ARA Expects Equipment Rental Revenue to Grow for Next 5 Years | Construction News

The latest forecast from the American Rental Association (ARA) calls for equipment rental revenue in the United States to grow 6.7% in 2016 and 2017, 6.2% in 2018, and 5.8% in 2019, to reach $48.7 billion.

The growth pace is slightly more moderate than in the previous two years, but the industry’s progress is consistently positive regardless of changes in oil and gas, construction, and other segments equipment rental companies serve.

“The performance of the equipment rental industry since the recession has been very positive and as auxiliary industries recover and grow, we anticipate equipment rental revenue growth to meet the forecast of the next five years,” says Christine Wehrman, ARA CEO and executive vice president.

“This means equipment rental companies can prepare for steady growth, plan for expanding their markets and build inventory to meet their customer demand.  The forecast also shows that many customers who have turned to renting equipment during and after the recession have seen the benefits and will continue to rent to control their costs,” Wehrman says. “The secular shift to rental is here to stay.”

The economic analysis from the ARA Rental Market Monitor subscription service suggests that the ongoing rebound in real residential construction in 2015 will help fuel the growth in the construction and industrial equipment and the general tool rental segments.

“A 2015-19 compound annual growth rate (CAGR) of 2.7% is projected for real total construction with real nonresidential growing 1.0% and real residential growing 5.7%. This will drive revenue growth in the construction and industrial segment and the general tool segment, which will average annual revenue increases of 6.5%, and 6.7% respectively, over the period,” according to the latest analysis provided by IHS Economics, the forecasting firm that provides data and analyses for the ARA Rental Market Monitor.

According to the ARA Rental Market Monitor, party and event rentals will “benefit from continued improvement in consumer spending and rental revenue is projected to show a 2.6 percent CAGR over the 2015-19 period. Total equipment rental revenue is expected to grow at a CAGR of 6.3 percent between 2015 and 2019, reaching $48.7 billion in 2019.”

The short-term forecast for Canada is more subdued in 2016, with expectations of 0.8% growth in equipment rental revenue to reach $4.98 billion, with a greater rebound of 5.7% in 2017, 6.3% in 2018 and 5.6% in 2019 to reach $5.9 billion.

‘Lower oil prices will put some downward pressure on oil sands investment, but prices are expected to bottom out above the point at which oil sands become unprofitable and will rise steadily to over $80 a barrel by the end of 2018,” according to the ARA Rental Market Monitor.

In Canada, according to the ARA Rental Market Monitor, “even with the modest outlook for construction markets, construction and industrial equipment and general tool revenues are expected to grow at CAGRs of 4.7% and 4.3%, respectively, through 2019. Party and event rental is expected to grow at a CAGR of 3.6%, benefitting from increases in overall consumer spending, as well as growth in consumer expenditures on services. Total rental revenue is projected to grow at a CAGR of 4.6% over the 2015-19 period.”