The American Rental Association (ARA) improved its rental industry forecast for the third and fourth quarters of 2022, signaling robust growth that directly impacts building contractors nationwide. According to the latest ARA data, U.S. equipment rental revenue is projected to grow by 11.1 percent in 2022, reaching nearly $56 billion. This upward revision reflects strong demand across construction and general tool segments, despite persistent supply chain disruptions and labor shortages. For building professionals tracking industry momentum, the Ara Show 2025 What Rental Industry Professionals Need offers a forward-looking perspective on where the sector is headed. Understanding the current forecast helps contractors make informed decisions about fleet investment, project budgeting, and equipment procurement strategies for the months ahead.
Understanding the ARA Rental Industry Forecast for 2022
The ARA quarterly forecast serves as a critical benchmark for the equipment rental industry, providing revenue projections, growth rates, and trend analysis that help businesses plan their operations. The May 2022 update raised expectations compared to earlier projections, reflecting stronger-than-anticipated demand in the construction sector.
Key Drivers Behind the Improved Forecast
Several factors contributed to the ARA decision to raise its forecast midway through 2022:
- Sustained construction activity across residential, commercial, and infrastructure segments kept demand for rented equipment consistently high.
- Fleet utilization rates remained elevated as contractors preferred renting over purchasing amid economic uncertainty.
- Rate increases driven by inflation pushed revenue higher even when fleet expansion was constrained by supply chain bottlenecks.
- Infrastructure spending from federal programs began filtering into project pipelines, creating additional demand for rental equipment.
John McClelland, Ph.D., ARA vice president for government affairs and chief economist, noted that the current growth cycle differs from previous ones. In the past, revenue growth was primarily attributed to fleet expansion. Today, supply chain issues are inhibiting fleet growth while inflation simultaneously pushes rates higher. This dual dynamic means revenue is growing through pricing power rather than volume alone.
Construction Equipment Rental Leads the Way
Construction equipment rental is the standout performer in the 2022 forecast. The segment is expected to achieve 13 percent growth this year, reaching $41.7 billion in revenue. This follows a 10.2 percent increase in 2021, demonstrating sustained momentum in the construction rental market. Building contractors working on commercial projects, residential developments, and infrastructure initiatives have been the primary drivers of this demand.
General tool rental, which includes smaller equipment and accessories used across trades, is projected to grow 7 percent in 2022 to reach $14.1 billion. While this segment grows at a slower pace than construction equipment, it still represents a significant portion of total industry revenue. The combination of these two segments produces the overall 11.1 percent industry growth rate for 2022.
Long-Term Projections: Where the Rental Industry Is Heading
While 2022 represents a peak growth year, the ARA forecast provides visibility into the industry trajectory through 2026. Understanding these longer-term trends helps building contractors make strategic decisions about equipment acquisition, project bidding, and capital allocation.
Annual Growth Rates Through 2026
The ARA projects that equipment rental revenue growth will moderate in the years following the 2022 peak. Here is the forecast trajectory for U.S. equipment rental revenue growth:
| Year | Projected Growth Rate | Key Market Conditions |
|---|---|---|
| 2022 | 11.1% | Strong demand, rate increases, supply constraints |
| 2023 | 6.0% | Moderating demand, improving supply chains |
| 2024 | 2.9% | Market stabilization, normalized fleet growth |
| 2025 | 3.6% | Gradual recovery, infrastructure project ramp-up |
| 2026 | 3.9% | Sustained growth, mature market conditions |
Despite the slowdown in growth rates after 2022, the industry is expected to surpass $60 billion in total revenue by 2024. By 2026, the ARA forecasts the U.S. equipment rental market will reach $65.5 billion. This represents substantial absolute growth even as the percentage gains narrow.
What Slowing Growth Means for Building Contractors
A transition from double-digit to single-digit growth does not signal a downturn. Instead, it reflects a maturing market where the extraordinary demand surge of 2021 and 2022 normalizes into a more sustainable growth pattern. For building contractors, this has several implications:
- Rate stability: As supply chain constraints ease and fleet expansion resumes, rental rates may stabilize, making project cost estimation more predictable.
- Equipment availability: With fleet growth recovering, contractors can expect better access to specific equipment models that have been in short supply during the boom period.
- Longer planning horizons: The moderate growth outlook through 2026 provides confidence for contractors to commit to multi-year project timelines and equipment rental agreements.
- Strategic purchasing decisions: Knowing that rental rates may soften in coming years helps contractors evaluate whether to rent or purchase equipment for specific project durations.
Supply Chain Challenges and Their Impact on Rental Operations
Supply chain disruptions have been a defining challenge for the equipment rental industry throughout 2022. These issues affect how rental companies manage their fleets and how contractors access the equipment they need. The ARA forecast highlights this tension between strong demand and constrained supply.
How Supply Chain Issues Shape Fleet Management
Rental companies face extended lead times for new equipment deliveries from manufacturers. Components such as microchips, hydraulic systems, and engines remain in short supply, delaying production and delivery schedules. This has forced rental operators to adopt new strategies:
- Extending the service life of existing fleet assets through more intensive maintenance programs
- Increasing rental rates to balance supply with demand while funding future fleet replacements
- Improving fleet utilization metrics to maximize revenue from every available unit
- Investing in telematics and fleet management software to optimize equipment deployment
For contractors, these dynamics mean that securing rental equipment for critical project phases requires earlier planning and stronger relationships with rental providers. The Robert H Pedersen Installed As Ara Board Chair story provides insight into the leadership guiding the industry through these challenges.
Inflation and Its Effect on Rental Rates
Inflation has emerged as a significant factor in the current rental cycle. As the cost of new equipment, replacement parts, and labor rises, rental companies pass these increases through to customers. This is reflected in the ARA data showing that revenue growth is increasingly driven by higher rates rather than fleet expansion.
Building contractors should account for rental rate inflation when preparing project bids and budgets. While rate increases protect rental companies margins, they also represent a cost pressure on construction projects that must be factored into overall financial planning.
Strategies for Contractors Navigating Supply Constraints
To manage through the current supply-constrained environment, building contractors can adopt several practical approaches:
- Establish preferred relationships with two or more rental providers to improve equipment access.
- Communicate equipment needs well in advance of project mobilization dates, ideally four to six weeks ahead.
- Consider alternative equipment specifications when first-choice models are unavailable.
- Build rental rate contingencies into project budgets to absorb potential cost increases.
- Monitor the Equipment Rental Profiles Building a Stronger Rental Business resource for insights on industry best practices and operator strategies.
Canadian Rental Market Trends and Cross-Border Implications
The ARA forecast also covers the Canadian equipment rental market, which follows a similar trajectory to the United States. Canadian rental revenue is projected to grow 9.6 percent in 2022 to reach $4.5 billion (CAD). This strong performance reflects comparable demand drivers, including infrastructure investment and construction activity north of the border.
Canadian Revenue Growth Outlook
According to the ARA data, the Canadian equipment rental market will follow this growth trajectory:
- 2022: 9.6 percent growth to $4.5 billion
- 2023: 6.4 percent growth
- 2024: 3.8 percent growth
- 2025: 2.1 percent growth
- 2026: 1.8 percent growth to $5.2 billion
The Canadian market experiences the same moderating growth pattern as the United States, with the post-pandemic surge giving way to more measured expansion in subsequent years. The total market is projected to reach $5.2 billion by 2026, representing sustained absolute growth even as percentage increases narrow.
Lessons from Previous Industry Cycles
The equipment rental industry has demonstrated resilience through multiple economic cycles. The Ara Show 2021 in Las Vegas What Rental event marked the industry return to in-person gatherings after the pandemic disruption, signaling confidence in the sector direction. The current forecast builds on that recovery momentum.
For building contractors, the key takeaway from the ARA forecast is clear. The equipment rental industry is entering a period of steady, sustainable growth after the extraordinary rebound of 2021 and 2022. While the double-digit growth rates will not persist indefinitely, the absolute market size continues to expand, reaching historic levels. This provides a stable foundation for contractors planning their equipment strategies, project timelines, and business investments through the remainder of the decade.
Preparing for the Next Phase of Rental Industry Growth
Building contractors who stay informed about rental industry trends gain a competitive advantage in project planning and execution. The ARA quarterly forecast, combined with industry events and leadership developments, provides the intelligence needed to make confident equipment decisions. As the market transitions from rapid recovery to sustained growth, the ability to anticipate rental availability, pricing trends, and supply conditions becomes an increasingly valuable business capability.