ARA expects a rental resurgence
The American Rental Association (ARA) expects positive growth for the equipment and event rental market in 2021 and beyond.
The ARA’s previous forecast projected modest growth of 0.3% this year.
But a new forecast calls for a 1.5% increase in 2021, surpassing $50.2 billion in rentals.
The latest forecast arrives after a difficult 2020 when total industry revenues fell by 11.7% to under $49.5 billion. Party and event rental revenue declined by 49% last year.
While construction rentals fell 11% in 2020, they are expected to increase by 1% in 2021. General tool rental revenue is projected to grow by 4% with part and event rentals surging by as much as 37%.
Looking further ahead, the ARA calls for accelerated recovery in 2022 with revenues growing 11.3% to $55.9 billion, then nearly 5% to $58.7 billion in 2023 and another 3.1% to $60.5 billion in 2024.
Rental segments are expected to surpass peak revenues of 2019 by the end of 2022, the ARA said.
“With the government stimulus programs and the rollout of the vaccine, people are beginning to have more confidence,” said John McClelland, ARA vice president for government affairs and chief economist. “ The equipment and event rental industry often recovers from adversity more quickly than the industries it serves, and it looks like this is happening again,”
McClelland notes that party and event companies that were hit so hard by cancelations starting last March “are beginning to see a glimmer of hope ahead.”
In the meantime, the ARA said that it is continuing to “work hard” to bring additional, government stimulus relief to segments of the rental market.
Scott Hazelton, managing director, IHS Markit, the international forecasting firm that compiles data and analysis of the ARA Rentalytics members-only subscriber service as part of a research partnership with ARA, says the new forecast is more positive because economic data from the end of 2020 was better than expected.
“From an equipment rental perspective, construction did not slow as much as expected, although we do expect it to remain a drag in 2021,” Hazelton said. “The larger surprise was the performance on manufacturing, which is also a source for equipment rental demand.”
Key to the resurgence in the rental market is the COVID-19 vaccine reaching more of the U.S. population and proposed economic stimulus from the Biden administration.
While the forecast reflects the passage of the latest COVID-19 economic relief bill passed in December, Hazelton says it does not incorporate the $1.9 trillion American Rescue Plan being proposed by the Biden administration.
“The potential is for 2021 to surprise on the upside,” he said.