Contractors will rent construction equipment with more frequency as industry experts identify key factors in predicting the growth of the construction rental industry in 2014.
Industry experts have recently reported that the construction industry will continue to rent equipment to fulfill contracts and the construction rental industry will benefit greatly. As reported by the American Rental Association, construction contractors and equipment distributors are optimistic that local nonresidential construction activity will improve in 2014.
Wells Fargo Equipment Finance published primary research findings for the infrastructure construction industry that found more than 90 percent of contractors intend to rent equipment in 2014.
Why are more construction contractors renting equipment?
The construction industry is becoming increasingly competitive and there are several factors that play a role in the overall trend to rent instead of purchase. Contractors reported to Rental Pulse that those factors were lack of consistent work (72.8 percent of respondents), need for project-specific equipment (67.4 percent of respondents), and overall equipment costs (52.5 percent of respondents).
Contractors have been seeking advanced technology to allow them to complete jobs faster and easier to keep their productivity high and costs down. With continuous technological advances in construction equipment, some types of earlier models of equipment are becoming obsolete. As a result, to avoid many risks associated with owning equipment, the incentive to rent heavy machinery increased. Another advantage of leasing is that it allows contractors to invest capital into other ventures, instead of using it for down payment and to pay of debt usually associated with equipment purchase.
At the same time, e-commerce has seen many advances and improvements, and since the early 2010s, many companies offering rental equipment for contractors have been utilizing the latest in technology so they can increase their productivity and be more successful than their competitors.
All these factors and trends contribute to the construction rental industry growth, and more contractors than a year ago say they will be renting. Distributors and equipment rental companies almost universally say they will maintain or grow the size of their rental ﬂeets.
By Malcolm Roach, CEO of Open Door Technology, provider of Open Door Rental Software