Slight Increase in Third Quarter Revenue, Say Respondent to Baird/RER Rental Survey

Graphics by Baird Research

Third quarter 2025 revenue increased by 2 percent year over year according to respondents to the quarterly Baird/RER Rental Equipment Industry survey. The increase was a mild improvement compared the several most recent quarters. Twenty-nine percent of respondents (revenue weighted) reported missing internal budgets (43 percent equal weighted), 19 percent reported better-than-expected results and 53 percent said results were in line with expectations. Expectations were a net negative for eight straight quarters, but misses are becoming less common, particularly for larger sized operators.

The Baird analysts said that after a challenging period from the second half of 2024 through the first half of 2025, they are starting to see a modest improvement in activity, which could be further catalyzed by lower rates or policy uncertainty.

“We continue to hear a positive outlook from customers with large projects on the horizon,” said one respondent. 

“However, most have yet to materialize fully. Cautious optimism seems to rule the day.”

“Some markets are down, but overall growth is good,” said another. 

“Tough, but the work is there,” added a third.

Fleet utilization was 58.3 percent for respondents within the recent range as the supply of equipment has increased, while demand growth remains modest. The utilization rate for access equipment decreased to 60.6 percent from 65.8 percent in the third quarter of 2024. The utilization rate for earthmoving equipment decreased similarly from 65.9 percent in the year-ago quarter to 61 percent in the recently concluded quarter.

“Large data centers are keeping the rental fleets busy in our market,” said one respondent. 

“Large projects at universities and medical centers are still strong,” said another. “Small projects are slow to develop or on hold.”

“Large material handling equipment is very popular,” added a third. “Utilization is near 100 percent for 15,000-pound-plus equipment.” 

“There seems to be an excess amount of ‘wait and see’ going on,” another said. “Hesitant to start projects that are on the books.”

Another respondent said everyone seems to be waiting on the Fed to lower interest rates; while another said residential projects seem to have picked back up.

Fourth quarter growth appears modest
Respondents expect an approximate year-over-year revenue growth rate of about 0.6 percent, a deceleration compared to the third quarter. However, survey participants are expecting annual rental revenue to be up 4.6 percent in 2026, whereas a year ago respondents expected a 3 percent growth rate for 2025. However, through three quarters, actual revenue growth in 2025 is closer to 1 percent, respondents say.

“The 2026 view looks hopeful, but it is more focused on the second half of 2026 for growth,” one respondent said.

“Hopeful Q4 2025 is better, and we are able to carry momentum into 2026,” said another. “Optimistic that 2026 is going to be a better year overall.”

“If interest rates keep going down, activity will explode in 2026,” added a third. “Lots of projects have been pushed out over the last 18 months, just waiting for rates to decrease.
Another participant noted that hospitals and state education growth are projected for the next several years.

In general, respondents say 2025 was not a great year, but they expect improvement in 2026. The majority say they are having a mediocre or poor 2025, with 60 percent rating it that way and 40 percent calling 2025 positive. The majority of respondents described their market as “very” or “extremely” competitive. Still most respondents are rating the overall health of their companies as “good” or “very good.” The majority of respondents expect 2026 to be good, although 75 percent expect material prices to rise, and 80 percent expecting bid prices to go up. 

Average rental rates were down 0.2 percent year over year in the third quarter. Rental rates have been softening during the past year, the surveys have shown. Signs of stabilization are encouraging, particularly because respondents expect rental rates to rebound to more normal levels (up 2 percent) in 2026.

“Large projects continue the trend towards single-source suppliers, which is pressuring rates. Hospitals, data centers and infrastructure are driving growth,” said one respondent. 

Fleet size up slightly
Average fleet size in units grew 1 to 2 percent, respondents said, increasing for the fifth consecutive quarter, showing that the industry had to rebalance equipment supply as demand softened over the past 18 months. Equipment pricing rose 3.7 percent year over year after being negative in the fourth quarter of 2024 for the first time in survey history, with OEMs raising prices to offset tariff headwinds.

Respondents expect to increase fleet spending by 2 percent over the next six months. Fifty-three percent expect to spend more on fleet in 2026 while 22 percent expect to spend less. 

The majority of respondents are not reporting project delays caused by the government’s current immigration policies, with 44 percent reporting no effect and 25 percent seeing some impact but projects not delayed. However, 14 percent are experiencing some delays in project because of immigration issues, and another 14 percent facing severe disruptions.

“Skilled labor shortages are still a problem for us,” said one respondent. “Hard to get people to work, and our customers are experiencing the same problems. Hasn’t been a very fun year with increased competition in every market we serve.”

“We are advertising for help,” said another. “Most who apply are in their 50s and 60s. Very few young people are applying.”