Why the Rental Economy is About to Boomrent1
With 2019 in full swing, the business landscape has gone through numerous changes that are having drastic impacts on the economy. Currently, we are experiencing an economic downturn with large unbalanced growth. GDP growth has slowed in the United States and Canada, with companies tightening their budget belts to weather through this uncertainty.
Yet for heavy equipment rental companies, the downturn is good news. With companies seeking to protect their investments, industries that rely on heavy equipment in their operations are turning toward more cost-effective methods to get the work completed. This has led to more heavy equipment rentals instead of purchases, as the cost of purchasing machines outright are high and there are also additional costs to cover storage, maintenance and machine parts.
U.S. and Canada Rental Revenue Outlook
The American Rental Association (ARA) has produced their forecast outlook for the rental market and it shows significant gains in their ARA Rental Market Monitor report. In Canada, the compound annual growth rate (CAGR) for the construction rental segment, industrial rental segment and tool segment is expected to see a steady rate from 4.3% to 4.7% until 2021. In the United States, these same segments are predicted to see a CAGR ranging from 4.1% to 6.1%.
Total rental revenue also is expected to see positive numbers. The United States is expected to show a growth of 5.6% this year and 5% in 2020. For Canada, the total rental revenue will show steady growth of 4.1% this year and rising to 4.7% in 2021 for a total revenue of $6.125 billion.
Increase in Energy Prices and Demand Boosting Rental Economy
The business climate had been positive due to the tax cuts that were implemented in the United States. These cuts have also lead to companies seeking greater investments. At the same time, energy prices are set to rise. While businesses are eager to begin new residential and nonresidential construction projects, the rise in energy prices will make companies wary of owning heavy equipment outright. To satisfy this demand while still seeking the most cost-effective route, construction companies are turning to rental equipment companies to fill in the gap to provide what they need for their city projects.
Another factor impacting the rental economy is the increasing trend to digital disruption rippling through the market sector. Rental companies are taking advantage of new, rising innovations such as apps and web-portals to reach more customers by providing an interactive online experience. Contractors, developers, landscapers and service industries can now simply make a rental order online and specify delivery for a more convenient and streamlined booking process. Customers can easily compare rates, select rental dates, and have their order processed effortlessly.
This digital disruption is creating more competition in the rental market, offering additional benefits to the industry and giving another boost to the rental economy. With technology empowering the rental industry, and positive demand growth in the construction industry, the positive outlook for rental businesses will continue to move forward at a healthy and stable pace.
Rent1 Offering Equipment Rentals for Commercial and Residential Customers
When you are looking for reliable heavy equipment and superior customer service, find the machine your need at Rent1. We have over 60 pieces of heavy equipment and utility vehicles available to help you complete your next project. We also offer an easy-to-use online portal where you can compare rates, choose a machines, select a rental duration and book online.