Despite the coronavirus pandemic, Southwest Florida rental equipment market thriving
When the global pandemic hit, the negative economic impact was felt by almost every industry across the board. But out of the rubble of a decimated economy emerged one surprising development – a housing boom that blindsided almost everyone. And, as everyone in the rental equipment market knows, when construction thrives, so does demand for equipment.
If you need proof, look no further than Sunshine State, where housing starts experienced a whopping 35 percent increase compared to the same time last year. Predictably, forecasts for the total rental market in Florida show an increase of 3.1 percent expected for the remainder of 2021, reaching double digits by 2022 compared to the previous year.
The forecast is even rosier in Southwest Florida, where counties with booming construction continue to see healthier-than-expected growth in the equipment rental market, even as other sectors of the economy continue to be hobbled by the pandemic.
Lee County – home to Fort Myers, Cape Coral, and Bonita Springs — had the greatest concentration of new home construction. Rental equipment forecasts followed, with an expected increase of 6.45 percent for Cape Coral/Fort Myers.
Meanwhile, the nearby city of Naples ranked fourth in the country in new home sales with a 150 percent increase in activity over the last year. Naturally, IHS market has predicted an increase in rental equipment activity of up to 4.23 percent over 2020.
According to Dan K. Eberhart, Managing Director of Eberhart Capital, a private equity firm with a large equipment rental portfolio, “We project that the rental equipment market in the Southwest, Florida, region will continue to grow over the next 5 to 10 years, as population growth will drive municipal projects on infrastructure and roadways, and new commercial buildings in the technology and healthcare sectors.”
Much of the growing population is driven by what one analyst calls “Baby Chasers.” These are baby boomers moving to live closer to their millennial children and grandchildren. Migration from large urban areas to smaller towns and regions is also driving economic activity in Southwest Florida. Areas seeing the greatest influx include Sarasota and Cape Coral/Fort Myers. It is estimated as many as 50 people a day are moving into these counties.
But it is not just families relocating that is helping the rental equipment market. Commercial developments in Southwest Florida are also on the rise. Several large projects are either poised to begin or are already underway. These include several projects in Collier County, involving new hotels, mixed-used developments, and office complexes.
According to Eberhart, despite the construction boom, many construction companies will likely prefer to rent (versus purchase) equipment for a long time to come. “As economic factors bring some uncertainty in the market,” says Eberhart, “construction companies are playing it safe. They are more likely to rent high-dollar equipment over buying, since buying requires a guarantee of long-term returns generated from the investment.”
There are more reasons to rent, as well. For example, companies may only need certain equipment for specialized or infrequent jobs. In addition, owning equipment requires ongoing maintenance costs, and with new technologies coming online daily – such as added safety features, digital work aides, and ergonomic advancements — new equipment can become dated quickly.