017 and 11.8 percent in 2018.
Party and special event, which wasn’t as hard hit by the recession, has showed steady growth over the last four years and is expected to continue at a similar pace with revenue increases of 3.9 percent in 2015, 3.5 percent in 2016, 2.5 percent in 2017 and 2.7 percent in 2018.
“We expect continued strong growth for our industry over the next five-year period,” says Christine Wehrman, ARA’s executive vice president and CEO. “Construction spending is on the rise with significant growth expected in the commercial and residential construction markets, and clearly the energy sector continues to be a boom market in North America.”
In 2014, the equipment rental industry revenue growth remained strong at 7.3 percent, but wasn’t quite as robust as initially expected, as evidenced by revisions in the quarterly updates to the initial ARA Rental Market Monitor forecast of 8 percent growth.
“The revision in our expectations has to do with the general economy and with the construction industry, where growth in 2014 did not meet expectations,” says Scott Hazelton, managing partner, IHS Economics.
ARA invested in quarterly updates to the ARA Rental Market Monitor to give those subscribing to the service more timely information and to report trends as they happen.
“We continue to monitor our industry on a quarterly basis to give our members the best information available in a rapidly changing economic environment,” Wehrman says.”
The forecast for Canada calls for 5.2 percent growth in 2015 to $5.16 billion, with growth of 6.8 percent in 2016, 3.5 percent in 2017 and 3.6 percent in 2018 to total $5.9 billion at the end of the latest five-year forecast.
It also is expected that rental companies in the U.S. will continue to invest more than 30 percent of their revenue annually in new equipment over the next five years. Total investment, according to the ARA Rental Market Monitor, is projected to reach $11.9 billion in 2014 and grow to nearly $15.5 billion in 2018.
source: http://www.rentalmanagementmag.com/
