Wells Fargo Construction Industry Forecast Shows Strong Equipment Rental Demand in 2019

Wells Fargo Construction Industry Forecast Highlights Strong Rental Demand in 2019

The 43rd Annual Wells Fargo Construction Industry Forecast has delivered encouraging news for the equipment rental sector. Released in early 2019, the survey gathered opinions from contractors, manufacturers, and equipment distributors across the United States to measure optimism for the year ahead. The results confirm what many in the field already suspected: the construction industry is enjoying a period of sustained strength, and the rental market is a primary beneficiary of this momentum.

According to Peter Gregory, national manager for Wells Fargo Equipment Finance Construction Manufacturer and Dealer Services Group, many construction companies posted record sales and profits in the previous year. Rental clients are expecting another strong year, supported by a robust pipeline of future construction work that extends well into the year. One notable trend from the forecast is the extent to which distributors and rental companies are expanding their fleets to meet growing contractor demand. For a deeper look at how rental businesses are optimizing their operations, see our guide on improving equipment rental ROI through fuel efficiency strategies for construction fleets.

The survey methodology is worth noting. Conducted in late 2018, it gathered responses from a broad cross-section of industry participants, including 244 contractors whose companies would consider buying construction equipment, alongside 127 distributors and rental companies. This dual perspective provides a comprehensive view of both supply and demand dynamics in the equipment market. The consistency of the positive results across multiple respondent categories strengthens the reliability of the forecasts.

Rental Fleet Expansion: Key Findings from the Forecast

The Wells Fargo survey reveals that 63 percent of distributors and rental companies are renting out more construction equipment in 2019 compared to a year ago. This uptick in rental activity is driven by several interrelated factors, including strong end-user demand, equipment backlogs at manufacturers, and the strategic decision by dealers to sell units from their rental fleets rather than lose sales opportunities to competitors.

Distributor Fleet Growth Plans

When asked about their rental fleet strategies, distributors expressed clear intentions to grow in the coming year. The survey results show:

• 58 percent of distributors plan to grow their rental fleet in 2019
• 35 percent expect their fleet to remain the same size as the previous year
• Only 7 percent anticipate reducing their rental fleet in the near term

Even among distributors maintaining current fleet size, ongoing replacement of older units and replenishment of equipment sold from the rental pool means that 93 percent of all distributors will be purchasing equipment for their rental fleets this year. This consistent demand creates a stable market for manufacturers and supports the broader construction supply chain from OEMs to independent rental houses. The replacement cycle alone generates significant equipment orders even when fleets are not expanding in net terms.

Why Contractors Choose to Rent

The survey also explored the motivations behind contractor rental decisions in depth. Flexibility remains the number one reason contractors choose to rent equipment rather than buy it outright. However, a notable shift occurred between survey periods: the desire to build equity before purchasing equipment increased dramatically from 9 percent in the prior survey to 22 percent in the current results, making it the second most cited reason for renting. The full breakdown of contractor motivations includes:

1. Flexibility to scale equipment needs up or down based on changing project demands
2. Building equity toward future equipment purchase (up sharply from 9% to 22%)
3. Avoiding large capital outlays for short-term or seasonal projects
4. Access to specialized equipment without long-term ownership commitment
5. Reduced maintenance, storage, and insurance responsibilities
6. Ability to test equipment before committing to a purchase decision

This shift toward using rental as a deliberate path to ownership represents an important change in contractor behavior and has significant implications for how rental companies structure their programs and customer engagement strategies. Rental operators who recognize this trend can design rent-to-own options that capture customers at the rental stage and convert them into buyers over time.

Equipment Purchase Triggers

The survey also identified the specific conditions under which contractors are most likely to move from renting to buying equipment. Understanding these triggers helps rental companies anticipate customer behavior and align their sales strategies accordingly. The top factors that contractors need to see before purchasing equipment are:

These findings suggest that rental companies can benefit by helping contractors build confidence in their project pipelines and local economic conditions through data sharing and market intelligence. Equipment distributors who provide value-added information along with rental services differentiate themselves in a competitive market.

Implications for Rental Business Strategy

The Wells Fargo forecast provides actionable intelligence for rental businesses of all sizes. Understanding the macro trends driving equipment demand allows rental companies to make smarter decisions about fleet composition, pricing models, and customer engagement approaches. For example, the strong pipeline of construction work suggests that rental companies should focus on maintaining high fleet availability while also planning for strategic fleet expansion in targeted equipment categories.

Fleet Composition and Capacity Planning

With nearly two-thirds of rental companies reporting increased rental activity, the pressure is on to maintain adequate inventory levels. Rental businesses should evaluate their fleet mix carefully to ensure they have the right equipment types to match current project demand across their service areas. Earthmoving equipment, aerial work platforms, compact construction equipment, and power generation equipment continue to see strong rental demand nationally. Companies that invested in fleet expansion over the past year are well positioned to capture additional market share as demand continues to grow.

Rental businesses looking to strengthen their market position can learn from successful operators featured in our article on building a stronger rental business through industry visibility and strategic positioning.

Managing Risk and Protecting Fleet Assets

As rental fleets grow in size and value, so does the need for comprehensive risk management programs. Equipment rental businesses face unique challenges when it comes to protecting their assets, from theft and damage on job sites to liability concerns and regulatory compliance. The forecast’s positive outlook makes this an ideal time to review insurance coverage and asset protection strategies. Rental companies should ensure their policies adequately cover expanded fleets and that rental agreements clearly define customer responsibilities for equipment care and damage liability.

For a detailed look at protecting your rental investment across all operating scenarios, read our analysis on closing the gaps in equipment rental insurance for fleet operators.

Maintenance as a Competitive Advantage

With 93 percent of distributors buying equipment for their rental fleets, proper maintenance programs are essential to protect these investments and maximize long-term return on assets. Rental companies that implement systematic maintenance schedules, track equipment performance data diligently, and prioritize preventive care can reduce costly downtime and extend equipment service life significantly. This not only improves profitability through lower lifecycle costs but also enhances customer satisfaction by ensuring equipment is ready to perform when needed on the job site.

Benchmarking maintenance performance against industry standards is a critical step for continuous improvement. Our practical guide on benchmarking maintenance for construction rental fleets offers measurable approaches to improving fleet performance and operational efficiency.

Outlook for the Construction Equipment Rental Market

The Wells Fargo forecast paints a picture of an industry in a healthy growth cycle with strong fundamentals. Equipment backlogs at manufacturers indicate that demand continues to outpace supply in several key equipment categories, which historically supports higher rental rates and improved fleet utilization. At the same time, the strong national economy and robust construction pipeline across multiple sectors provide a solid foundation for continued rental market expansion through the forecast period and beyond.

Key Market Drivers for Continued Growth

• Strong construction project pipeline across commercial, infrastructure, and residential sectors nationwide
• Equipment supply constraints at OEM level driving contractors toward rental as an alternative
• Increasing preference for rental as a capital management strategy among financially sophisticated contractors
• Growing specialization of construction equipment requiring rental access rather than outright purchase
• Technology adoption including telematics enabling more efficient rental operations and fleet management
• Favorable financing environment supporting both rental company expansion and contractor equipment investment

Strategic Recommendations for Rental Operators

Based on the Wells Fargo forecast findings and supporting market data, rental businesses should consider the following strategic priorities for 2019 and beyond:

1. Invest in fleet expansion with a focus on high-demand equipment categories in your service area
2. Develop rental-to-purchase programs that capitalize on the growing trend of contractors using rental as a deliberate path to equipment ownership
3. Strengthen preventive maintenance programs to maximize equipment lifecycle value and minimize customer-facing downtime
4. Leverage telematics and data analytics to optimize fleet utilization and inform data-driven purchasing decisions
5. Build strong relationships with manufacturers to secure priority access to new equipment in constrained supply categories
6. Invest in customer education about the financial benefits of rental as a strategic tool for managing construction equipment needs

The construction equipment rental market is entering a phase of sustained opportunity built on solid economic fundamentals. Rental businesses that align their strategies with the market trends identified in the Wells Fargo forecast, invest thoughtfully in their fleets, and prioritize operational excellence through maintenance and customer service will be well positioned to capture growth in the year ahead. With contractor confidence high and project backlogs remaining strong across most regions, the conditions are favorable for another record year in equipment rental operations nationwide.