Optimistic But Guarded Respondents to Baird/RER Q1 Survey Averaged a 4 Percent Increase

Respondents to the Baird/RER equipment rental survey averaged a 4 percent year-over-year revenue increase in the first quarter of 2026, an improvement compared to the prior several quarters. It was the best year-over-year quarter growth in the past seven quarters. General rental improved 1 percent equal-weighted and 2.6 percent revenue-weighted. Specialty rental grew 4.1 percent equal-weighted and 11.6 percent revenue-weighted.

Thirty-three percent of respondents (revenue-weighted)reported that the first quarter revenues beat internal budgets (20 percent equal weighted. Meanwhile 31 percent reported seeing worse than expected results (43 percent equal-weights; and 33 percent said revenues were in line with expectations. Expectations were net positive (+1) percent for the first time in 10 quarters. Results are aligning with expectations particularly for larger size operators.

“After a challenging 2H24/1H25, we see slow, gradual improvement in activity, which could be further catalyzed by lower rates/less policy uncertainty/end to the war in Iran,” said Baird analysts.

“Smaller projects remain modest, but large projects continue to push demand and increase at a stronger rate than expected,” said one respondent. “This stronger-than-expected increase is primarily driven by pent-up demand that was stamped out by tariffs last year.”

“The many megaprojects (data centers, chip plants, energy, etc.) in the U.S. are a significant driving force,” said another.

“Demand has been relatively stable, with strength in data centers, infrastructure, and certain commercial segments offsetting softness in retail and some private construction,” said a third.

Average rental rates declined 0.6 percent year over year (up 0.6 percent on an equal-weighted basis). Rental rates have been gradually softening over the past several years, following a peak of +4.8 percent in the third quarter of 2022, as lower utilization levels have placed downward pressures on rental rates.

“Rental rates are still too low,” said one respondent. “We’ve got a relatively large footprint in the Midwest and are still growing. Unit prices continue to climb, but seeing rates on certain classes of equipment being rented for about the same amount as 20 years ago.”

“If you can stomach rate discounting, you can get gear on rent,” said another.

“Very competitive marketplace,” added another. “Too many shops in too small an area in my neck of the woods.”

“It’s time we all start charging more since all of our expenses have shot up,” said another. “Not calling for a monopoly, but an industry-wide price adjustment is in order. Let’s raise rates!”

During the first quarter of 2026, 41 percent of respondents said business picked up during the quarter, while 55 percent said business mostly stayed the same. Only 4 percent said business decelerated during the quarter. Respondents expect 2026 revenue to increase 7 percent year over year in an optimistic note. General rental is expected to increase 6.1 percent, while specialty is expected to jump at a 12.3 Percent clip revenue weighted (6.5 percent equal-weighted.)

“We are seeing some pockets of good things, while others remain flat this year,” said a respondent. “Hoping to see better things happening later in the year.”

“Demand is being driven largely by data centers, hospitals, and infrastructure,” said another. “Fortunately, our clients have a good portion of available work. The overall economy is still sluggish, but we feel a general breakout is coming in the next 12 months.”

“Large megaprojects, particularly data center construction and maintenance, remain a significant driver of current and future demand,” said a third.

Hopeful for 2026

Respondents expect 2026 revenue to increase 6.6 percent year over year, whereas last quarter respondents expected 5.3 percent revenue growth in 2026. They are not so optimistic when it comes to rental rates, expecting rates to increase 1.2 percent year over year, while last quarter respondents expected a 2.3-percent hike. The 2026 outlook has improved compared to the start of the year for 36 percent of respondents, while only 11 percent are less optimistic. 53 percent have a similar outlook.

Fleet spending is expected to increase 7.5 percent year over year in 2026. Last quarter respondents expected 3.3-percent. Respondents expect to increase 6.9 percent on general rental, while 10.9 percent expectation on specialty fleet.

“Data centers in my area are demanding a lot of equipment rentals,” said a respondent. “I am finding that even the large national companies can’t support these large sites. We are finding more opportunities to rent equipment on these sites to supplement the requests to these large sites.”

“Seeing more customers opt to rent vs. buy for longer projects,” said another. “Some turn into rental-purchase options but seeing now more than ever customers are willing to bring in rental equipment for big projects vs. buying equipment.”

Make peace not war

Higher crude oil prices are expected to have a negative impact on business for 45 percent of respondents, with 20 percent expecting a positive impact.

“This war with Iran is a mistake and will pull us into a recession if it persists,” said one respondent.

“My gaining an optimistic outlook for rental this year depends on the deal Trump works out with Iran once they surrender,” said another.

“I see a strong foundation for a good year as long as nothing crazy happens with the Iran year,” said another, while another said, “Should have been a better year, but now with the war and higher oil prices, I don’t think so.”

However, another respondent said, “Fuel prices increases are not caused by the war in Iran. The greedy oil companies found an excuse to rip off the customers and make a larger profit.”

Another customer summed up the feelings of many by noting that customers are hopeful but guarded.