The equipment rental industry in North America is expected to see slower growth in the coming years. The demand for construction and heavy equipment is decreasing after the pandemic. This means the U.S. and Canada will grow at a slower pace¹.

The American Rental Association (ARA) predicts U.S. rental revenue will rise by 8.2% to $78.2 billion in 2024. However, growth will slow down to 5.7% in 2025¹. The Canadian Rental Association (CRA) also expects growth, but at a slower rate. They predict a 7.6% increase to $8.2 billion in 2024, followed by a 6.8% growth in 2025¹.

Key Takeaways

The equipment rental industry in North America is projected to experience a slowdown in growth, with the U.S. and Canada seeing softening demand for construction machinery and heavy equipment.
U.S. equipment rental revenue is expected to increase by 8.2% to $78.2 billion in 2024, with growth slowing to 5.7% in 2025.
Canadian rental revenue is forecast to grow by 7.6% to $8.2 billion in 2024 and ease to 6.8% in 2025, driven by rising demand from the non-residential construction sector.
The post-pandemic surge in demand for rental equipment is beginning to subside, leading to a more moderate growth trajectory for the industry.
Rental companies will need to adapt their strategies to address the changing market dynamics and maintain profitability in the years ahead.

Equipment Rental Industry Projected to Experience Softening Growth in 2025

The equipment rental industry is expected to slow down in growth by 2025. The U.S. market revenue is forecasted to reach $82.6 billion, a 5.7% increase from 2024’s $78.2 billion². Since the COVID-19 retreat in 2021, the rental sentiment index has grown. However, a contraction signal was seen in the last quarter, hinting at a market softening². The Canadian market is also expected to grow, with revenue reaching $6.21 billion in 2025, a 6.7% increase from 2024’s $5.76 billion³.

Key Growth Indicators

Several factors are contributing to the industry’s softening growth. Interest rate reductions will impact the economy with a lag². Infrastructure and manufacturing construction spending are also maturing, leading to reduced growth despite federal funds inflow². However, the general tool hire sector is expected to remain stronger, thanks to improvements in automotive and aerospace manufacturing².

In Canada, the general tool rental growth is anticipated to be slower than in the U.S. due to a rising Canadian dollar³. Canada’s data center construction is not expected to boom like in the U.S., where it is predicted to grow at a near 40% rate in 2025, due to slower AI adoption².

Market	2024 Revenue	2025 Revenue	Growth Rate
U.S. Equipment Rental	$78.2 billion	$82.6 billion	5.7%
Canadian Equipment Rental	$5.76 billion	$6.21 billion	6.7%

As the equipment rental industry faces a changing economic landscape, businesses must stay agile. They need to adapt to trends in aerial work platform rentals, industrial tool rentals, and temporary power solutions to seize new opportunities and stay competitive²³.

Construction and Industrial Sector Impact on Rental Market

The construction and industrial sectors will greatly affect the equipment rental market⁴. In the United States, the American Rental Association (ARA) predicts rental revenue growth will slow down. It will go from 7.9% in 2024 to 3.6% in 2025. But, it’s expected to rise to 4.3% by 2028⁴.

In Canada, the Canadian Rental Association (CRA) sees strong growth in these sectors. Rental revenue is expected to hit $7.4 billion by 2028. This represents a 4.1% annual growth rate over four years⁴.

The equipment rental industry has seen different trends lately⁵. United Rentals saw a 7.4% increase in rental revenue in the first nine months of 2024⁵. Herc Rentals reported a 13% year-over-year increase in rental revenue to $866 million in the third quarter⁵. But, H&E Equipment Services only saw a 3.3% year-on-year increase in rental revenue to $326.2 million in the third quarter⁵.

The outlook for construction machinery rentals, heavy equipment leasing, and industrial tool rentals is cautiously optimistic⁶. Rental revenue is expected to grow by 3.4% in 2023 to nearly $57.7 billion. This follows an 11% growth in 2022 to almost $55.8 billion⁶.

Looking ahead, rental revenue is forecasted to grow by 2.9% in 2024, 3.3% in 2025, and another 3.4% in 2026. This will bring rental revenue to nearly $63.4 billion⁶.

While the construction and industrial segments have seen double-digit revenue increases, the future growth is expected to be more moderate⁶. The construction and industrial segment is forecasted to increase by 4% in 2023, 2% in 2024, and 3% in 2025 and 2026⁶. The general tool segment is expected to see more robust growth, with forecasts of 5% in 2024 and 2025, and 4% in 2026⁶.

“The construction and industrial sectors are poised to have a substantial influence on the equipment rental market, with a mix of growth trends observed across major players in the industry.”

Residential Construction’s Role in Equipment Rental Demand

The residential construction sector is key in the demand for renting construction and sports equipment⁷. The U.S. rental industry is set to see an 8.9% revenue jump in 2024, reaching $78.7 billion⁷. Yet, the 2025 forecast shows a more modest 5.3% growth⁷.

Housing Starts and Market Trends

U.S. housing starts have dropped since the Federal Reserve raised interest rates in March 2022⁸. In October 2024, starts hit 1.31 million, down from April 2022’s peak of 1.83 million⁸. The Congressional Budget Office predicts a slight increase in housing starts from 2025 to 2029⁸.

Interest Rate Effects on Construction

The Federal Reserve’s rate cut and expected future cuts could boost residential construction⁸. This might increase demand for renting construction and sports equipment.

Future Housing Market Projections

Canadian equipment rental revenue is forecasted to rise by 7.6% to $8.2 billion in 2024⁸. The growth rate is expected to slow to 6.8% in 2025⁸. By 2028, Canada’s rental revenue is predicted to hit $9.5 billion⁸.

“The residential construction sector plays a crucial role in the demand for construction machinery rentals, heavy equipment leasing, and sports equipment rental.”

Non-Residential Construction Spending Patterns

The United States saw a big jump in non-residential construction spending, hitting $768.4 billion in 2023. This was a 21.6% rise from the year before⁹. But, the American Institute of Architects (AIA) predicts a slowdown. They forecast a 4% increase in 2024 and just 1% in 2025⁹.

This slowdown could affect the demand for renting out equipment. This includes aerial work platforms, temporary power solutions, and industrial tools.

In Canada, the equipment rental market is expected to grow thanks to strong non-residential construction. In 2021, rental revenue jumped by 15.8%, and in 2022, it rose by 11.1%, reaching $4.6 billion⁹. The forecast shows a 1.6% revenue increase in 2023, followed by 4% in 2024, 5.3% in 2025, and 3.5% in 2026, reaching nearly $5.3 billion⁹.

Indicator	United States	Canada
Non-Residential Construction Spending Growth	21.6% in 2023, 4% in 2024, 1% in 2025⁹	Contributes to equipment rental market expansion⁹
Equipment Rental Revenue Growth	3.4% in 2023 to $57.7 billion⁹	15.8% in 2021, 11.1% in 2022 to $4.6 billion; 1.6% in 2023, 4% in 2024, 5.3% in 2025, 3.5% in 2026 to $5.3 billion⁹
Construction and Industrial Segment Growth	10.2% in 2021, 12.7% in 2022; 4% in 2023, 2% in 2024, 3% in 2025 and 2026⁹	Not provided
General Tools Segment Growth	4.5% in 2021, 6.2% in 2022; 1% in 2023, 5% in 2024 and 2025, 4% in 2026⁹	Not provided

The data shows different trends in non-residential construction spending in the U.S. and Canada. The U.S. market is expected to slow down, while Canada’s market is set to grow. This could open up new opportunities for rental businesses in aerial work platforms, temporary power solutions, and industrial tools.

“The construction and industrial segment is forecast to show a 4% revenue increase in 2023, followed by 2% in 2024, and 3% in both 2025 and 2026.”⁹

This industry data is crucial for rental businesses. It highlights the importance of keeping an eye on market trends. Rental businesses need to adjust their strategies to take advantage of these changes.

Policy Changes and Their Impact on Equipment Rental Industry

The equipment rental industry is closely tied to economic and policy dynamics. Upcoming policy changes are expected to significantly influence the sector’s trajectory. Rental businesses must navigate these shifting waters to identify growth opportunities and manage risks¹⁰.

Federal Reserve Rate Adjustments

The Federal Reserve’s recent interest rate cuts are likely to stimulate construction activity. This drives demand for construction machinery rentals, heavy equipment leasing, and aerial work platform rentals¹⁰. Rental companies must closely monitor these policy developments and adapt their strategies accordingly to capitalize on the potential uptick in construction projects and equipment needs.

Government Infrastructure Spending

As the government allocates funds for infrastructure projects, the equipment rental industry stands to benefit. However, delays in the distribution of these funds have slowed the start of some large construction initiatives. This creates a mix of opportunities and challenges for rental businesses¹⁰. Rental companies must stay vigilant in monitoring the progress of infrastructure projects and positioning themselves to meet the anticipated surge in equipment demand.

Immigration Policy Effects

Changes in immigration policies can have a significant impact on the construction labor force. This can lead to labor shortages that could constrain the industry’s growth. This, in turn, could affect the demand for equipment rentals, as construction activity may slow down¹⁰. Rental businesses must closely follow these policy developments and adjust their strategies to address the evolving labor landscape and its impact on construction activity.

While the equipment rental industry navigates the complex landscape of policy changes, rental businesses must remain agile and proactive in their approach. By closely monitoring economic indicators, government initiatives, and regulatory shifts, they can identify emerging opportunities and mitigate potential risks. This will drive sustainable growth in the construction machinery rentals, heavy equipment leasing, and aerial work platform rentals sectors¹⁰.

“In times of change, the most resilient and adaptable rental companies will thrive, capitalizing on the opportunities presented by evolving policies and economic conditions.”

Automation helps rental businesses

Automation and specialized software are key for rental businesses to stay ahead. They help manage inventory, track maintenance, and book efficiently. This is especially important in a market that’s growing slower¹¹.

Equipment rental software is essential for companies in sports equipment and temporary power solutions. It helps them adapt to market changes¹¹.

Leveraging AI and Machine Learning

The rental industry is using more AI and machine learning. This helps improve efficiency and customer service¹¹. Companies like Spartan Solutions and STAEDEAN are leading the way with AI in rental software¹¹¹².

AI tools can predict when rental assets will return and optimize demand forecasting. They also automate workflow processes¹¹.

Platforms like Wynne Systems’ RenterLink use AI for faster transactions. Microsoft’s Copilot with STAEDEAN’s Rental Management solution boosts productivity¹¹.

As the rental industry grows, using AI and rental software is vital. It helps businesses stay competitive and offer great service¹¹.

“AI has the potential to revolutionize operations, enhance customer service, and drive growth in the rental sector by improving operational efficiency through demand forecasting, dynamic pricing, workflow automation, and customer management.”¹¹

The Future of Rental Businesses

The rental industry is embracing automation and AI. This helps them stay competitive as growth slows¹¹. Rental businesses that use specialized software and innovative solutions will thrive¹¹.

Company	Innovative Solutions	Key Highlights
Spartan Solutions	Predictive maintenance	Working with AI specialists for over 5 years, supplying AI-based tools to clients¹¹
STAEDEAN	Product Recommendation Engine (PRE) utilizing AI and machine learning	Enhancing operational efficiency for equipment rental companies¹¹
Wynne Systems	Voice-to-transaction AI functionality for RenterLink e-commerce platform	Facilitating faster rental transactions and streamlining operations¹¹
Trackunit	Incorporating generative AI into IrisX platform	Offering an interactive environment in the off-highway segment of the construction industry¹¹

As the rental industry evolves, using rental software and AI is key. It helps businesses stay competitive, optimize operations, and offer great service¹¹.

Conclusion

The equipment rental industry is facing a softening growth in 2025¹³. The construction and industrial sectors might grow slower. But, there are still chances in residential construction and government projects¹⁴. Experts are still hopeful about the future of the rental market.

In the U.S., the rental industry is expected to grow by 7.6% in 2023, reaching $60.4 billion¹⁴. This growth will slow down to 3.1% in 2024. Canada’s market is also growing, with 2.9% in 2023 and 4.3% in 2024¹⁴. Rental businesses can use automation and software to stay efficient in these changes.

Policy changes, like interest rate adjustments and government spending, will shape the industry’s future¹³. Rental companies need to adjust to rising interest rates and changing housing trends¹³. By staying informed and proactive, rental companies can find new opportunities in the equipment rental industry projected to experience softening growth in 2025, construction machinery rentals, and heavy equipment leasing.

FAQ

What is the projected growth for the equipment rental industry in North America?

The equipment rental industry in North America is expected to grow slowly. The American Rental Association (ARA) predicts U.S. rental revenue will rise by 8.2% to .2 billion in 2024. Growth will slow to 5.7% in 2025. The Canadian Rental Association (CRA) also sees moderate growth, with revenue increasing by 7.6% to .2 billion in 2024. Growth will ease to 6.8% in 2025.

What are the key growth indicators for the equipment rental market?

Key growth indicators include non-residential construction growth, industrial production, and expanding oil sands investment in Canada. The construction and industrial sectors are expected to have a big impact on the equipment rental market.

How will the construction and industrial sectors impact the equipment rental market?

In the United States, the ARA expects rental revenue growth in construction and industrial sectors to slow. It will go from 7.9% in 2024 to 3.6% in 2025. But, it’s expected to stabilize and increase to 4.3% by 2028. In Canada, the CRA forecasts strong growth, with rental revenue projected to reach .4 billion by 2028. This represents a compound annual growth rate of 4.1% over the next four years.

What role does residential construction play in equipment rental demand?

Residential construction is crucial for equipment rental demand. U.S. housing starts have decreased since the Federal Reserve increased interest rates in March 2022. However, the recent rate cut and expected future cuts may stimulate demand in residential construction. This could boost equipment rental demand.

How will non-residential construction spending patterns affect the equipment rental market?

Non-residential construction spending in the U.S. surged in 2023. The American Institute of Architects (AIA) forecasts a 4% increase in 2024 and a 1% increase in 2025. This slowdown may impact equipment rental demand in this sector. In Canada, strong non-residential construction growth is expected to expand the equipment rental market.

How will policy changes affect the equipment rental industry?

Policy changes, like the Federal Reserve’s recent rate cut, are likely to stimulate demand in construction. Government infrastructure spending is expected to boost demand for equipment rentals. However, delays in fund distribution have slowed some large construction startups. Immigration policy changes could reduce demand for housing and exacerbate construction labor shortages, affecting the equipment rental market.

How can rental businesses leverage technology to improve efficiency?

Automation and software solutions are key for rental businesses to improve efficiency and profitability. Equipment rental software helps manage inventory, track maintenance, streamline booking, and analyze performance. These technological advancements are crucial for rental businesses to stay competitive in a market with softening growth.

Source Links

Earnings call: United Rentals posts record revenues, bullish on 2025 outlook By Investing.com – https://www.investing.com/news/stock-market-news/earnings-call-united-rentals-posts-record-revenues-bullish-on-2025-outlook-93CH-3682773
Equipment rental industry projected to experience softening growth – https://news.ararental.org/equipment-rental-industry-projected-to-experience-softening-growth
ARA’s Q4 economic forecast shows softening growth – https://news.ararental.org/aras-q4-economic-forecast-shows-softening-growth
With US rate cuts coming, is the North American equipment rental industry softening or solidifying? – https://www.constructionbriefing.com/news/with-us-rate-cuts-coming-is-the-north-american-equipment-rental-industry-softening-or-solidifying/8038825.article
Four things we learnt from North American rental giants’ Q3 results – https://www.internationalrentalnews.com/news/four-things-we-learnt-from-north-american-rental-giants-q3-results/8040188.article
Equipment rental revenue poised to continue growth in 2023 and beyond – https://ararental.org/Rental-Management/article/ArtMID/4195/ArticleID/1676/Equipment-rental-revenue-poised-to-continue-growth-in-2023-and-beyond
ARA report shows rental equipment growth is ‘softening’ – https://quadcitiesbusiness.com/ara-report-shows-rental-equipment-growth-is-softening/
What is the outlook for the North American rental market? – https://www.internationalrentalnews.com/news/north-american-rental-revenue-growth-to-slow-in-medium-term/8042516.article
ARA forecasts softening rental – https://www.internationalrentalnews.com/news/ara-forecasts-softening-rental/8024876.article
Equipment Rental Industry: Resilience Amid Economic Fluctuations – https://www.onwish.ai/insights/equipment-rental-industry-resilience-amid-economic-fluctuations
How AI is unlocking rental fleet efficiency – https://www.internationalrentalnews.com/news/how-ai-is-unlocking-rental-fleet-efficiency/8040082.article
Interview: Alias2K and the untapped potential of AI in rental – https://www.internationalrentalnews.com/news/interview-alias2k-and-the-untapped-potential-of-ai-in-rental/8037853.article
An Update to the Economic Outlook: 2023 to 2025 – https://www.cbo.gov/publication/59431
Rental Management recognizes the equipment rental industry’s 2023 Market Movers – https://news.ararental.org/rental-managementrecognizes-the-equipment-rental-industrys-2023-market-movers

Equipment Rental Growth to Slow Down in 2025 | Market Report