North America Construction Equipment Rental Market - Strategic Assessment & Forecast 2023-2029

The North America construction equipment rental market was estimated at USD 42.64 billion in 2022 and is expected to reach USD 58.49 billion by 2029, growing at a CAGR of 4.62%. In 2021, the Biden-Harris government signed the Bipartisan Infrastructure Law (BIL), which focused on promoting the nation’s infrastructure and competitiveness by rebuilding roads, bridges, ports, and airports. It also included the upgradation of rail systems and providing cleaner and cheaper energy. Investment in the construction industry during November 2022 was recorded at USD 1.8 billion. Private construction received worth USD 1,426.4 billion in investment during the same period. The launch of ‘US Bipartisan Infrastructure Bill 2021 and Canada’s Affordable Housing Scheme is expected to propel the North America construction equipment rental market during the forecast period.

GOVERNMENT INVESTMENT IN PUBLIC INFRASTRUCTURE

• In November 2022, the Minister of Innovation, Science, and Industry in Canada announced an investment of USD 127 million to support the renovation and expansion of 8 biocontainment facilities across Canada. Additionally, under the Investing Canada Plan, the government stated more than USD 180 billion in grants for public transit projects, green infrastructure, social infrastructure, and trade and transportation routes over 12 years.
• The Liberton Flat Redevelopment project includes redeveloping the commercial and residential zones and will develop the new public library. It will also include a new stadium of 28,000 seats and a space for 7,000 people to live in the city. This project will change the face of Vancouver City; the construction started in 2019, will be completed in 2036, and will cost USD 4 billion. Royalmount Project includes the biggest shopping mall with 232,257 square meters will be redeveloped. The mega project will add a performing art space, water park, and indoor & outdoor cinema. The project will also house resorts, hotels, an outdoor skating rink, and office space inside the mega mall, costing USD 2 billion.
• Development of the high-speed rail system in California would include 800 miles of rail, with up to 24 stations. The project will connect San Francisco to Los Angeles, extending to Sacramento and San Diego. The rail would run along 1,287 km and is estimated to be completed in 2033. This project is the first high-speed train system implemented in the US. It is estimated to cost USD 68 billion, and the federal investment includes USD 2.6 billion in state bonds. Another investment of approximately USD 7 billion is by public-private partnership funding. The construction is being done in an environmentally friendly way, as it has promised to recycle 100% of all usable concrete and steel. The transportation system would include trains that accommodate 1,300 passengers at once and will be up to 1,300 feet long. The technology of the trains would be based on high-speed trains from Japan, Germany, and France.
• The Surrey-Langley SkyTrain project is being constructed in British Columbia, which will extend the Expo Line 16 km primarily along Fraser Highway on an elevated guideway from King George SkyTrain Station in Surrey to 203 Street in Langley City. It includes eight stations and three transit exchanges at 166, 196, and 203 St Stations. The project is estimated to be completed by 2028. The estimated total cost of the project is USD 4.01 billion. The SkyTrain will improve the transport experience and increase access to opportunities and housing in that area.
• Canada announced a USD 964 million program in 2022 to assist smart renewable energy and grid modernization projects that would reduce emissions by investing in clean energy technologies such as wind, solar, storage, hydro, geothermal, and tidal. Several wind farm & solar projects are under progress in regions such as Quebec, Ontario & Alberta, which is expected to trigger the demand for rental construction equipment due to its quick availability compared to new equipment.
• The Portal Bridge Enhancement Project, with a total value of USD 1.65 billion, involves the construction of a 3.92 km, two-track, high-level, fixed-span railway bridge over the Hackensack River in New Jersey. Project construction commenced in 2021 and is estimated to be completed in quarter four of 2026. The project would replace the 111-year-old swing bridge, enabling marine traffic to sail underneath smoothly. The project will improve service throughout the northeast corridor.

KEY HIGHLIGHTS

• The earthmoving segment of the overall rental construction equipment accounted for the largest North America construction equipment rental market share in 2022. In the earthmoving segment, excavators accounted for the largest share in 2022.
• The Toronto Waterfront Redevelopment project is North America's largest urban redevelopment project. It is anticipated that approximately 5 million square feet of commercial development and 30,000 residential units, including affordable housing, will be built in the West Don Lands, East Bayfront, and Lower Don Lands neighborhoods, and much more across the wider designated waterfront area. The project will also include cultural facilities such as parks, public spaces, and amenities for new communities. Constriction of the Regal Plaza Corporate Centre includes USD 130 million, 35,650 square-foot mixed-use business complex located at 600 Dixon Road (at Martin Grove Road) in Toronto. The complex will also comprise an 11-story above-grade Staybridge Inn Hotel and a commercial center, with two new underground parking levels.
• The construction of various infrastructure and residential projects in North America is expected to drive the demand for renting excavators in the North America construction equipment rental market. For instance, the Denver-based architect, Tres Birds, announced the development of the tallest mass timber building in 2022.
• The Portal Bridge Enhancement Project, with a total value of USD 1.65 billion, involves constructing a 3.92 km, two-track, high-level, fixed-span railway bridge over the Hackensack River in New Jersey. The construction commenced in 2021 and is estimated to be completed in quarter four of 2026. The project would replace the 111-year-old swing bridge, enabling marine traffic to sail underneath smoothly, and will improve service throughout the northeast corridor. This will boost the demand for rental road construction machinery in the North America construction equipment rental market.
• Intel announced its plans to build two chip factories in Ohio in 2021, with an investment of more than USD 20 billion. Phase 1 of the project is estimated to create 3,000 Intel and 7,000 construction jobs. The construction is planned to begin in 2022 and is expected to be complete in 2025. Additionally, General Motors Co. has planned to invest USD 7 billion in developing four manufacturing factories in Michigan. The investment would create 4,000 new jobs.
• The manufacturing industry received USD 121.3 billion worth of investment in 2021. The investment in chemical manufacturing (USD 63.2 billion) and computers and electronic products accounted for the largest share. Real estate, rental, and leasing investments were also prominent, receiving USD 43.8 billion in 2021. Additionally, greenfield investment was recorded at USD 3.4 billion in 2021.

MARKET TRENDS & DRIVERS

Investment in the Upgradation and Maintenance of Infrastructure Projects Is Expected to Support the North America Construction Equipment Rental Market
In November 2022, the Minister of Innovation, Science, and Industry in Canada announced an investment of USD 127 million to support the renovation and expansion of 8 biocontainment facilities across Canada. Additionally, under the Investing Canada Plan, the government stated more than USD 180 billion in grants for public transit projects, green infrastructure, social infrastructure, and trade and transportation routes over 12 years.

Moreover, Quebec announced an expenditure of USD 75.6 billion in 2022 for the renovation and maintenance of infrastructure projects. The education sector has stated an investment of USD 7.2 billion to expand and refurbish higher education institutions and increase classroom space. Additionally, Canada’s focus on the ‘Green Building Strategy’ has significantly propelled the demand for rental construction equipment in the country. The Strategy aims to reduce emissions by 37% by 2030 and create a net-zero emissions building sector by 2050.

Tight Supply of New Construction Equipment and High Prices to Escalate the Demand for Rental Equipment
The regional supply disruptions have hampered the manufacturing of new equipment, leading to a surge in equipment prices and propelling the North America construction equipment rental market. The severe scarcity of chips used in equipment manufacturing has also added further pressure to the situation. Moreover, it has been estimated that semiconductor chips will remain in short supply during 2023. Prices of new equipment, for instance, skid steer loaders, increased by 30% in the region. Aerial platform and earthmoving segments also witnessed considerable price jumps in 2022 due to inflationary pressures. Prices of large excavators were up by 12% in 2022 with low sales; for instance, John Deere excavator prices rose by 18% in Canada.

Post-pandemic, in 2021, the industry experienced higher growth, and the uncertainty caused by the pandemic advantaged many rental companies. The irregular construction activities motivated small and medium-scale construction companies to rent the equipment and contribute to the North America construction equipment rental market. The uncertainty is expected to be intensified in the construction industry due to higher inflation in raw material prices, high unemployment, and high interest charged by construction companies, thereby encouraging the adoption of rental construction equipment in the market.

The Boom in Residential Construction to Propel the Demand for Rental Construction Equipment
In May 2022, the U.S. government released its Housing Supply Action Plan, which primarily focused on reducing the burden of housing costs over time and boosting the development of affordable and quality housing across the US. The Plan would also aid the renters with high rental costs by constructing housing for low- and middle-income families. Approximately 1,392,300 residential units were finished in 2022 across the U.S., which was a 3.8% increase compared to 2021. According to the US Census Bureau report of December 2022, building permits were recorded at a total of 1,330,000 which was 1.6% below compared to November 2022.   

The Canadian government launched National Housing Co-Investment Fund (NHCF) in 2018 with an investment of USD 13.2 billion for constructing 60,000 new housing units and the upgradation of 240,000 existing housing units by partnering with construction companies over ten years.

Integration of Digital Technologies in the Rental Fleet by the Rental Construction Equipment Companies
The North America construction equipment rental market focuses on digital technologies to enhance the customer experience. For Instance, United Rentals has invested significantly in developing productivity-enhancing integration tools, digital platforms, and cloud-based worksite management solutions.

Total Control, provided by United Rentals, is a cloud-based worksite management solution that supports customers in maximizing the utilization of their equipment fleet. The company also has a facility of Mobile Application through which customers can rent equipment smoothly, track their fleet through GPS technology, and browse the online equipment rental fleet portfolio with pricing. Customers can also place service and maintenance requests via the application.

INDUSTRY RESTRAINTS

A Rise in Mortgage Rates in the Region May Restrict the Demand for Residential Units
The Canada Mortgage and Housing Corp. (CMHC), in 2022, stated that approximately 3.5 million houses must be built by 2030 to tackle the housing gap. In Canada, in Nov 2022, single-family permits fell by 9%, and multi-family permits dropped by 2.6%. Additionally, residential construction in the U.S. fell to its lowest in 2022 due to high mortgage rates and high prices of construction materials. In October 2022, the average interest rate was 7.06%, and the house prices reached USD 525,000, a 40% increase compared to 2020. The Federal Reserve further predicted the mortgage rates to be at 4.6% in 2023, which is comparatively higher than the pre-pandemic levels.

Skilled Labour Shortage to Hamper the Delivery of Construction Projects
According to the data published by Statistics Canada, the country recorded 81,500 labor shortages in the construction industry as of Q1 2022. Many construction companies were forced to postpone and cancel their construction projects due to a shortage of skilled workforce. For Instance, PCL Constructors In. (Construction company) dismissed many opportunities due to the unavailability of the labor force.

Additionally, per the Canadian Manufacturers and Exporters (CME), the country’s economy lost more than USD 13 billion in 2021 due to the labor and skill shortage in the manufacturing sector. Approximately 43% of the companies had delayed or canceled their projects which accounted for a loss of around USD 5.4 billion. As per the US Bureau of Labor Statistics, the construction industry in the US had approximately 440,000 job openings in April 2022. The investment announced through the Infrastructure Bill in 2021 requires more than 300,000 laborers each year to fulfill its goal of rebuilding infrastructure projects.

Environmental Regulations to Hamper the Demand for Large Rental Construction Equipment
The U.S. and Canadian governments, in 2021, committed to achieving net-zero emissions by 2050. The U.S. government’s concern for air pollution is driving it towards taking more necessary steps. The country is following the Tier 4 emission standard and is expected to launch the Tier 5 emission standard by 2024. The construction industry in the region is one of the largest contributors to CO2 emissions. Therefore, these regulations could hamper the demand for diesel-powered rental equipment in the North America construction equipment rental market. Demand for large rental equipment in North America would also decline as the construction companies are pushed to use compact and electric equipment on the constriction sites.

VENDOR LANDSCAPE

• The prominent key players in the North America construction equipment rental market include Caterpillar, Volvo Construction Equipment, Liebherr, Hitachi Construction Machinery, Komatsu, John Deere, Hyundai Construction Equipment, JCB & Kobelco.
• Other prominent vendors are CNH Industrial, Liugong, Tadano, Terex, and JLG.
• Liebherr, Caterpillar, Volvo Construction Equipment, Komatsu & Hitachi Construction Machinery are the industry leaders in the region. They have a strong market share, and these vendors offer diverse products in the North America construction equipment rental market.
• In May 2022, Caterpillar acquired Tangent Energy Solution, Germany-based energy–as–a–Service (EaaS) company, to reduce energy costs, increase energy efficiency, reduce emissions & provide resiliency for customer operations.
• JCB, John Deere & Terex are emerging strong in the North America construction equipment rental market. These companies are introducing innovative products to capture construction equipment market share. For instance, in 2022, John Deere launched its new large, wheeled loaders (744 P-tier, 824 P-tier, 844 P-tier, and the 904 P-tier) in the US.