Should I rent or should I buy (assets)?

When we talk about equipment for general construction the answer is almost always rent. Unlike the chorus of the Clash song “Should I stay or should I go…” where the answer for going is trouble and staying is double (trouble), renting the right construction equipment for the job is as important as having the skilled operators to get the best out of it. The UK Construction Equipment Rental & Leasing market size in 2023 was £8.4bn (source IBIS).

The impact of higher interest rates is pushing up the leasing costs for equipment providers. Data from the US Equipment Rental Market suggest that up to 80% of construction equipment in the US is leased, with the the annual lease costs for an individual piece of equipment more than doubling as a result of interest rate hikes.

Equally, not only has the ability to rent the equipment when you need it reduced cost and mitigated risk for sub-contractors, it has also created a buoyant rental market with a supply side capacity that allows projects to run in parallel. The benefits seen by the project owner of this surplus capacity has come through in shorter project lead times. As interest rates rise and push up costs, we may start to see tighter supply as equipment providers trim the size of their fleets.

The obvious challenge in the original question is where there is a lot of identical repeat work, over multiple years. Clearly, in this case a contractor might consider a strategic investment to improve their profitability, but this is probably more of an exception in the Food and Specialty sectors.

At DDK we have deliberately chosen to partner with leading contractors who have the capability and the capacity to deliver the bespoke requirements of our clients, trouble free.