53 Real Estate and Rental and Leasing in The US Industry Report

INDUSTRY REPORT 53
Real Estate and Rental and Leasing in

the US
Home sweet home: A reversal of current real estate market conditions is expected to
slow industry revenue growth
Jonathan Burns | August 2022
IBISWorld.com 1-800-330-3772 info@IBISWorld.com

Real Estate and Rental and Leasing in the US August 2022
Contents
Recent Developments......................................................... 3 COMPETITIVE LANDSCAPE.......................... 20
ABOUT THIS INDUSTRY.................................. 5 Market Share Concentration............................................. 20
Key Success Factors........................................................20
Industry Definition................................................................5 Cost Structure Benchmarks............................................. 21
Major Players...................................................................... 5 Basis of Competition......................................................... 23
Main Activities..................................................................... 5 Barriers to Entry............................................................... 24
Supply Chain....................................................................... 6 Industry Globalization........................................................ 24
INDUSTRY AT A GLANCE................................ 7 MAJOR COMPANIES...................................... 25

Executive Summary............................................................ 9 Market Share Overview..................................................... 25
Related Companies........................................................... 25
INDUSTRY PERFORMANCE..........................10 Realogy Holdings Corp..................................................... 26
United Rentals, Inc............................................................ 28
Key External Drivers.........................................................10 Cbre Group, Inc................................................................. 30
Current Performance........................................................ 11 Avis Budget Group, Inc..................................................... 32
INDUSTRY OUTLOOK.................................... 13 OPERATING CONDITIONS............................ 34
Outlook.............................................................................. 13 Capital Intensity................................................................. 34

Industry Life Cycle............................................................. 14 Technology & Systems......................................................34
Revenue Volatility..............................................................35
PRODUCTS & MARKETS............................... 16 Regulation & Policy........................................................... 35
Industry Assistance........................................................... 36
Supply Chain..................................................................... 16
Products & Services.......................................................... 16 KEY STATISTICS............................................ 37
Demand Determinants...................................................... 17
Major Markets....................................................................18 Industry Data..................................................................... 37
Business Locations........................................................... 19 Annual Change..................................................................37
Key Ratios......................................................................... 37
ADDITIONAL RESOURCES............................38
Additional Resources........................................................ 38
Industry Jargon..................................................................38
Glossary............................................................................ 38
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Recent Rising interest rates cause dramatic changes in consumer confidence

Developments
As the federal government attempts to stabilize economic growth after the COVID-19 (coronavirus) pandemic,
raising interest rates is one of the many ways The Federal Reserve can stabilize rapid growth. Although raising
interest rates are intended to help the economy in the long run, the short-term effect may have some negative
implications on the United States’ financial sector. Since interest rates play a vital role in dictating consumer
confidence and general investment activity, a large spike in the central bank’s policy rate (CBPR) can make
consumers and businesses more hesitant to invest in the domestic economy. As a result, industries will have to
adapt to evolving consumer sentiment and strategize new investment tactics.
IBISWorld analysts continually monitor the economic impact of current events. The above headlines are expected to
impact this industry. The content in this report will soon be updated to reflect their significance.
This section last udpated August 10, 2022
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are truly global in nature.
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About This Industry

Industry Definition This sector is primarily concerned with operators involved in the management, sale, purchase and rent of real
estate. This sector also includes the renting and leasing of tangible goods, such as equipment, and intangible
goods, such as patents. It is important to note that operators which are primarily engaged in renting or leasing
equipment with operators are excluded from this sector, as well as commercial mortgages, which are treated as a
financial instrument.
Major Players Realogy Holdings Corp.
United Rentals, Inc.
Cbre Group, Inc.
Avis Budget Group, Inc.
Main Activities The primary activities of this industry are:
Renting and leasing of tangible assets (i.e. equipment)
Renting and leasing of intangible assets (i.e. patents)
Managing, renting, selling, buying real estate
The major products and services in this industry are:
Real estate
Rental and leasing
Lessors of nonfinancial intangible assets
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Supply Chain
SIMILAR INDUSTRIES
Real Estate Investment Trusts in Apartment Rental in the US Real Estate Appraisal in the US Truck Rental in the US
the US
RELATED INTERNATIONAL INDUSTRIES
Global Commercial Real Estate
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Industry at a Glance
Key Statistics Key External Drivers % = 2017–22 Annual Growth
$1.1tr 1.7% 2.2%

Revenue Per capita disposable income Value of residential construction
Annual Growth Annual Growth Annual Growth

0.2pp 2.0pp
Yield on 10-year Treasury note Homeownership rate
2017–2022 2022–2027 2017–2027
-0.9pp
0.9% 0.1% Rental vacancy rates
$521.0bn Industry Structure

Profit
POSITIVE IMPACT
Annual Growth Annual Growth
Concentration Industry Globalization
2017–2022 2017–2022
Low Low / Steady
0.6%
MIXED IMPACT
Life Cycle Revenue Volatility
Mature Medium
46.1% Regulation & Policy Technology Change
Profit Margin Medium / Steady Medium
Annual Growth Annual Growth Competition

Medium / Increasing
2017–2022 2017–2022
NEGATIVE IMPACT
-0.7pp
Capital Intensity Industry Assistance
High Low / Steady
Barriers to Entry
4m Low / Steady
Businesses
Annual Growth Annual Growth Annual Growth
2017–2022 2022–2027 2017–2027 Key Trends

3.5% 2.0%
 Due to rent growth outpacing wage growth, it is clear that
economic fundamentals underpinning sector growth are not
in sync
6m  Some considerable progress has been made on national

Employment rent growth as vaccines roll out
Annual Growth Annual Growth Annual Growth  A strong period of revenue returns and rising profitability has
served to lure many industry participants
2017–2022 2022–2027 2017–2027
 Sector profitability is expected to take a dip over the next five
2.7% 0.8%
years as weak conditions persist
 Amid a wave of evictions and a drying up of cashflow,

landlords could also lose their property
$212.5bn  As nonresidential construction markets return to growth,
Wages
there is an expected uptick in demand for industry group
Annual Growth Annual Growth Annual Growth products
2017–2022 2022–2027 2017–2027  A surge in residential construction served to balance a sharp

decline in nonresidential construction
2.6% 0.7%
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Products & Services Segmentation
Major Players SWOT
STRENGTHS
High Profit vs. Sector Average
WEAKNESSES
High Customer Class Concentration

High Product/Service Concentration
Low Revenue per Employee
High Capital Requirements
OPPORTUNITIES
High Revenue Growth (2017-2022)

High Revenue Growth (2022-2027)
High Performance Drivers
Value of residential construction
THREATS
Low Revenue Growth (2005-2022)

Low Outlier Growth
Yield on 10-year Treasury note
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Executive Summary Home sweet home: A reversal of current real estate market conditions is
expected to slow industry revenue growth
Over the five years to 2022, revenue for the Real Estate and Rental and Leasing sector is expected to increase an
annualized 0.9% to reach $1.1 trillion, including an expected decrease of 0.8% in 2022 alone. Additionally, this
sector's performance has been aided by an increase in housing starts and fast-rising home prices during the period,
specifically in 2020 as urban flight occurred. Performance in the lessors of real estate industry group has also been
supported by falling vacancy for much of the period, but also stymied by a slight uptick in homeownership and
declining rents in some of the nation's largest metro-areas. Overall, a hot homeownership market has worked
against the rental segment of this industry, since falling rents due to rising vacancy in 2020 and 2021 as a result of
the COVID-19 (coronavirus) pandemic are inconsistent with rising home prices.
As construction activity increases, so does demand for construction machinery and equipment, which has supported
growth in the Rental and Leasing Services subsector via the commercial and industrial machinery and equipment
rental and leasing industry group. A surge in residential construction served to balance a sharp decline in
nonresidential construction; however, this portion of the sector was hit particularly hard by the coronavirus, with
major industry player United Rentals showing the largest decline as a result of the pandemic in 2020, while more
real estate-focused operators have performed better. However, it is important to consider that as construction
activity improves and capital expenditure across the economy rises in recovery, the equipment rental and leasing
industry subgroup should also show improved signs of life, slowing declines in profitability in 2022.
Over the five years to 2027, sector performance is expected to weaken, with sector revenue rising at a decelerated,
annualized rate of 0.1% to reach just over $1.1 trillion. Sector revenue is expected to slow mainly due to a reversal
of current real estate market conditions. A recent development for the industry is the Federal Reserve's decision to
raise interest rates to combat the near record high inflation in 2022, as interest rates increase there will likely be less
industry activity due to rising borrowing costs across the US economy in over the five years to 2027.
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Industry Performance
Key External Rental vacancy rates

Drivers
The rental vacancy rate can be used as a metric for supply and demand of residential real estate available for rent.
As vacancy declines, supply of rental units becomes tight, permitting landlords to charge higher rents, increasing
sector revenue. The rental vacancy rate is expected to rise in 2022.
Value of residential construction
The value of residential construction represents the value of all new work performed, alterations, maintenance and
repairs on residential structures in the United States. As the value of residential construction increases, it indicates
rising demand for residential real estate, driving revenue gains for the sector. Additionally, as construction activity
increases, there will be renewed demand for construction equipment rentals, further boosting sector revenue. The
value of residential construction is expected to rise in 2022, presenting the industry with a potential opportunity.
Homeownership rate
The homeownership rate demonstrates the share of consumers who own homes. As homeownership rises, demand
for rental housing is expected to fall, weakening industry performance. Conversely, as homeownership falls, demand
for rental housing will rise, boosting the industry's performance. Homeownership rates are expected to rise in 2022.
Per capita disposable income
Per capita disposable income can be used as a metric of affordability. As per capita disposable income increases,
consumers will be able to better afford sector products, such as apartments and homes for rent, boosting sector
demand. Per capita disposable income is expected to fall in 2022.
Yield on 10-year Treasury note
The yield on the 10-year Treasury note is indicative of the federal government's cost of borrowing. As the yield
increases, borrowing costs also increase. Interest rates on conventional mortgages and on leases will move in line
with the yield on the 10-year Treasury note. As interest rates rise, the cost of borrowing also increases, which will
push up sector revenue as long as cost increases do not stifle demand by pricing consumers out of the market. The
yield on the 10-year Treasury note is expected to rise sharply in 2022, posing a threat to the industry.
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Current It is important to consider the effects of the global outbreak of COVID-19

Performance (coronavirus) in early 2020 on the Real Estate and Rental and Leasing
sector over the five years to 2022.
It is necessary to understand that the sector was marked by initial strong performance at the beginning of the five-
year period. However, it must be noted that the sector had been showing marked signs of structural weakness
during the latter half of the current period, including an oversupply of luxury housing units, declining rent affordability
across metro-areas and an operating environment characterized by low interest, debt-fueled acquisitions and high
financial leverage. Then, in March 2020, the coronavirus outbreak roiled end markets and demand conditions,
having a dual effect on sector performance.
Significant urban flight caused sharp declines in national rents in specific metro-areas as consumers fled cities for
more spacious suburban properties. Conversely, this has kicked off a buying bonanza in the residential home
market, specifically the single-family detached market segment. However, the overall buzzword regarding sector
performance during the coronavirus pandemic is forbearance. Essentially, via mortgage and eviction forbearance
during the pandemic, which ended in September 2021, this has prevented any significant turnover in the market,
which has caused a serious supply crunch, driving prices of homes up at record rates. This, taken into account with
currently low, albeit rising, mortgage rates, and significant direct monetary stimulus from the federal government
suggest the real estate subsector is likely ballooning.
Over the five years to 2022, the sector is expected to exhibit an annualized increase in revenue of 0.9% to reach
$1.1 trillion, including an 0.8% decrease in 2022 alone. However, a strong period of revenue returns and rising
profitability (hardly stymied by the pandemic) has served to lure many industry participants, with the total number of
industry enterprises rising an expected 3.5% to reach 3.7 million companies. Moreover, the period has exhibited an
increase in employment to accompany this increase in participation with the number of industry employees rising an
annualized 2.7% to 5.6 million workers. Sector profitability, defined as earnings before interest and taxes, is
expected to account for 46.1% of sector revenue in 2022, an decline from 2020 which was hardly effected.
RENT STRUGGLES
Overall, the largest concerns for the Real Estate subsector are in regard to
the macroeconomic fundamentals, which underpin sector growth.
According to the Federal Reserve Bank of St. Louis, home and commercial property prices have recovered over
100.0% of their pre-recessionary value in some markets. In fact, according to Bloomberg, in 2016, the Federal
Reserve warned “[real estate] appear[s] increasingly vulnerable to negative shocks, as…prices have continued to
outpace rental income.” Furthermore, according to data from the New York University Furman Center for Real
Estate and Urban Policy, in 2019, half of low-income households in 53 survey areas are considered severely rent-
burdened, meaning they pay over 50.0% of their income to rent, a disparity that is rising due to the impacts of
coronavirus.
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This has been further exacerbated by the presence of record low interest and mortgage rates, which has
incentivized the rapid purchasing of properties to rent on borrowed funds, which increases the financial risk and
leverage of operating in the sector. Due to rent growth outpacing wage growth, it is clear that economic
fundamentals underpinning sector growth are not in sync. With nominal home values rising faster than their real
value and the buying power of real wages, the wedge between real and nominal home and rent values grows, while
more and more consumers are boxed out of affordable units, causing a supply crunch which will in turn inflate rents
even further as affordability continues to decline. This environment has created significant market distortions, which
help to explain the rapid rise in the commercial and residential real estate subsegment over the past 10 years.
However, this growth is most likely unsustainable and the subsector is more than likely heading for a correction.
According to the Q1 2021 Special Report authored by ATTOM Data Solutions (ATTOM), at least 15.0% of
mortgagees were underwater in Q4 of 2020, in 32 of the nation's top 50 most distressed housing markets, with
11.2% of total national mortgages being underwater. According to the report, “foreclosures will be concentrated in
markets where there is a dual trigger – for example high unemployment rates and homeowners who are underwater
on their loans.” Despite some considerable progress being made on national rent growth as vaccines roll out, the
coronavirus has laid bare the cracks in the sector and according to ATTOM Chief Product Officer, Todd Teta, “the
pandemic still looms large and may pose a threat to the progress made so far, and by extension could affect home
sales and prices,” particularly in these distressed markets.
Undoubtedly, extended forbearance has started the clock for the real estate subsector, and it is now a race against
time to for unemployed renters to recover lost wages and get back to work to make their current and back rental
payments, while landlords must strive collect any rent at all to pay potential creditors or to pocket as profit, with
some states and institutions requiring a lump sum payment of lost rent or missed credit payments at the end of the
forbearance period, which will shift the debt burden onto already cash-strapped renters, landlords and homeowners
alike.
Historical Performance Data

Rental
Domestic Vacancy
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Rate
Year ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) (%)
2013 912,648 749,779 2,805,815 2,724,779 4,420,387 N/A N/A 162,033 N/A 8.30
2014 958,180 804,130 2,910,867 2,826,557 4,565,163 N/A N/A 169,815 N/A 7.60
2015 1,008,132 839,744 3,013,382 2,927,152 4,701,207 N/A N/A 178,409 N/A 7.10
2016 1,045,235 869,630 3,068,528 2,978,086 4,789,446 N/A N/A 181,865 N/A 6.90
2017 1,081,219 895,877 3,191,321 3,094,122 4,932,759 N/A N/A 186,597 N/A 7.20
2018 1,113,904 929,633 3,294,258 3,197,205 5,085,899 N/A N/A 192,229 N/A 6.90
2019 1,153,890 964,340 3,367,506 3,270,016 5,182,391 N/A N/A 199,310 N/A 6.80
2020 1,112,372 931,978 3,563,634 3,451,220 5,406,588 N/A N/A 200,414 N/A 6.30
2021 1,139,779 959,295 3,724,978 3,603,722 5,611,483 N/A N/A 212,105 N/A 6.10
2022 1,130,234 947,438 3,792,816 3,675,538 5,637,346 N/A N/A 212,532 N/A 6.30
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Industry Outlook
Outlook Over the five years to 2027, the Real Estate and Rental and Leasing sector
is expected to decelerate sharply, largely as a result of expected
slowdowns in the Real Estate subsector caused by rising rent burden and
skyrocketing home prices, serving to price many out of the current
market.
Demand for equipment and automotive leasing and rentals is expected to hurt the sector amid a weakening of Real
Estate subsector, as higher auto rates and spiking fuel prices are expected to diminish auto leases. However, as
nonresidential construction markets return to growth, there is an expected uptick in demand for industry group
products to be rented and used at construction sites.
However, it is important to consider how long the adversity of the COVID-19 (coronavirus) outbreak will hang
around, disrupting fundamental wage growth due to such high slack in current labor markets, which could cause the
sector to slide further due to the fact that income levels for some consumers may not have recovered to the point
where they plan to rent or even purchase property. Add a labor shortage such as the economy is currently
experiencing into this equation and the renting and owning of property becomes even more difficult. As a result, the
sector is expected to post marginal growth over the five years to 2027, with revenue rising a meager, annualized
0.1% to just over $1.1 trillion by 2027.
Sector profitability is expected to take a dip over the next five years, especially as weak rental market conditions and
rising home unaffordability persist. Furthermore, along these lines, increases in industry participation are expected
to slow, along with increases in employment. Due to overall weakness, the number of sector operators is expected
to increase at a decelerated annualized rate of 1.9% to reach 4.2 million companies, while the number of industry
employees is expected rise a meager annualized 0.8% to reach 5.9 million workers.
DÉJÀ VU WITH A TWIST
Overall, similar effects were experienced in the aftermath of the 2008

subprime mortgage crisis.
Amid rising foreclosures and evictions, consumers who used to own a home found themselves renting or moving in
with family since their income could no longer support mortgage payments due to skyrocketing unemployment. This
actually boosted sector performance due to a spike in rental housing demand from foreclosed homeowners.
Whereas rental and leasing of apartments was a benefactor during the prior recession, this time around, they are
expected to take the brunt of the hit since it is now consumers who are delinquent on rent payments, not institutional
investors unable to cover their liabilities due to toxic mortgages.
To be clear, there is an affordability crisis looming on top of the already wide disparity between wage growth and
rent growth. Now, renters are expected to be evicted in waves forbearance period expires, while they must pay
back-rent on top of current obligations. If they cannot, it is likely these renters will be evicted, increasing vacancy
and depressing rent growth, ultimately weakening subsector performance due to a massive deadfall in demand as a
result of suppressed income and inability to pay lump sum back-rent.
Moreover, this could trickle into a financial crisis, should landlords of these properties have significant debt or
financial obligations they had been servicing via rental income. Amid a wave of evictions and a drying up of
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cashflow, landlords could also lose their property due to repossession as a result default on mortgage instruments.
This would serve to limit rental supply and further price renters out of affordable markets since rents would be
expected to rise amid a dearth of supply. Though rising rents due to limited supply may aid landlords, it will certainly
limit demand, weakening the sector as a whole. Last time around, foreclosed homeowners could fall back on rental
property. Now, it is unclear where evicted renters will fall back, greatly exacerbating potential weakness in this
subsector. In this current pandemic, asset values cannot simply be inflated to fix individuals' balance sheets via
quantitative easing, as it is those individual renters and landlords who will be in distress, not institutional investors.
LOOMING CREDIT TIGHTENING
During early 2022 the US economy hit near record high levels of inflation,
as the pressure from the Russian Invasion and lingering high gas prices
mounted.
Due to this, the Federal Reserve announced its intention of raising the interest rates and tightening the credit
market, in turn making borrowing and financing anything more costly. In attempt to slow down the hot market,
industry revenue is likely to be affected by the new contractionary monetary policy, since several downstream
demand industries are linked to the availability of credit in the US.
Performance Outlook Data

Domestic Rental
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Vacancy
Year ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) Rate (%)
2022 1,130,234 947,438 3,792,816 3,675,538 5,637,346 N/A N/A 212,532 N/A 6.30
2023 1,122,184 937,876 3,858,256 3,744,794 5,662,420 N/A N/A 212,986 N/A 6.40
2024 1,114,721 929,202 3,925,209 3,815,767 5,687,006 N/A N/A 213,442 N/A 6.50
2025 1,121,082 933,307 4,005,101 3,897,299 5,753,121 N/A N/A 215,671 N/A 6.60
2026 1,129,265 938,607 4,085,084 3,978,562 5,821,866 N/A N/A 218,047 N/A 6.60
2027 1,134,536 942,092 4,161,571 4,056,947 5,879,622 N/A N/A 219,981 N/A 6.70
2028 1,138,942 944,764 4,224,088 4,121,293 5,925,231 N/A N/A 221,517 N/A 6.70
Industry Life Cycle The life cycle stage of this industry is Mature
LIFE CYCLE REASONS
Entrances and exits by enterprises are largely steady

Product groups are clearly segmented and well-defined
Industry can leverage technological innovation to a minimal degree
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The Real Estate and Rental and Leasing sector is considered to be in the mature stage of its life cycle. Sector value
added (SVA), which is a measure of the sector's contribution to the overall economy, is expected to rise an
annualized 0.5% over the 10 years to 2027. In contrast, US gross domestic product (GDP) is expected to rise an
annualized 1.8% during the same period. Although SVA is growing marginally slower than US GDP, this sector is
still in the mature phase of its life cycle. First, SVA is a proxy measure for GDP that is computed using sector
profitability, depreciation and wages as a share of revenue. During the period, the sector's share of wages over
revenue has remained essentially unchanged and while sector profitability has weakened slightly, it is still quite
stable. Additionally, sector depreciation remains consistently between 16.0% and 20.0% of revenue. Due to the
relative stability of these components, it can be inferred that this sector is mature, with SVA growth largely keeping
pace with US GDP growth. It is expected that SVA is slowing during the latter half of the period due to a hot
residential real estate market, with vacancy increasing in more recent years. Other indicators, such as the stable
entry of enterprises and establishments, well-defined end markets and limited opportunity to technologically innovate
serve to further demonstrate that this sector is in the mature phase of its life cycle. During the next 10-year period,
barring any unforeseen market distortions, SVA growth should trend more in line with US GDP growth as the sector
normalizes.
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Products & Markets

Supply Chain Key Buying Industries Key Selling Industries
1st Tier 1st Tier
Mining in the US Home Builders in the US
Retail Trade in the US Apartment & Condominium Construction in the US
Healthcare and Social Assistance in the US Housing Developers in the US
Finance and Insurance in the US Industrial Building Construction in the US
Manufacturing in the US Commercial Building Construction in the US
Consumers in the US 2nd Tier
Accommodation and Food Services in the US Construction Machinery Manufacturing in the US
Public Administration in the US SUV & Light Truck Manufacturing in the US
Woodworking Machinery Manufacturing in the US
Products & Services
The Real Estate and Rental and Leasing sector is composed of three
subsectors, the Real Estate subsector, the Rental and Leasing Services
subsector and the Lessors of Nonfinancial Intangible Assets (except
copyrighted works) subsector.
The following is a description of each subsector, its products and the subsector's disposition of total sector revenue.
REAL ESTATE (NAICS 531)
The Real Estate subsector accounts for the majority of sector revenue,
accounting for a growing 67.6% of total sector revenue in 2022.
This subsector has taken a hit in 2020 as a result of the COVID-19 (coronavirus) outbreak, however it is expected to
remain the dominant contributor to sector revenue, bouncing back strongly in the second half of 2020. This
subsector includes enterprises and establishments primarily engaged in the renting or leasing of real estate to
others, as well as those engaged in the selling, buying or renting of real estate for others. Moreover, this subsector
includes equity real estate investment trusts (REITs) primarily engaged in the leasing of residential buildings or other
property to others. Mortgage REITS are excluded from this subsector since they are considered a financial
instrument. The Real Estate subsector has performed quite well over the five years to 2021. Most notably, the
Apartment Rental industry (IBISWorld report 53111) has supported growth in this segment. Additionally, this
subsector's performance has been aided by strong revenue gains in the Real Estate Sales and Brokerages industry
(IBISWorld report 53121), which exhibited strong results as well during the period. Overall, this subsector is
expected to remain the largest contributor to sector revenue over the five years to 2027. Notably, this subsector had
diverging conditions amid the coronavirus outbreak, since the residential rental market took a hit while home prices,
homeownership rates and existing home sales all spiked significantly.
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RENTAL AND LEASING SERVICES (NAICS 532)
The Rental and Leasing Services subsector accounts for a falling 25.2% of
sector revenue in 2022.
This subsector includes enterprises and establishments that provide a wide variety of tangible goods such as
automobiles, computers, consumer goods and industrial machinery and equipment to consumers for a rental fee or
lease payment. Establishments in this subsector can be further broken down into locations engaged in renting
consumer goods and equipment and those that are engaged in renting or leasing machinery and equipment. This
subsector excludes establishments engaged in leasing in conjunction with loans, and are classified under the
Finance and Insurance sector (NAICS 52). Essentially, any service engagement that includes the rental of
equipment and a specialized operator to use the equipment (e.g. crop harvesting services) is excluded from this
subsector. This subsector's performance has been supported by activity in the Car Rental industry (IBISWorld report
53211) and the Heavy Equipment Rental industry (IBISWorld report 53241).
This subsector had a relatively strong performance in line with the sector as a whole, fueled by rising levels of
tourism and international and domestic travel. However, with massive reductions in travel and fuel costs in 2020, this
segment is expected to take a significant hit. Moreover, major players such as Avis Budget Group Inc. and United
Rentals posted stark declines in revenue for 2020 as a result of coronavirus, with competitor the Hertz Corporation
being forced to file for Chapter 11 bankruptcy. In 2022, this segment will likely exhibit a revival as the economy
moves away from the initial lockdowns of the pandemic.
LESSORS OF NONFINANCIAL INTANGIBLE ASSETS (EXCEPT COPYRIGHTED WORKS, NAICS

533)
The Lessors of Nonfinancial Intangible Assets (except copyrighted works)

subsector is expected to account for the smallest share of sector revenue,
accounting for an increased 7.2% of total sector revenue.
This subsector includes establishments engaged in the assigning of rights to assets such as patents, trademarks,
brand names or franchising agreements, for which a royalty or fee is paid to the asset holder. It should be noted that
establishments in this subsector own the patents, trademarks or franchise licenses, which they permit others to use
or recreate for a fee. Establishments leasing tangible assets are classified under the Rental and Leasing Services
subsector (NAICS 532).
Demand Demand for the Real Estate and Rental and Leasing sector's products and
Determinants services is first and foremost influenced by consumer affordability,
measured by per capita disposable income or median household income.
As income levels rise, consumers will be better able to afford sector products and services. Conversely, when
incomes fall, consumers will be less able to afford certain residential options, forcing them to relocate and
weakening demand for sector products and services.
Demand for sector residential real estate industry group is typically dependent on levels of employment as well. If
consumers do not have income, they cannot afford to rent an apartment or a home. Particularly in 2020, with surging
unemployment as a result of the COVID-19 (coronavirus) outbreak, it is expected the industry will exhibit a deadfall
in demand. However, this will alleviate as joblessness claims decline and unemployment declines.
The homeownership rate will also determine demand for sector products and services. Technically, conventional
mortgages are treated as financial instruments and are not included in this sector. However, rates of
homeownership will indirectly determine levels of demand for this industry. As more consumers seek to own their
homes, demand for residential rental services will decline.
Interest rates will also affect levels of demand for sector products and services. As interest rates rise, depreciable
assets such as automobiles and construction equipment will become more expensive to lease or rent, due to
increased capital cost. The industry has benefitted greatly from low interest rates during most of the period, however
there have been recent developments in 2022, as the Federal Reserve implements contractionary monetary policy
reign in lingering high inflation rates in the US economy. This is likely to cause a demand problem for the industry as
financing and renting most things becomes more expensive as the supply of credit decreases.
Moreover, levels of demand for products and services can be linked to levels of construction activity. When
construction activity and other industrial activities are booming, demand for the rental and lease of heavy equipment
and machinery will rise.
Lastly, demand for sector products and services can be linked to time spent on leisure and sports in addition to
17 IBISWorld.com
levels of domestic and international travel. As more consumers travel domestically, demand for automobile rental
and leasing will also rise.
Major Markets
The Real Estate and Rental and Leasing sector's major markets can be
broken down into the household and consumer customer segment
(54.7%) and the business and industry segment (45.3%).
The majority of sector revenue comes from consumer and household markets, as they are often the ones most
engaged in the Real Estate subsector. Individuals, consumers and households will demand residential real estate
and the necessary services it requires. Business and industrial demand will largely support the Rental and Leasing
subsector. To control capital costs, construction companies will often lease or rent equipment on an as needed
basis. Additionally, the rental or lease of automobiles or other consumer goods is often conducted on an as needed
basis as well, which limits the overall significance of this subsector's contribution to total sector revenue. Overall, the
Real Estate subsector supports a large volume of high-value transactions, thus necessitating that the majority of
sector revenue is earned by consumers and individuals in this subsector.
Overall, the outbreak of COVID-19 (coronavirus) is likely to push down the consumer and household segment due to
an overall suppression of income in addition to a stark rise in unemployment. Overall, it is expected that the
consumer segment will take a dip in line with other industry segments, but this could reflect a proportional increase
in the share of business and industry customers. However, it is expected that consumers and households will
recover as unemployment recedes and consumers are put back to work.
Exports in this industry are Low and Steady
Imports in this industry are Low and Steady
As a service-based sector with physical products being namely land and property, the Real Estate and Rental and
Leasing sector does not record international trade. Ultimately, there is no exchange of goods across international
borders. Information concerning multinational companies or major players that have foreign operations can be found
in the Globalization section of this report.
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Business
Locations
The distribution of Real Estate and Rental and Leasing sector establishments most closely follows the distribution of the nation's
population. Often, sector establishments will be concentrated in population-dense urban areas that are short on space.
Additionally, sector establishments tend to concentrate in these areas due to high levels of construction activity, which increase
demand for rental and leasing services for construction and heavy machinery. The Southeast is the most concentrated region of
sector activity, accounting for an estimated 25.9% of sector establishments. The next-most concentrated region of sector activity is
the West, which accounts for 20.5% of sector establishments. Following this, the Mid-Atlantic region accounts for 15.2% of sector
establishments. Lastly, the Great Lakes region accounts for 10.6% and the Southwest accounts for 12.0%. No other region
accounts for more than 10.0% of sector establishments.
Notably, the COVID-19 (coronavirus) outbreak may serve to shift the composition of industry operations to a degree. As more
consumers flee crowded cities in the wake of the coronavirus, it is likely that the concentration of industry landlords may shift to
more suburban areas, though cities are still expected to hold the dominant position over the five years to 2027.
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Competitive Landscape
Market Share
Concentration
Concentration in this industry is Low
The Real Estate and Rental and Leasing sector exhibits a low level of market share concentration, with the top four
major players accounting for less than a combined 5.0% of sector revenue. Overall, this sector has an extremely
high number of nonemploying establishments, which account for 87.5% of total sector establishments and 43.1% of
sector revenue. Therefore, it is difficult for anyone one company or group of companies to control a significant
portion of the sector's market share. Moreover, subsequent industry groups also exhibit low levels of market share
concentration, firmly cementing this sector in the low-level concentration category. Due to this sector's inordinate
proportion of nonemploying enterprises, it is not expected that market share concentration will shift dramatically over
the five years to 2027. Moreover, it is unlikely that the outbreak of COVID-19 (coronavirus) will serve to shift industry
concentration either, due to the fact that the industry is so diffuse.
Key Success IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
Factors
Having a good reputation:
Operators in the sector must maintain cordial relations with renters and leasers to ensure repeat business.
Having marketing expertise:

Operators that do not pay attention to market signals can miss out on opportunities by not adjusting rents
accordingly.
Carrying out all necessary maintenance to keep facilities in good condition:

It is necessary for lessors to upkeep property, buildings and inventory to ensure customer satisfaction.
Business expertise of operators:

Lessors that are not savvy will miss out on potential growth opportunities.
Ability to carry out credit checks on clients:

Lessors must carry out their due diligence to ensure potential clients can afford rental payments over the proceeding
term of the lease.
Having a clear market position:

Lessors with an identifiable market position or brand name will be more widely recognized and trusted by
consumers.
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Cost Structure
Benchmarks
Profit
Sector profitability, defined as earnings before interest and taxes, is

expected to account for 46.1% of sector revenue in 2022, down slightly
from 46.8% in 2017. Sector profitability accounts for such a large
portion due to the high share of nonemploying enterprises in the Real
Estate subsector, particularly in the Apartment Rental industry
(IBISWorld report 53111) which records rents as profit since the wage
they pay themselves are rents and are essentially just profit. Moreover,
operators in the Commercial Leasing industry (IBISWorld report 53112)
records profit of over 50.0% of industry revenue, pushing sector
profitability up. Overall, sector profitability has risen somewhat in recent
years as a result of strong macroeconomic conditions, though this is
somewhat in doubt in regard to 2020 considering the COVID-19
outbreak. Overall, sector profitability has been propped up during the
pandemic by strong real estate subsector performance while rental and
leasing floundered. Sector profitability is expected to weaken slightly
over the next five-year period due to continued increases in vacancy
and a reversal of economic conditions. Lastly, it should be made clear
that 2020 represents a decline from higher levels of profitability
observed during the period. Furthermore, profitability is expected to
weaken over the next five years as a difficult operating environment
sets in.
Wages
Sector wages are estimated to account for 18.8% of sector revenue in

2022, down from 17.3% in 2017. Wages in this sector are skewed
upward by operators in the Rental and Leasing subsector because it
has a lower proportion of nonemploying operators, which necessitates
that they pay wages. Operators in the Real Estate subsector pay lower
wages, but also have a higher portion of nonemploying enterprises,
which will bias wages downward because nonemploying enterprises in
this subsector will pay themselves with profit, necessitating low wage
costs. Sector wages as a share of revenue are expected to remain
largely flat over the next five years due to slow trends in hiring as a
result of the COVID-19 slowdown.
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Purchases
Purchase costs are estimated to account for 0.9% of sector revenue in

2022. Purchase costs are low on average due to the fact that operators
in the Real Estate subsector do not engage in much purchasing activity,
requiring few inputs to operate. Purchases in this subsector typically
include software or maintenance charges. Conversely, operators in the
Rental and Leasing subsector will incur higher purchase costs, typically
closer to 15.0%, due to the need to stock an inventory of goods and
equipment available for rent or lease.
Marketing
Marketing expenses are expected to be minimal for this sector, due to

the fact that most operators will rely on word-of-mouth referrals.
Moreover, since most goods provided by the Rental and Leasing
subsector are substitutable, a proven reputation for customer
satisfaction and fair prices will prove more beneficial than an
advertising campaign. Additionally, real estate is typically not advertised
to an extreme extent, with residential lessors relying on word-of-mouth
referrals. Marketing is expected to account for only 0.5% of sector
revenue in 2022.
Depreciation
Depreciation charges are estimated to account for 18.9% of sector

revenue in 2022. Both operators in the Real Estate and the Rental and
Leasing subsectors exhibit high depreciation charges due to the nature
of the goods and services they provide. Depreciable assets in the Real
Estate subsector include commercial buildings and residential
dwellings, and the upkeep they require. Likewise, operators in the
Rental and Leasing subsector also have high depreciation costs.
Depreciable assets in this subsector include heavy industrial and
construction equipment as well as rental cars, all of which incur heavy
depreciation charges and wear and tear.
Rent
Rent charges account for an estimated 0.9% of sector revenue in 2022.

Since storefronts must be rented and maintained, operators in the
rental and leasing subsegment tend to have higher rent costs, namely
because rent is not a factor for Real Estate subsector operators if
buildings are owned.
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Utilities
Utilities costs are expected to account for 0.7% of industry revenue in

2022. Utilities costs tend to be higher in the Real Estate subsector
because residential dwellings consume large amounts of power and
water. This subsector pushes up the average sector utility costs
because operators in the Rental and Leasing subsector typically pay
half the sector average for rent and utilities.
Other Costs
Other costs, such as insurance and administrative expenses, account

for an estimated 13.1% of industry revenue in 2022.
Basis of Competition in this industry is Medium and the trend is Increasing

Competition
INTERNAL COMPETITION
The Real Estate and Rental and Leasing sector does not exhibit a high
degree of internal competition due to the fact that many industry services
will complement one another, whereby operators across industry groups
will not be overly concerned with the performance of their sector
counterparts.
For example, competition between operators that provide residential real estate are not necessarily competing with
operators that lease and rent automobiles or heavy equipment. Moreover, due to the difference between the
consumer market and commercial market for vehicle and equipment rentals, operators that rent and lease vehicles
do not directly compete with those that lease or rent construction equipment or other heavy machinery. Additionally,
operators in the Real Estate Sales and Brokerages industry (IBISWorld report 53121) can actually help operators in
the Apartment Rental industry (IBISWorld report 53111) by helping to fill vacant units. In this sector, it appears that
the biggest source of competition is the disparity between the number of nonemploying enterprises and employing
enterprises in the sector. With 87.5% of operators being nonemploying, accounting for 43.1% of sector revenue,
there is competition for customers between employing enterprises and nonemploying enterprises. Despite this, the
nonemployer share of sector revenue has been declining, representing a weakening in this form of internal
competition. Internal competition may heat up as a result of the COVID-19 (coronavirus) outbreak, in that price-
based competition in a race to the bottom will cause landlords to lower rents to fill vacant units, weakening the
sector as a whole.
EXTERNAL COMPETITION
This sector exhibits a medium degree of external competition, namely

with the Finance and Insurance sector (NAICS 52).
This is due to the fact that once a potential homeowner takes out a conventional mortgage on the property or home,
23 IBISWorld.com
this activity is now treated as a financial instrument and not as a Real Estate sector transaction, however
transactions recorded by brokers are included in the industry in volume and margin. Above all, this sector competes
most with those sectors that let customers buy or purchase products that this sector rents or leases. For example, a
rising homeownership rate will indicate declining demand for rental accommodations, while consumers who
purchase their own automobiles or heavy equipment will also siphon revenue from this sector. This sector does not
experience stiff competition from overseas operators, as most transactions and assets occur in, and are located in,
the United States.
Barriers to Barriers to Entry in this industry are Low and the trend is Steady
Entry
Overall, barriers to entry in the Real Estate and Rental Barriers to Entry Checklist
and Leasing sector are low to moderate. Barriers to entry
namely include capital costs and costs associated with Competition Medium
acquiring an inventory and a market presence. Typically,
barriers to entry in the Real Estate subsector are higher Concentration Low
due to the fact that capital costs associated with buildings
and land are far greater than those associated with
Life Cycle Stage Mature
automobiles or heavy equipment. Although barriers still
exist for operators in the Rental and Leasing subsector,
they are lower than those for operators in the Real Estate Technology Change Medium
subsector. This is because it is easy for small operators to
enter this sector, evidenced by the overwhelming majority Regulation & Policy Medium
of nonemploying enterprises comprising this sector's
structure, but it is difficult for them to scale and succeed Industry Assistance Low
on a national basis. However, it may be difficult for
operators to succeed in population-dense urban areas
due to the high price of real estate and high rents for
storefronts. Moreover, these areas tend to earn operators
the highest returns in the Real Estate subsector due to
shortage of space and high levels of demand. Barriers to
entry are unlikely to shift dramatically as a result of the
COVID-19 (coronavirus) outbreak.
Industry Globalization in this industry is Low and the trend is Steady

Globalization
The Real Estate and Rental and Leasing sector exhibits a low-to-average level of globalization. A majority of
operators are based in the United States and, though several operators conduct business internationally, the
overwhelming share of business tends to be conducted within US borders. This is mainly due to the fact that most
assets cannot be moved or are cost prohibitive to transport overseas. However, among some industry groups, the
Car Rental industry (IBISWorld Report 53211) does exhibit a high degree of globalization with major operators
conducting business at many international locations, and primarily airports. Overall, despite this one industry in the
sector, a majority of business is conducted within US borders. Globalization is unlikely to shift dramatically as a
result of the COVID-19 (coronavirus) outbreak.
24 IBISWorld.com
Major Companies
Market Share Overview
Related Companies
Competitors Company Type Employee Segment Revenue ($m) Market Share (%) Profit ($m)
Realogy Holdings Corp. All Star 500+ Employees 7,355.6 0.67 858.4
United Rentals, Inc. Golden Goose 500+ Employees 6,223.0 0.57 1,313.2
Cbre Group, Inc. Rising Star 500+ Employees 4,931.1 0.45 200.7
Avis Budget Group, Inc. Laggard 500+ Employees 4,861.5 0.44 208.8
25 IBISWorld.com
Companies with 5.0% industry market share are displayed in the PDF version of this report. You can view insights for all companies associated
with this industry on my.ibisworld.com
Realogy Holdings Corp.

Company Overview
Description Realogy Holdings Corp. is a public company headquartered in New Jersey with an estimated 81,171 employees. In
the US, the company has a notable market share in at least two industries: Real Estate Agency Franchises and Real
Estate Sales & Brokerage. Their largest market share is in the Real Estate Agency Franchises industry, where they
account for an estimated 35.8% of total industry revenue and are considered an All Star because they display
stronger market share, profit and revenue growth compared to their peers.
COMPANY TYPE Public Company

TOTAL COMPANY $7.4bn
REVENUE
EMPLOYEES 81,171
Other Industries Real Estate Sales & Brokerage in the US

Real Estate Agency Franchises
Analyst Insights Realogy begins joint venture with Centerbridge in fall of 2021
Realogy entered an agreement with Centerbridge Partners, L.P. (Centerbridge) to form a Title Insurance
Underwriter joint venture. Beginning in the first quarter of 2022, Centerbridge will control a 70.0% interest in Title
Resources Guaranty Company, Realogy’s insurance underwriter. With the venture, Realogy realigns its focus on its
core business, primarily consumer-facing transaction services in brokerage, title settlement and mortgage.
New Activity
Realogy enters partnership with Sotheby’s to expand its luxury offerings

In November 2021, Realogy and Sotheby’s announced the joint acquisition of Concierge Auctions, a leading global
luxury real estate auction marketplace. With the acquisition, Realogy and Sotheby’s will hold a joint 80.0%
ownership stake in Concierge Auctions. The acquisition extends Realogy’s current presence in high-end and luxury
markets.
M&A New Activity
Realogy reveals 2021 Corporate Social Responsibility Report

In Realogy Holdings Corp.’s (Realogy) 2021 Corporate Social Responsibility Report, the company outlined its
initiatives undertook to support its environmental, wellness and diversity goals throughout the year. For instance,
Realogy expanded its Inclusive Ownership Program, which encourages entrepreneurs from underrepresented
communities to franchise with one of Realogy's brands. The company’s wellness initiatives earned Realogy Cigna’s
2021 Well-being Award.
ESG M&A New Activity
26 IBISWorld.com
Realogy Holdings Corp.

Company Overview
Industry Market Market Share
Share, Revenue
and Profit 0.67% Strong 0.0%
Current Year Annual Growth
(2021) (2017–21)
Industry Revenue
$7.4bn Strong 5.2%

(2021) (2017–21)
Profit Margin
11.67% Moderate -0.2%

(2021) (2017–21)
27 IBISWorld.com

Company Overview
Brands & Trading United Rentals
Names
Description United Rentals, Inc. is a public company headquartered in Connecticut with an estimated 20,400 employees. In the
US, the company has a notable market share in at least one industry: Industrial Equipment Rental & Leasing, where
they account for an estimated 13.5% of total industry revenue and are considered an All Star because they display
stronger market share, profit and revenue growth compared to their peers.

REVENUE
EMPLOYEES 20,400
Other Industries Heavy Equipment Rental in the US

Industrial Equipment Rental & Leasing in the US
Analyst Insights 2021 performance

In 2021 United Rental Inc (United Rentals) total revenue reached $9.7 billion, increasing 13.9% compared with
2020. Equipment rentals and sales of rental equipment are the company’s largest revenue types (together, they
accounted for 94.0% of total revenue for the year ended December 31, 2021). Equipment rentals increased 14.9%,
primarily due to a 10.4% increase in fleet productivity, which included the more pronounced impact of the COVID-19
(coronavirus) pandemic, which resulted in rental volume declines in response to shelter-in-place orders and other
market restrictions, in 2020.
Structural
Expanded product offerings

In 2021 United Rentals Europe, an industry leader in Fluid Solutions, announced plans to further expand its product
offerings. After adding a comprehensive fleet of power equipment, including standard and industrial diesel
generators, the company is now adding electric submersible pumps and more types of diesel and electric
centrifugal pumps to its product inventory. Similar to the tank product line, the pump product line is designed with
safety, versatility and “plug and play” compatibility in mind. Additional diesel and electric centrifugal pumps from
Pioneer Pump, which feature the latest emission-compliant Stage V diesel engines, will be added.
Product Innovation Structural
United Rentals wins top workplace award

United Rentals announced it has earned a 2022 Top Workplaces USA Award, issued by Energage, a research
company. The award, based on data gathered by an independent employee engagement survey, recognizes United
Rentals for having an outstanding people-oriented culture. United Rentals ranked number 37 in the award’s Large
Company category, which includes companies with 2500+ employees. The Top Workplaces program has a 15-year
history of surveying more than 20 million employees and recognizing the top organizations. Top Workplaces USA
Awards recognize organizations with 150.0 or more employees that have built great cultures. Over 42,000
organizations were invited to participate in an employee engagement survey.
ESG Product Innovation Structural
28 IBISWorld.com

Company Overview
Share, Revenue
and Profit 0.57% Moderate 0.1%
(2021) (2017–21)
Industry Revenue
$6.2bn Moderate 8.4%

(2021) (2017–21)
Profit Margin
21.1% Strong -1.6%

(2021) (2017–21)
29 IBISWorld.com
Cbre Group, Inc.

Company Overview
Brands & Trading Insignia financial Koll real estate services
Names
Description Cbre Group, Inc. is a public company headquartered in Texas with an estimated 80,000 employees. In the US, the
company has a notable market share in at least five industries: Real Estate Appraisal, Real Estate Sales &
Brokerage, Real Estate Asset Management & Consulting, Commercial Real Estate and Commercial Leasing. Their
largest market share is in the Real Estate Appraisal industry, where they account for an estimated 6.9% of total
industry revenue and are considered a Disruptor because they display lower to medium market share that's rising
rapidly, but weaker profits compared to some of their peers.

REVENUE
EMPLOYEES 80,000
Other Industries Real Estate Sales & Brokerage in the US

Property Management in the US
Real Estate Asset Management & Consulting in the US
Commercial Real Estate in the US
Real Estate Appraisal in the US
Commercial Leasing in the US
Analyst Insights CBRE's Spencer Levy gives insight on interest rates and real estate
As part of an approximately annual discussion by a CBRE executive on CNBC, Senior Economic Adviser Spencer
Levy urged the development of new projects to hurry, as interest rates will fall and the cost of building projects
remains low.
Competition COVID ESG
Dow Jones Sustainability Index recognizes CBRE for environmental efforts

In recognition of its many ESG efforts, including committing to net-zero carbon by 2040 and signaling the Business
Ambition for 1.5C commitment, CBRE was placed on the Dow Jones Sustainability Index for the third consecutive
year. This honor is given to only 322 companies worldwide and represents an effective merger of strong business
strategy combined with pioneering environmental and social leadership. CBRE is also ranked #11 on Barron's 100
Most Sustainable Companies list and is a Kiplinger Top 20 ESG company.
ESG
CBRE recognized as a top company for real estate

The Lipsey Survey is a leading analyzer of professional sentiment and estimated surrounding individual companies
in the real estate market. For more than half a decade, CBRE has swept the podium, taking the 'Top Global Brand in
Commercial Real Estate' award for 21 consecutive years and the 'Top Pure Development Company' award for 5
consecutive years with their subsidiary Trammell Crow.
Competition ESG
30 IBISWorld.com
Cbre Group, Inc.

Company Overview
Share, Revenue
and Profit 0.45% Moderate 0.2%
(2021) (2017–21)
Industry Revenue
$4.9bn Moderate 20.1%

(2021) (2017–21)
Profit Margin
4.07% Weak -1.7%

(2021) (2017–21)
31 IBISWorld.com

Company Overview
Brands & Trading Apex Avis Budget FranceCars Maggiore Morini Rent Payless Turiscar Zipcar
Names
Description Avis Budget Group, Inc. is a public company headquartered in New Jersey with an estimated 18,500 employees. In
the US, the company has a notable market share in at least one industry: Car Sharing Providers, where they account
for an estimated 29.2% of total industry revenue and are considered a Laggard because they display lower market
share alongside slower profit and revenue growth than their peers.

REVENUE
EMPLOYEES 18,500
Other Industries Car Sharing Providers

Car Rental in the US
Analyst Insights Avis speeds to its best annual performance in 75-year history in 2021
Avis Budget Group, Inc. (Avis) net revenue increased 72.0% in 2021 compared to the year prior, indicating the
company’s robust recovery following crushed demand for rental cars during the COVID-19 (coronavirus) pandemic.
A return to travel in 2021 shot the cost of rental cars up, leading Avis to record its highest net income on record as
well. Company growth was contested by the emergence of the Omicron variant in late 2021, although redistribution
of the company’s fleet to regions where travel remained robust sustained demand.
COVID Discontinued Activity ESG Labor New Activity
Avis expanding tech presence through mobile applications and electric vehicles
Labor shortages at Avis have pushed the company to accelerate its adoption of its contactless, self-service rental
transactions through its Mobile Select and QuickPass offerings. The Mobile Select products enables renters to
select a car prearrival, proceed to the vehicle and leave the Avis location through a mobile application. Moving
forward, the company has announced its intention to add more electric vehicles to its fleet to meet its 2030 target
to reduce greenhouse gas emissions from its operation by 30.0%.
ESG Labor New Activity
Semiconductor shortages are fueling the low fleet supply at Avis locations
Ongoing shortages of semiconductors has constrained Avis’s fleet supply and caused the company to hold cars
longer when compared with prepandemic. However, the company has been able to rebuild its fleet of new cars due
to well-established relationships with manufacturing partners. Avis’s CEO has indicated he expects conditions
related to fleet supply to remain based on manufacturing capacity in 2022, and that new fleet supply will likely
remain constricted through model year 2022.
COVID Discontinued Activity ESG Labor New Activity
32 IBISWorld.com

Company Overview
Share, Revenue
and Profit 0.44% Weak -0.1%
(2021) (2017–21)
Industry Revenue
$4.9bn Weak -3.6%

(2021) (2017–21)
Profit Margin
4.29% Moderate -4.0%

(2021) (2017–21)
33 IBISWorld.com
Operating Conditions
Capital The level of capital intensity is High
Intensity
The Real Estate and Rental and Leasing sector exhibits a
high level of capital intensity. By using total sector wages as
a proxy for labor and sector depreciation charges as a proxy
for capital, IBISWorld analysis finds that for every dollar
spent on labor, operators in this sector will spend an
estimated $1.01 on capital goods. Depreciation charges are
largely consistent across the sector, typically accounting for
15.0% to 20.0% of industry group revenue. Capital goods
needed in this sector are buildings and dwellings, heavy
construction and industrial equipment and machinery, as well
as automobiles and trucks. Overall, the nature of this sector
is highly capital intensive and requires a large amount of
capital to begin and sustain operations. Buildings must be
purchased and rented out, heavy equipment and
automobiles must also be purchased by sector operators
and leased out. It is highly expensive to establish a well-
stocked inventory and maintain a vehicle fleet.
Technology & Potential Disruptive Innovation: Factors Driving Threat of Change

Systems
Level Factor Disruptive Description

Effect
Unknown Rate of Unknown A ranked measure for the number of patents

Innovation assigned to an industry. A faster rate of new
patent additions to the industry increases the
likelihood of a disruptive innovation occurring.
Unknown Innovation Unknown A measure for the mix of patent classes

Concentration assigned to the industry. A greater
concentration of patents in one area
increases the likelihood of technological
disruption of incumbent operators.
High Ease of Entry Likely A qualitative measure of barriers to entry.

Fewer barriers to entry increases the
likelihood that new entrants can disrupt
incumbents by putting new technologies to
use.
Very High Rate of Entry Very Likely Annualized growth in the number of
enterprises in the industry, ranked against all
other industries. A greater intensity of
companies entering an industry increases the
pool of potential disruptors.
High Market Likely A ranked measure of the largest core market

Concentration for the industry. Concentrated core markets
present a low-end market or new market
entry point for disruptive technologies to
capture market share.
This technology trend is underscored by structural factors that support new entrants. An accommodative structure can
create a situation where small entrants can focus on less profitable albeit innovative industry entry points. Or, large
operators in other industries can leverage expertise in other areas to enter the industry from a new angle.
The major markets for this industry are highly concentrated, which implies that the market has a focus on key customer
segments. This presents an opportunity for strategic entrance into lower-end markets or unserved markets for innovations
34 IBISWorld.com
to take on a disruptive trajectory.
The level of technology change is Medium
The Real Estate and Rental and Leasing sector exhibits a medium level of
technological change.
The Real Estate subsector has been improving operational efficiencies by adopting automated administrative software and
new property databases. Additionally, the sector could benefit greatly with the adoption of block-chain technology, which
has not yet become completely applicable. However, through the standardization of record keeping and property and lease
documents, sector operators would be more well informed and better able to execute decisions. The Rental and Leasing
subsector is subject to some technological change as well. The equipment, vehicles and goods rented and leased by the
subsector are often being reconfigured and remodeled to produce more efficient outcomes. However, it is important to note
that most rented and leased goods are substitutable. Therefore, the greatest application for technology in this subsector
would be the use of self-driving cars as well as auto-guided construction and industrial machinery.
Revenue The level of volatility is Medium

Volatility
The Real Estate and Rental and Leasing sector exhibits a medium level of
revenue volatility.
Volatility can be injected into this sector by financial shocks and rapid changes in real estate market conditions. However,
this sector has remained steady during the current period, with volatility mitigating in the wake of the Great Recession. The
Federal Reserve's commitment to gradually raise interest rates has not severely affected this sector since it signaled its
intentions well ahead of time, enabling sector operators to prepare for impending rate hikes. Additionally, steady
construction activity and rising domestic travel have kept the Rental and Leasing subsector stable over the five years to
2022.
Regulation & The level of regulation is Medium and the trend is Steady
Policy
Operators in the Real Estate subsector of the Real Estate and Rental and
Leasing sector are subject to all federal and state regulations concerning
building codes and public safety standards.
Residential dwelling unfit for occupancy cannot be leased. Likewise, industrial and commercial real estate that is not in
compliance with safety and zoning codes is also liable. This sector is also subject to regulations concerning Real Estate
Investment Trusts (REITs). Real estate companies and developers can elect to be taxed as a REIT under Section 856
through 860 of the Internal Revenue Code. As a REIT, these organizations must distribute, at a minimum, an amount equal
to 90.0% of taxable income and must distribute 100.0% of taxable income to avoid paying corporate federal income taxes.
REITs are also subject to several organizational and operational requirements to retain their REIT status. They must be
35 IBISWorld.com
structured as a corporation, business trust or similar association and be managed by a board of directors or trustees. They
must derive at least 75.0% of their gross income from rents or mortgage interests and at least 75.0% of their total
investment assets must be in real estate.
Industry The level of industry assistance is Low and the trend is Steady
Assistance
The Real Estate and Rental and Leasing sector does not receive direct support
from the federal government.
However, the Real Estate subsector does receive indirect assistance from Government Sponsored Entities (GSE). The
Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac, provides support through the stabilization of
the real estate and housing market by purchasing mortgages on the secondary market. Although this is technically a
financial service, the stability provided to the Real Estate sector is a boon for subsector operators. The Rental and Leasing
subsector does not receive direct support from the federal government, but benefits from the presence of trade associations
and groups that advocate and educate on behalf of sector interests.
CARES Act of 2020
There are several provisions contained within the Coronavirus Aid, Relief and Economic Security (CARES) Act to provide
relief for residential landlords and tenants. First, tenants experiencing hardship as a result of COVID-19 (coronavirus) may
request a forbearance on their obligations. In addition to forbearances on residential and multi-family borrowers, the
CARES act forbids the eviction of tenants for delinquent payment for 180 days. Though these protections may help the
industry, it is difficult to say whether these measures will aid the sector long-term, or whether they are simply a stopgap
measure. Overall, if consumers cannot return to work after the 180-day period is up, it is likely they will get evicted due to
nonpayment, which will severely undercut the industry during the outlook period. Moreover, since most sector operators are
small or considered nonemploying, it is likely that many operators have employment figures of fewer than 500 people,
which makes them eligible to receive funding from the Paycheck Protection Plan or Small Business Administration Loans,
blunting the impact of the virus to some degree. Overall, the Paycheck Protection Plan loans are aimed at retaining
employees, limiting job losses and ensuring that employees who are laid off have an enterprise to return to once things
clear up.
36 IBISWorld.com
Key Statistics
Industry Data
Domestic Rental
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Vacancy
Year ($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) Rate (%)
2013 912,648 749,779 2,805,815 2,724,779 4,420,387 N/A N/A 162,033 N/A 8.30
2014 958,180 804,130 2,910,867 2,826,557 4,565,163 N/A N/A 169,815 N/A 7.60
2015 1,008,132 839,744 3,013,382 2,927,152 4,701,207 N/A N/A 178,409 N/A 7.10
2016 1,045,235 869,630 3,068,528 2,978,086 4,789,446 N/A N/A 181,865 N/A 6.90
2017 1,081,219 895,877 3,191,321 3,094,122 4,932,759 N/A N/A 186,597 N/A 7.20
2018 1,113,904 929,633 3,294,258 3,197,205 5,085,899 N/A N/A 192,229 N/A 6.90
2019 1,153,890 964,340 3,367,506 3,270,016 5,182,391 N/A N/A 199,310 N/A 6.80
2020 1,112,372 931,978 3,563,634 3,451,220 5,406,588 N/A N/A 200,414 N/A 6.30
2021 1,139,779 959,295 3,724,978 3,603,722 5,611,483 N/A N/A 212,105 N/A 6.10
2022 1,130,234 947,438 3,792,816 3,675,538 5,637,346 N/A N/A 212,532 N/A 6.30
2023 1,122,184 937,876 3,858,256 3,744,794 5,662,420 N/A N/A 212,986 N/A 6.40
2024 1,114,721 929,202 3,925,209 3,815,767 5,687,006 N/A N/A 213,442 N/A 6.50
2025 1,121,082 933,307 4,005,101 3,897,299 5,753,121 N/A N/A 215,671 N/A 6.60
2026 1,129,265 938,607 4,085,084 3,978,562 5,821,866 N/A N/A 218,047 N/A 6.60
2027 1,134,536 942,092 4,161,571 4,056,947 5,879,622 N/A N/A 219,981 N/A 6.70
Annual Change
Domestic Rental
Revenue IVA Establishments Enterprises Employment Exports Imports Wages DemandVacancy Rate
Year (%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
2013 4.06 1.28 2.41 2.43 2.07 N/A N/A 0.92 N/A -4.60
2014 4.98 7.24 3.74 3.73 3.27 N/A N/A 4.80 N/A -8.44
2015 5.21 4.42 3.52 3.55 2.98 N/A N/A 5.06 N/A -6.58
2016 3.68 3.55 1.83 1.74 1.87 N/A N/A 1.93 N/A -2.82
2017 3.44 3.01 4.00 3.89 2.99 N/A N/A 2.60 N/A 4.34
2018 3.02 3.76 3.22 3.33 3.10 N/A N/A 3.01 N/A -4.17
2019 3.58 3.73 2.22 2.27 1.89 N/A N/A 3.68 N/A -1.45
2020 -3.60 -3.36 5.82 5.54 4.32 N/A N/A 0.55 N/A -7.36
2021 2.46 2.93 4.52 4.41 3.78 N/A N/A 5.83 N/A -3.18
2022 -0.84 -1.24 1.82 1.99 0.46 N/A N/A 0.20 N/A 3.27
2023 -0.72 -1.01 1.72 1.88 0.44 N/A N/A 0.21 N/A 1.58
2024 -0.67 -0.93 1.73 1.89 0.43 N/A N/A 0.21 N/A 1.56
2025 0.57 0.44 2.03 2.13 1.16 N/A N/A 1.04 N/A 1.53
2026 0.72 0.56 1.99 2.08 1.19 N/A N/A 1.10 N/A 0.00
2027 0.46 0.37 1.87 1.97 0.99 N/A N/A 0.88 N/A 1.51
Key Ratios
Imports/ Exports/ Revenue per Wages/ Employees per
IVA/Revenue Demand Revenue Employee Revenue estab.
Year (%) (%) (%) ($'000) (%) (Units) Average Wage ($)
2013 82.2 N/A N/A 206 17.8 1.58 36,656
2014 83.9 N/A N/A 210 17.7 1.57 37,198
2015 83.3 N/A N/A 214 17.7 1.56 37,950
2016 83.2 N/A N/A 218 17.4 1.56 37,972
2017 82.9 N/A N/A 219 17.3 1.55 37,828
2018 83.5 N/A N/A 219 17.3 1.54 37,797
2019 83.6 N/A N/A 223 17.3 1.54 38,459
2020 83.8 N/A N/A 206 18.0 1.52 37,069
2021 84.2 N/A N/A 203 18.6 1.51 37,798
2022 83.8 N/A N/A 200 18.8 1.49 37,701
2023 83.6 N/A N/A 198 19.0 1.47 37,614
2024 83.4 N/A N/A 196 19.1 1.45 37,532
2025 83.3 N/A N/A 195 19.2 1.44 37,488
2026 83.1 N/A N/A 194 19.3 1.43 37,453
2027 83.0 N/A N/A 193 19.4 1.41 37,414
Figures are inflation adjusted to 2022
37 IBISWorld.com
Additional Resources
Additional Federal Home Loan Mortgage Corporation
Resources http://freddiemac.com
Department of Housing and Urban Development

http://www.hud.gov
National Association of Realtors

http://www.nar.realtor
Industry Jargon OCCUPIER OUTCOURING

Relocation services.
REIT
Real Estate Investment Trust, which is a company that owns, and in most cases, operates income-producing real
estate.
RENTAL VACANCY RATE

The measure of unoccupied rental units on the market.
Glossary BARRIERS TO ENTRY

High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for
new companies to enter an industry.
CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor.
IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than
$0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of
capital for every $1 of labor.
CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e.
year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving
only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using
the US Bureau of Economic Analysis’ implicit GDP price deflator.
DOMESTIC DEMAND
Spending on industry goods and services within the United States, regardless of their country of origin. It is derived
by adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT
The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers
and executives within the industry.
ENTERPRISE
A division that is separately managed and keeps management accounts. Each enterprise consists of one or more
establishments that are under common ownership or control.
ESTABLISHMENT
The smallest type of accounting unit within an enterprise, an establishment is a single physical location where
business is conducted or where services or industrial operations are performed. Multiple establishments under
common control make up an enterprise.
EXPORTS
Total value of industry goods and services sold by US companies to customers abroad.
IMPORTS
Total value of industry goods and services brought in from foreign countries to be sold in the United States.
INDUSTRY CONCENTRATION
An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top
players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less
than 40%.
INDUSTRY REVENUE
38 IBISWorld.com
The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other
operating income from outside the firm (such as commission income, repair and service income, and rent, leasing
and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale
of fixed tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA)

The market value of goods and services produced by the industry minus the cost of goods and services used in
production. IVA is also described as the industry's contribution to GDP, or profit plus wages and depreciation.
INTERNATIONAL TRADE
The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For
exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand:
low is less than 5%, medium is 5% to 35%, and high is more than 35%.
LIFE CYCLE
All industries go through periods of growth, maturity and decline. IBISWorld determines an industry's life cycle by
considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments;
the amount of change the industry's products are undergoing; the rate of technological change; and the level of
customer acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT
Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-
employed individuals.
PROFIT
IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as
revenue minus expenses, excluding interest and tax.
REGIONS
West | CA, NV, OR, WA, HI, AK
Great Lakes | OH, IN, IL, WI, MI
Mid-Atlantic | NY, NJ, PA, DE, MD
New England | ME, NH, VT, MA, CT, RI
Plains | MN, IA, MO, KS, NE, SD, ND
Rocky Mountains | CO, UT, WY, ID, MT
Southeast | VA, WV, KY, TN, AR, LA, MS, AL, GA, FL, SC, NC
Southwest | OK, TX, NM, AZ
VOLATILITY
The level of volatility is determined by averaging the absolute change in revenue in each of the past five years.
Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%;
and low volatility is less than ±3%.
WAGES
The gross total wages and salaries of all employees in the industry.
39 IBISWorld.com
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53 Real Estate and Rental and Leasing in The US Industry Report

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53 Real Estate and Rental and Leasing in The US Industry Report

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INDUSTRY REPORT 53

Real Estate and Rental and Leasing in

Jonathan Burns | August 2022

IBISWorld.com 1-800-330-3772 info@IBISWorld.com

INDUSTRY AT A GLANCE................................ 7 MAJOR COMPANIES...................................... 25

INDUSTRY OUTLOOK.................................... 13 OPERATING CONDITIONS............................ 34

Outlook.............................................................................. 13 Capital Intensity................................................................. 34

Recent Rising interest rates cause dramatic changes in consumer confidence

This section last udpated August 10, 2022

About This Industry

Major Players Realogy Holdings Corp.

United Rentals, Inc.

Cbre Group, Inc.

Avis Budget Group, Inc.

Main Activities The primary activities of this industry are:

Renting and leasing of tangible assets (i.e. equipment)

Renting and leasing of intangible assets (i.e. patents)

Managing, renting, selling, buying real estate

The major products and services in this industry are:

Rental and leasing

Lessors of nonfinancial intangible assets

RELATED INTERNATIONAL INDUSTRIES

Global Commercial Real Estate

$1.1tr 1.7% 2.2%

Annual Growth Annual Growth Annual Growth

$521.0bn Industry Structure

Annual Growth Annual Growth Competition

Annual Growth Annual Growth Annual Growth

2017–2022 2022–2027 2017–2027 Key Trends

6m  Some considerable progress has been made on national

 Amid a wave of evictions and a drying up of cashflow,

2017–2022 2022–2027 2017–2027  A surge in residential construction served to balance a sharp

Products & Services Segmentation

Major Players SWOT

High Profit vs. Sector Average

High Customer Class Concentration

High Revenue Growth (2017-2022)

Low Revenue Growth (2005-2022)

Key External Rental vacancy rates

Value of residential construction

Per capita disposable income

Yield on 10-year Treasury note

Current It is important to consider the effects of the global outbreak of COVID-19

Historical Performance Data

DÉJÀ VU WITH A TWIST

Overall, similar effects were experienced in the aftermath of the 2008

LOOMING CREDIT TIGHTENING

Performance Outlook Data

Entrances and exits by enterprises are largely steady

Products & Markets

Mining in the US Home Builders in the US

Retail Trade in the US Apartment & Condominium Construction in the US

Healthcare and Social Assistance in the US Housing Developers in the US

Finance and Insurance in the US Industrial Building Construction in the US

Manufacturing in the US Commercial Building Construction in the US

Consumers in the US 2nd Tier

Accommodation and Food Services in the US Construction Machinery Manufacturing in the US

Public Administration in the US SUV & Light Truck Manufacturing in the US

Woodworking Machinery Manufacturing in the US

Products & Services

REAL ESTATE (NAICS 531)

RENTAL AND LEASING SERVICES (NAICS 532)

LESSORS OF NONFINANCIAL INTANGIBLE ASSETS (EXCEPT COPYRIGHTED WORKS, NAICS