Rental equipment revenue will grow a moderate 3% over 2020 through the remainder of 2021 – but hang on in 2022.
The American Rental Association says it now expects the combined construction/industrial and general tool rental revenue to grow by almost 10% next year, reaching a record $52.4 billion. That number even tops the rental industry's 2019 height of $50.9 billion.
The news is even brighter for the construction equipment segment, which ARA forecasts will grow 12.3% in 2022, reaching $38.7 billion. ARA says it did not include the impact of the proposed infrastructure bill — now making a tortuous path through Congress — in its calculations.
John McClelland, ARA vice president for government affairs and chief economist, says most of the benefits of increased infrastructure spending will not occur next year since it takes time for projects to be approved and funding obligated. IHS Markit, which produces the ARA forecast, will incorporate the infrastructure spending "once we have a clear indication of final passage" of the bill, McClelland says.
IHS is monitoring the market to see to what degree inflation — which has not been an issue for more than a decade — is inflected in rental-rate increases.
ARA also issues a five-year projection with each forecast. It now projects rental revenues to grow 5.5% in 2023, 2.5% in 2024, and 3.3% in 2025 to reach $58.6 billion.
ARA says rental companies slashed construction equipment and general tool capital expenditures by 44.4% in 2020, dropping equipment investment to $7.64 billion. Now on the rebound, ARA predicts equipment investment will grow by 36.2% this year to $10.4 billion, followed by another 36% increase to $14.2 billion in 2022. Additionally, this investment will grow by 10.9% in 2023, 2.3% in 2024 and 3.8% in 2025 to total more than $16.6 billion, according to ARA.