State of the Industry: Rentals

Rentals are an essential piece of the construction and industrial industry, providing support for infrastructure development, real estate projects, and various other endeavors. As hubs for equipment and machinery, they offer solutions for high upfront purchase prices while getting contractors and builders what they need to get the job done. In this blog, we discuss construction and industrial rentals with Bill Johnson, Vice President of Sales and Marketing at GreatAmerica Financial Services. We will explore the current state of the construction and industrial rental industry, what drives its success, current prospect, and the future of the industry.

State of the industry 

In 2023, the construction and industrial rental yard industry had a record year with revenue of $71.5 billion and is predicted to continue growing in 2024. Now is a very exciting time to be involved in rentals. As we are coming out the other side of the pandemic, we are seeing a renewed focus on infrastructure spending and the expansion of construction projects. Rentals are a great solution for those companies investing in expansion without the cost burden of purchasing equipment for limited use.

Drivers of Success

As I mentioned earlier, the infrastructure industry has seen success due to the increase in spending. However, the key to this success lies in the benefits of the service itself. Renting equipment instead of buying or financing is a viable option for many. It is a cost-effective solution that allows builders and contractors to access updated equipment that they may not normally have. The construction industry is also seeing professionals shifting management of equipment to rental services, freeing their time to focus on their core competencies and project execution.

Owning equipment comes with hidden costs, such as maintenance and storage. Construction and industrial rental providers are responsible for maintaining their equipment, and their primary goal is to keep the customer happy and coming back. This attention to detail and customer-centric approach is a significant contributor to the industry's success.

Industry prospect in 2024

Amidst times of uncertainty and economic volatility, the rental industry has proven to perform at its best. In 2024, with an election on the horizon, many in the construction and industrial sector may feel hesitant to invest upfront in high-cost equipment. The risks of a potential drop in demand for projects could leave builders and contractors with unused equipment and financial strain. In such uncertain times, the appeal of rental options becomes increasingly apparent, offering flexibility and cost-effectiveness for those in need of equipment without the burden of ownership.

Rentals in 5 to 10 years

One of the key elements that make construction and industrial rentals successful is their flexibility in accommodating the equipment needs of their customers. With rental options ranging from one month to ten months, businesses and individuals can find solutions that fit their unique needs. Going forward, I anticipate rentals will continue to offer this level of flexibility to their customers, including by-the-hour rental options.

I'm also excited about the potential impact of emerging technologies on the rental industry. Innovations in technology, such as telematics and IoT, have the potential to enhance the efficiency, safety, and monitoring in construction and attract more people to rental solutions. As these technologies continue to evolve, I believe they will play an increasingly important role in shaping the rental landscape over the next 5 to 10 years.

 Conclusion

Rental continues to play an important role in construction and industrial markets, providing cost-effective solutions for businesses and individuals who require equipment for a limited time. With the increase in infrastructure spending and the expansion of construction projects, the rental industry is expected to continue growing in the coming years. To remain successful, construction and industrial rental must focus on delivering exceptional customer service and adapt to emerging technologies in an effort enhance their efficiency and safety. Overall, the future of the construction and industrial rental industry looks promising, and we can expect to see more innovation and growth in the years to come.