IBISWorld - 2020 Real Estate and Rental and Leasing in The US Industry Report

INDUSTRY REPORT 53
Real Estate and Rental and Leasing in

the US
Welcome home: Sector growth has been supported by increased construction

activity and disposable income
John Madigan | April 2020
WWW.IBISWORLD.COM 1-800-330-3772 INFO@IBISWORLD.COM

Real Estate and Rental and Leasing in the US April 2020
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Contents
ABOUT THIS INDUSTRY..................................3 COMPETITIVE LANDSCAPE.......................... 20
COVID-19 (Coronavirus) Impact Update........................... 3 Market Share Concentration........................................... 20
Industry Definition............................................................ 3 Key Success Factors...................................................... 20
Supply Chain..................................................................... 3 Cost Structure Benchmarks...........................................21
Major Players.................................................................... 3 Basis of Competition...................................................... 22
Main Activities.................................................................. 3 Barriers to Entry.............................................................. 22
Similar Industries.............................................................. 4 Industry Globalization..................................................... 23
AT A GLANCE...................................................5 MAJOR COMPANIES......................................24

Key Statistics Snapshot.................................................... 5 Major Players.................................................................. 24
Key Trends........................................................................ 5
SWOT in the Industry........................................................ 5 OPERATING CONDITIONS........................... 28
Executive Summary.......................................................... 5
Industry Structure............................................................. 6 Capital Intensity.............................................................. 28
Key Industry Data..............................................................7 Technology & Systems................................................... 28
Major Players.................................................................... 8 Technology & Systems................................................... 28
Products & Services Segmentation.................................. 8 Revenue Volatility........................................................... 29
Regulation & Policy......................................................... 29
INDUSTRY PERFORMANCE.............................9 Industry Assistance........................................................ 29
Key External Drivers.......................................................... 9 KEY STATISTICS.............................................30

Industry Performance..................................................... 10
Industry Data Timeseries................................................12 Industry Data.................................................................. 30
Annual Change............................................................... 30
INDUSTRY OUTLOOK................................... 13 Key Ratios....................................................................... 30
Additional Resources......................................................31
Revenue Outlook.............................................................13 Industry Jargon...............................................................31
Industry Life Cycle.......................................................... 14 Glossary..........................................................................31
Products & Services Segmentation................................ 15
Supply Chain................................................................... 15
Products & Services........................................................15
Demand Determinants.................................................... 17
Major Markets................................................................ 18
International Trade......................................................... 19
Business Locations........................................................ 19
Legend
Icons are used throughout the report to indicate impact on the industry.
Negative impact
Neutral impact
Positive impact
About This Industry

COVID-19 IBISWorld's analysts constantly monitor the industry impacts of current events in real-time – here is an
(Coronavirus) update of how this industry is likely to be impacted as a result of the global COVID-19 pandemic:
Impact Update
· Overall, the method in which realtors and industry operators conduct their business has been disrupted
by the outbreak of COVID-19 (coronavirus). Due to mandated social distancing and the limitations
imposed on gathering size, many showings and open house events have been canceled. If industry
operators cannot rent inventory, industry revenue is expected to decline.
· The Real Estate subsector is expected to face stiff headwinds as a result of the coronavirus outbreak.
Due to the forced shuttering of businesses and rising unemployment, residential and nonresidential
renters alike do not have the cash flow to afford rent and other debt obligations. Failure to pay will result in
evictions and foreclosure, greatly weakening sector performance due to a decline in overall demand.
· The rental of equipment may be buoyed as capital expenditures are trimmed by downstream operators
and industrial operators as they opt to rent machinery as needed, instead of outright purchasing
equipment.
Note: The content in this report is currently being updated to reflect the trends outlined above.
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.
Supply Chain Supply Industries Demand Industries
Construction Machinery Manufacturing - Mining
SUV & Light Truck Manufacturing - Retail Trade
Woodworking Machinery Manufacturing - Healthcare and Social Assistance
Home Builders - Finance and Insurance
Apartment & Condominium Construction - Manufacturing
Housing Developers - Consumers
Industrial Building Construction - Accommodation and Food Services
Commercial Building Construction - Public Administration
Major Players United Rentals Inc.
Realogy Corporation
CBRE
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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Similar Industries 52593 - Real Estate Investment Trusts in the US
Operators in this industry are primarily concerned with providing an investment trust and not a service
related to the rent or purchase of real estate.
53111 - Apartment Rental in the US
Operators in this industry act as lessors of buildings used as residences or dwellings.
53212 - Truck Rental in the US
Operators in this industry primarily rent or lease (without drivers) trucks, utility trailers, buses, semitrailers
and other related vehicles.
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At a Glance
Key Statistics Total Revenue Annual Growth Annual Growth
Snapshot 2020 2015-2020 2020-2025
$1.1tr 2.8% -0.3%

Profit Margin Wages as a share of Revenue Number of Businesses
2020 2020 2015-2020
47.6% 17.9% 3.3%
Key Trends Low interest rates have enticed commercial and industrial customers alike to lease more warehousing and
logistics space
A potent combination of oversupply and under-demand has set the sector up for a difficult challenge
Demand has been flagging in recent years, which has slowed rent growth across the country
Sector profitability is expected to weaken in line with a decline in the real estate subsector
The general softening in the residential real estate market is expected to weaken conditions for the sector
Despite a slowdown in residential construction activity, the value of private nonresidential construction is
still expected to increase
SWOT in the
Industry
Strengths Weaknesses Opportunities Threats
High Profit vs. Sector High Customer Class High Revenue Growth Low Revenue Growth
Average Concentration (2015-2020) (2005-2020)
High Product/Service High Revenue Growth Low Outlier Growth

Concentration (2020-2025)
Low Revenue per High Performance Drivers

Employee
High Capital
Requirements
Executive Over the five years to 2020, the Real Estate and Rental and Leasing
Summary
sector in the United States has performed well, with sector revenue
increasing an annualized 2.8% to reach $1.1 trillion, which includes an
expected growth of 2.2% in 2020 alone.
Growth in the Real Estate subsector has been driven by strong increases in the value of residential
construction activity, which increased an annualized 1.5% during the period. Additionally, this subsector's
performance has been aided by an increase in housing starts, which have increased an annualized 3.7%
during the period. Performance in the lessors of real estate industry group has also been supported by
falling vacancy, but also stymied by a slight uptick in homeownership, likely a consequence of record low
interest rates.
Moreover, as residential and nonresidential 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.
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Additionally, as per capita disposable incomes continue to rise and more US citizens increase domestic
travel, growth in the Rental and Leasing Services subsector has also been supported by rising revenue in
the automotive, consumer and general goods rental and leasing industry group. Overall, current sector
performance and profit have been strong due to a confluence of positive trends. However, with the
outbreak of COVID-19 (coronavirus), the future of the sector is uncertain, with concerns about financing,
foreclosure and bankruptcy roiling real estate markets and slashing construction activity in 2020.
Over the five years to 2025, sector performance is expected to contract somewhat, with sector revenue
falling an annualized 0.3% to reach just under $1.1 trillion by 2025. Sector revenue is expected to slow
mainly due to a reversal of current real estate market conditions. Rent growth is expected to soften, as
vacancy is expected to rise and the homeownership rate is anticipated to increase an annualized 0.2%,
which will serve to weaken demand for the lessors of real estate industry group, and subsequently the
Apartment Rental industry (IBISWorld report 53111). Overall, sector performance will be dictated by how
employment and price growth are affected by the outbreak of coronavirus, depending on the level of
foreclosure and bankruptcy exhibited over the next few years.
Industry Structure Level Trend Level Trend
Life Cycle Mature Regulation Level Medium Steady
Revenue Volatility Low Technology Change Medium
Capital Intensity High Barriers to Entry Low Steady
Industry Assistance Low Steady Industry Globalization Low Steady
Concentration Level Low Competition Level Medium Increasing
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Key Industry Data
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Major Players
Products & Services

Segmentation
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Industry Performance
Key External Drivers
o Rental vacancy rates
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 increase in 2020, posing a
potential threat to the industry.
o 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 2020, presenting the industry with a potential opportunity.
o Homeownership rate
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 2020.
o 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 2020.
o 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 fall in 2020.
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Industry Performance It is important to consider the effect of the global outbreak of

COVID-19 (coronavirus) in early 2020 on Real Estate and Rental and
Leasing sector performance.
While IBISWorld estimates are based on the latest data, the effect of the virus will not be made apparent
until more monthly data can be made available and analyzed. Therefore, it is necessary to understand that
the sector was marked by initial strong performance over the five years to 2020 and a deceleration after
2018. However, more optimistic data in the later portion of the period will likely be revised downward due
to expected adversities, particularly in 2020 and potentially beyond. Overall, fueled by strong activity in
both the residential and commercial real estate industry groups and rising residential construction activity,
the Real Estate and Rental and Leasing sector is expected to post an annualized 2.8% increase in revenue
to reach $1.1 trillion, which includes an expected bump of 2.2% in 2020 alone.
However, it must be noted that the sector has been showing marked signs of structural weakness during
the period, including oversupply of luxury housing units, declining rent affordability and an operating
environment characterized by debt-fueled acquisitions. This creates market distortions which help to
explain the rapid rise in the real commercial and residential estate subsegment of this sector over the past
10 years, with home and commercial property prices reaching 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.”
To be clear, the residential and commercial real estate leasing subsegment of this sector has been
overheating, posturing itself for a deceleration, despite strong results currently exhibited.
With the outbreak of COVID-19 and millions of US citizens and businesses out of work and forcibly shut
down, potentially unable to meet their rental and other financial obligations, the sector is headed for
deflation at best, or a financial crisis at worst. Undoubtedly, the Real Estate and Rental and Leasing sector
has not undergone such turmoil since the subprime mortgage crisis and much about sector performance
remains uncertain.
Cash crunch looming
During the current period, commercial and residential real estate performance has been strong, with rising
residential commercial rents, particularly the office and apartment rental subsegments, supporting
revenue growth. Low interest rates have enticed commercial and industrial customers alike to lease more
warehousing and logistics space, while companies such as WeWork have been taking advantage of low
rates to acquire more office space. Moreover, companies such as Airbnb in the residential leasing
segment, have been performing strongly as a result of increased domestic and international travel and
rising residential rents, with property owners using low interest rates to fuel the acquisition of more
properties to rent out via the company's online platform. Overall, the commercial and residential leasing
segments of this industry have had a strong period, fueled by strong macroeconomic conditions and low
interest rates, though performance has been showing signs of weakness, with an affordability crisis
expected to cause a slowdown.
However, with the outbreak of COVID-19, it is abundantly clear that the sector is headed for a downturn of
some degree. Amid the mandated social distancing and telecommuting of non-essential workforce, a
massive slowdown in domestic and international travel, declines in consumer spending and consumer
confidence, companies such as WeWork and private listers renting residential property via Airbnb's online
platform are enduring a massive deadfall in demand, slashing revenue expectations. Additionally, amid
rising unemployment and the forced closure of businesses nationwide, private listers, consumers and
businesses alike are experiencing a liquidity crisis, potentially unable to pay their own financial obligations.
As the fallout from COVID-19 unfolds, it is expected that the sector will exhibit a wave of foreclosures and
bankruptcies amid overleveraged participants, as well as an overall deflation of the sector as a whole.
However, it must be noted that this downturn could serve as a strong opportunity for participants or new
entrants that have balance sheets in better repair, though the outcome of this remains to be seen.
Luxury real estate limits affordable supply
A potent combination of oversupply and under-demand has set the sector up for a difficult challenge, with
the conditions that provided for such strong growth early during the period weakening the industry in the
latter half of the period. Cheap debt and rising rents have enabled a rapid expansion in luxury residential
unit supply. However, due to increases in rents outpacing affordability and wages, most luxury units are
sitting on the market, causing a supply crunch in the middle-market segment, which has experienced
explosive rent growth and priced most consumers out of the market. According to data from the New York
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University Furman Center, 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.
However, as a result of strong rent growth, the subsector showed strong performance, exhibiting increases
in revenue, profitability and participation. Industry profitability has risen to reach 47.6% of industry revenue
in 2020. During the period, the number of industry enterprises has risen an annualized 3.3% to reach 3.4
million operators. Moreover, with participation rising, the number of industry employment has risen an
annualized 2.8% to reach 5.4 million workers.
The Real Estate subsector is currently running too hot with price growth outpacing that of wages. As a
result, demand has been flagging in recent years, which has slowed rent growth across the country,
indicating that the subsector is headed for a slowdown. Signs of unsustainability were already showing
prior to the outbreak of COVID-19, and now it is clear that the sector will have a correction. With millions of
Americans currently out of work and unemployment skyrocketing, rent and mortgage payments may be
deferred or delinquent, which would certainly cause a decline in industry performance.
Industry Data Domestic

Rental
Vacancy
Timeseries Revenue IVA Estab. Enterprises Employment Exports Imports Wages Demand Rate
($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) (%)
2005 842,602 702,202 2,812,251 2,742,125 4,585,677 N/A N/A 158,225 N/A 9.85
2006 845,023 702,839 2,803,054 2,726,907 4,637,729 N/A N/A 156,865 N/A 9.70
2007 827,502 684,103 2,707,195 2,628,125 4,551,232 N/A N/A 151,856 N/A 9.75
2008 786,454 650,273 2,496,041 2,414,021 4,326,693 N/A N/A 144,323 N/A 10.0
2009 672,474 587,529 2,723,926 2,642,663 4,409,469 N/A N/A 156,030 N/A 10.6
2010 763,457 639,494 2,690,462 2,610,265 4,289,560 N/A N/A 142,483 N/A 10.2
2011 782,339 655,365 2,687,449 2,608,752 4,263,406 N/A N/A 144,498 N/A 9.52
2012 818,871 691,182 2,739,682 2,659,940 4,330,587 N/A N/A 149,908 N/A 8.68
2013 855,776 702,108 2,805,815 2,724,779 4,420,387 N/A N/A 150,988 N/A 8.32
2014 897,763 752,667 2,910,867 2,826,557 4,565,163 N/A N/A 158,348 N/A 7.55
2015 943,317 785,182 3,013,382 2,927,152 4,701,207 N/A N/A 166,366 N/A 7.05
2016 976,338 812,069 3,068,528 2,978,086 4,789,446 N/A N/A 169,638 N/A 6.85
2017 1,006,874 663,650 3,191,321 3,090,863 4,932,759 N/A N/A 174,309 N/A 7.18
2018 1,040,740 869,963 3,328,473 3,223,698 5,105,716 N/A N/A 180,993 N/A 6.88
2019 1,060,152 866,520 3,448,482 3,339,929 5,265,442 N/A N/A 188,981 N/A 6.75
2020 1,083,547 885,883 3,548,136 3,437,846 5,395,437 N/A N/A 193,547 N/A 6.78
2021 1,081,581 874,302 3,618,218 3,510,577 5,442,060 N/A N/A 194,815 N/A 6.90
2022 1,078,082 859,110 3,682,143 3,577,449 5,478,429 N/A N/A 195,730 N/A 7.05
2023 1,073,662 842,854 3,740,384 3,638,793 5,506,554 N/A N/A 196,374 N/A 7.22
2024 1,069,419 826,796 3,798,972 3,700,671 5,532,996 N/A N/A 196,973 N/A 7.38
2025 1,066,431 837,937 3,852,307 3,757,090 5,557,642 N/A N/A 197,564 N/A 7.53
Industry Outlook
Over the five years to 2025, the Real Estate and Rental and Leasing
sector is expected to contract marginally, largely as a result of
expected slowdowns in the Real Estate subsector caused by increases
in the rental vacancy rate and the homeownership rate.
Demand for equipment and automotive leasing and rentals is expected to support the sector amid a
weakening of Real Estate subsector.
Nonresidential construction activity is expected to continue humming along, which will keep demand for
heavy construction equipment and industrial machinery steady. However, the sector is expected to feel the
effects of weaker demand conditions, stemming from a weakening in fundamental conditions which
underpin the residential real estate leasing industry group as the effects of the COVID-19 (coronavirus)
outbreak are made more apparent. The sector was expected to weaken by some degree prior to the
outbreak, however, the fallout from COVID-19 will determine the severity of this expected decline. As a
result, the sector is expected to contract marginally, with revenue falling an annualized 0.3% to just under
$1.1 trillion by 2025.
Sector profitability is expected to weaken in line with a decline in the real estate subsector, falling to 44.0%
of sector revenue. Despite this, the sector is expected to normalize over the five years to 2025, with growth
during the current period primarily stemming from an overheated residential and commercial real estate
industry group. Overall, increases in sector participation are expected to slow significantly from current
rates, increasing an annualized 1.8% to 3.8 million enterprises. Additionally, in line with an expected sector
correction, sector employment is expected to nearly halt, rising an annualized 0.6% to reach 5.6 million
employees.
Slowdown in the Real Estate subsector
Over the five years to 2025, it appears that the Real Estate subsector will have to contend with the negative
effects of the same factors that provided for such strong performance during the current period, as well as
the aftermath from the COVID-19 outbreak. During the outlook period, the rental vacancy rate is expected
to rise an annualized 2.1%. As vacancy rises due to an oversupply of luxury units and as more middle-
market consumers are priced out of the market, rents are expected to fall, harming performance in the
Apartment Rental industry (IBISWorld report 53111). Moreover, the Real Estate Sales and Brokerages
industry (IBISWorld report 53121) is expected to decelerate as well. This general softening in the
residential real estate market is expected to weaken conditions for the Real Estate and Rental and Leasing
sector, causing sector revenue to contract over the next five years. This decline is likely to be exacerbated
by the COVID-19 outbreak.
Rental and leasing services keep steady
Over the five years to 2025, the Rental and Leasing subsector is expected to post performance similar to
that of the current period. Overall, this subsector is more stable than the Real Estate subsector because
demand for leasing and rentals is often tied to several factors, such as per capita disposable income,
current interest rates and levels of construction activity. This subsector is expected to remain steady with
some industry groups, such as the automotive, consumer and general goods rental and leasing industry
group, expected to decelerate while others, such as the commercial and industrial machinery and
equipment rental and leasing industry group, are expected to accelerate. For example, the Car Rental
industry (IBISWorld Report 53211) is expected to decelerate amid a massive decline in domestic and
international travel, effectively reducing demand for rental cars. The Heavy Equipment Rental industry
(IBISWorld report 53241) is expected to accelerate in line with a rising value of private nonresidential
construction. Despite a slowdown in residential construction activity, the value of private nonresidential
construction is still expected to increase during the outlook period, which will keep demand for heavy
construction equipment rentals near current levels and support the sector in the wake of downturn the real
estate subsector. Moreover, nonresidential projects will typically demand more machinery due to the
intensity of certain construction projects.
Revenue Outlook Revenue IVA Estab. Enterprises Employment Exports Imports Wages
Domestic
Demand
Rental
Vacancy
($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) Rate (%)
2020 1,083,547 885,883 3,548,136 3,437,846 5,395,437 N/A N/A 193,547 N/A 6.78
2021 1,081,581 874,302 3,618,218 3,510,577 5,442,060 N/A N/A 194,815 N/A 6.90
2022 1,078,082 859,110 3,682,143 3,577,449 5,478,429 N/A N/A 195,730 N/A 7.05
2023 1,073,662 842,854 3,740,384 3,638,793 5,506,554 N/A N/A 196,374 N/A 7.22
2024 1,069,419 826,796 3,798,972 3,700,671 5,532,996 N/A N/A 196,973 N/A 7.38
2025 1,066,431 837,937 3,852,307 3,757,090 5,557,642 N/A N/A 197,564 N/A 7.53
Industry Life Cycle The life cycle stage of this industry is Mature
Life Cycle Reasons The Real Estate and Rental and Leasing sector is considered to be in the mature stage of its life cycle.
o Modest growth in IGP as a share of
Sector value added (SVA), which is a measure of the sector's contribution to the overall economy, is
total US GDP expected to rise an annualized 0.7% over the 10 years to 2025. In contrast, US gross domestic product
o Significant rise in enterprise and (GDP) is expected to rise an annualized 1.8% during the same period. Although SVA is growing slower than
establishment numbers US GDP, this sector is still in the mature phase of its life cycle. First, SVA is a proxy measure for GDP that
o Stable product markets is computed using sector profitability, depreciation and wages as a share of revenue. During the period,
o Medium level of technological
the sector's share of wages over revenue has remained essentially unchanged and while sector
change profitability has weakened slightly, it is still quite stable. Additionally, sector depreciation remains
o Established end market consistently between 19.0% 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 later 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. Moreover, this weakness in SVA also stems from expected weakness in sector
performance during the outlook period as a result of the COVID-19 (coronavirus) outbreak.
Products & Services Segmentation

Supply Chain
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 diminished 68.5%
of total sector revenue in 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. The Real Estate subsector has performed quite well over the five years to
2020. Most notably, the Apartment Rental industry (IBISWorld report 53111) has supported growth in this
segment, posting an annualized 2.6% increase in industry revenue during the current period. 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
2025.
Rental and Leasing Services (NAICS 532)
The Rental and Leasing Services subsector accounts for a rising 24.5% of sector revenue in 2020. 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 the Heavy Equipment
Rental industry (IBISWorld report 53241).
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 7.0% 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). Along these lines, the Intellectual Property
Licensing industry (IBISWorld report 53311) has supported this segment.
Demand Determinants Demand for Real Estate and Rental and Leasing sector products and
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 one 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.
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.
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 as well
as levels of domestic and international travel. As more consumers travel domestically, demand for
automobile rental and leasing will also rise.
Major Markets
Real Estate and Rental and Leasing sector major markets can be
broken down into the household and consumer customer segment
(65.5%) and the business and industry segment (34.5%).
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.
International Trade 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.
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 25.5% of sector establishments. The next most concentrated region
of sector activity is the West, which accounts for 20.4% of sector establishments. Following this, the Mid-
Atlantic region accounts for 15.6% of sector establishments. Lastly, the Great Lakes region accounts for
10.8% and the Southwest accounts for 12.0%. No other region accounts for more than 10.0% of sector
establishments.
Competitive Landscape
Market Share Concentration in this industry is Low
Concentration
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 during the next five-year period.
Key Success Factors IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:
 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.
Cost Structure
Benchmarks
Profit
Sector profitability, defined as earnings before interest and taxes, is expected to account for 47.6% of
sector revenue in 2020, up from 46.7% in 2015. 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 (coronavirus)
outbreak. Sector profitability is expected to weaken slightly during the next five-year period due to
continued increases in vacancy and a reversal of economic conditions.
Wages
Sector wages are estimated to account for 17.9% of sector revenue in 2020, up from 17.6% in 2015.
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.
Purchases
Purchase costs are estimated to account for 0.7% of sector revenue in 2020. 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 0.4% of
sector revenue in 2020.
Depreciation
Depreciation charges are estimated to account for 16.3% of sector revenue in 2020. 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 0.7% of sector revenue in 2020. 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.
Utilities
Utilities costs are expected to account for 0.5% of industry revenue in 2020. 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 15.9% of industry
revenue in 2020.
Basis of Competition Competition in this industry is Medium and the trend is Increasing
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.
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, this activity is now treated as a financial instrument and not as a Real
Estate sector transaction. 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 Entry Barriers to Entry in this industry are Low and the trend is Steady
Overall, barriers to entry in the Real Estate and Rental and Leasing
sector are low to moderate.
Barriers to entry namely include capital costs and costs associated with acquiring an inventory and a
market presence. Typically, barriers to entry in the Real Estate subsector are higher due to the fact that
capital costs associated with buildings and land are far greater than those associated with 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 subsector. This is because it is easy for small operators
to enter this sector, evidenced by the overwhelming majority of nonemploying enterprises comprising this
sector's structure, but it is difficult for them to scale and succeed 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 Checklist
Competition Medium
Concentration Low
Life Cycle Stage Mature
Technology Change Medium
Regulation & Policy Medium
Industry Assistance Low
Industry Globalization Globalization in this industry is Low and the trend is Steady
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.
Major Companies
Major Players
United Rentals Inc.
Market Share: 0.5%
Headquartered in Stamford, CT, United Rentals Inc. (United Rentals) was founded in 1997 and is the
world's largest equipment rental company. The company has a staggering product inventory with over
3,300 classes of equipment for rent to construction and industrial companies, manufacturers, utilities,
municipalities, homeowners, government entities and other markets. The rental fleet is made up of more
than 440,000 units valued at more than $9.0 billion, which includes backhoes, forklifts, generators, boom
lifts and construction lasers. In 2020, the company is expected to earn a total revenue of $8.0 billion,
amid the current downturn in the US economy as a result of COVID-19 (coronavirus). United Rentals' US
equipment rental operations account for greater than 85.0% of the company's total sales, with the
majority of the remaining revenue coming from new and used equipment sales.
The company has been active in some acquisitions during the period. In 2017, United Rentals completed
the acquisition of NES Rentals (NES) for $965.0 million in cash. United Rentals is the largest operator in
the Heavy Equipment Rental industry (IBISWorld report 53241). Additionally, the company is expected to
have a market share greater than 5.0% in the Industrial Equipment Rental and Leasing industry
(IBISWorld report 53249).
Financial performance
Over the five years to 2020, United Rentals' US Real Estate and Rental and Leasing sector-relevant
revenue is expected to grow at an annualized rate of 6.9% to $5.3 billion. The acquisition has supported
continued expansion during the period. Above all, United Rentals has exhibited strong growth due to a
burgeoning US construction sector. Overall, a strategic acquisition and a strong construction sector
have promoted company growth during the period. Moreover, the company's sector- and US-relevant
operating income is expected to increase an annualized 4.3% to reach $1.2 billion in 2020. It is also
worth noting that revenue is expected to decline in 2020 as a result of the coronavirus outbreak. Overall,
demand conditions have weakened, with nonresidential construction plummeting in 2020, which is
expected to undercut revenue growth in 2020.
Realogy Holdings Corp.
Market Share: 0.5%
Realogy Holdings Corp. (Realogy) is a global provider of real estate services, including franchising,
brokerage and relocation and title services and is headquartered in Madison, NJ. Realogy is the parent
company for some of the most notable real estate brands and trademarks, such as NRT LLC, Century
21, TRG and Better Homes and Gardens Real Estate. NRT LLC is the company's largest subsidiary and is
affiliated with the Coldwell Banker, ERA and Sotheby's International Realty. Realogy is the one of the
largest operators in the country, with 14,800 offices and 289,000 agents across 116 countries. Company
operating segments include: real estate franchise; company-owned real estate brokerage; relocation;
and title and settlement services. Although Realogy is involved in the buying and selling of residential
real estate, the company's subsidiaries also list residential homes for rent. Realogy is active in several
sector-relevant industries through its numerous subsidiaries. For example, in the Real Estate Sales and
Brokerages industry (IBISWorld report 53212) and in the Real Estate Asset Management and Consulting
industry (IBISWorld report 53139).
According to the company's most recent financial release, company revenue totaled $5.5 billion in 2019
and is expected to reach $5.1 billion in 2020, as demand conditions weaken significantly as a result of
the coronavirus outbreak. Nearly 98.0% of Realogy's business is conducted within the United States, and
sector- and US-relevant revenue is expected to total $5.0 billion in 2020, representing an annualized 2.1%
increase from 2015. Additionally, the company's operating income has exhibited an annualized 0.2%
increase to reach an estimated $528.9 million in 2020. Overall, the company has been engaging in some
acquisition activity via its subsidiaries NRT and TGR. In 2015, the company acquired 13 real estate
brokerage operations through NRT for a cash consideration of $96.0 million. Additionally, in the same
year, the wholly owned subsidiary TRG acquired three title and settlement operations for a cash
consideration of $34.0 million. In 2016, NRT acquired 11 real estate brokerages and property
management operations for a cash consideration of $74.0 million, while TRG acquired one title
settlement operation for $10.0 million. This activity has continued in 2017, with NRT purchasing 16 real
estate brokerages for $11.0 million, while TRG acquired another two title and settlement operations.
CBRE Group Inc.
Market Share: 0.4%
Los Angeles-based CBRE Group Inc. (CBRE) operates more than 450 offices in more than 100 countries.
Formerly known as CB Richard Ellis Group, the company is one of the largest commercial real estate
service operators in the world. Founded in 1906, and employing more than 80,000 people globally, the
company is focused on commercial property and corporate facilities management, occupier and
property or agency leasing, property sales, valuation, real estate investment management, commercial
mortgage origination and servicing, capital markets (equity and debt) solutions, development services
and proprietary research. CBRE is expected to hold a nearly 2.0% market share in the Real Estate Asset
Management and Consulting industry (IBISWorld report 53139) and an estimated 6.6% market share in
the Real Estate Appraisal industry (IBISWorld report 53132). Additionally, the company is estimated to
have a near 2.0% market share of the Real Estate Sales and Brokerages industry (IBISWorld report
53121).
CBRE participates in this sector via several segments, including occupier outsourcing (relocation
services), property management and leasing. The loan servicing and capital markets segments are
excluded from this analysis. CBRE's leasing and sales segments, which account for 30.8% of company
revenue, offer real estate tenants, investors and owners strategic advice with regard to the leasing,
disposition and acquisition of property, market appraisals, litigation support, feasibility studies and
discounted cash flow analysis. Over the five years to 2020, the company has expanded through a series
of acquisitions, such as its purchase of The Furman Company, a South Carolina-based commercial real
estate brokerage and management services company, Additionally, the company purchased Global
Workplace Solutions Business in 2015 for $1.5 billion paid to the parent company Johnson Controls
Vends.
In 2020, CBRE will earn an estimated $23.6 billion in total company revenue. Over the five years to 2020,
CBRE's US sector-specific revenue is expected to increase at an annualized rate of 17.4% to $4.3 billion.
It should be noted that in the third quarter of 2018, CBRE announced that it was changing its revenue
recognition methods, and thus results for 2016 and 2017 were revised, posting marked increases over
their previously stated values. It appears that due to a weakening outlook, CBRE is pursing different
growth strategies to keep ahead of the industry. Since the housing market recovery, which began prior
to the period, the company has exhibited strong increases in both sector-specific and total revenue.
Additionally, the company is expected to earn $224.3 million in operating profit in 2020, representing an
annualized 8.8% increase in sector-specific operating income. Overall, CBRE's diversity is expected to
enable it to weather the stronger declines in revenue exhibited in 2020 as a result of the COVID-19
(coronavirus) outbreak.
Avis Budget Group Inc.
Market Share: 0.4%
Avis Budget Group Inc. (Avis), is based in Parsippany, NJ, and rents cars and trucks in the United States,
Canada, Australia, New Zealand and the Caribbean. Avis has nearly 30,000 employees globally, with
20,000 employed within the United States. Avis is made up of two brands: Avis Rent-A-Car System and
Budget Rent-A-Car. Avis Rent-A-Car System is concentrated on providing services for business travelers
and premium leisure travelers, while Budget Rent-A-Car targets price-conscious travelers. Overall, an
estimated 86.0% of Avis' revenue is considered sector specific. Avis operates 10,000 locations globally,
with a rental fleet of 520,000 vehicles.
The company has also been active in acquisitions such as the purchase of car-sharing company Zipcar
in 2015, which now has more than 860,000 members in the United States, Canada and Europe.
Additionally, Avis acquired Payless Car Rental Inc. prior to 2015, which was then the sixth-largest car
rental company in North America with 120 retail locations and $80.0 million in annual revenue.
Moreover, Avis announced a partnership with Waymo, Google's self-driving car project, in 2017. Avis is
expected to perform vehicle cleaning, part replacement and scheduled maintenance, as well as provide
parking and storage for Waymo's autonomous test fleet. In exchange for supplying fleet management
services, Avis will gain access to Waymo's autonomous vehicle technology.
Over the five years to 2020, Avis is expected to earn total company revenue of $6.8 billion, a sharp
decline from 2019, a result of the outbreak of COVID-19 (coronavirus) causing international and
domestic travel to plummet. sector- and US-specific revenue is expected to decline an annualized 5.0%
to reach an estimated $4.4 billion in 2020. Additionally, Avis' sector- and US-specific operating income
has exhibited an annualized decline of 8.9% to reach $374.8 million, as a result of weaker conditions in
2020. Overall, Avis has exhibited the largest exposure of industry players to the outbreak of COVID-19.
Operating Conditions
Capital Intensity The level of capital intensity is High
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 $0.91 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 &
Systems Level Factor Disruption Description
Rate of Unknown A ranked measure for the number of

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

Unknown Concentration classes 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 Rate of Entry Very Annualized growth in the number of

High Likely enterprises in the industry, ranked
against all other industries. A greater
intensity of companies entering an
industry increases the pool of
potential disruptors.
Very Market Very A ranked measure of the largest core

High Concentration Likely market for the industry.
Concentrated core markets present a
low-end market or new market entry
point for disruptive technologies to
capture market share.
Technology & The level of technology change is Medium

Systems
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 Volatility The level of volatility is Low
The Real Estate and Rental and Leasing sector exhibits a low 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 2020.
Regulation & Policy The level of regulation is Medium and the trend is Steady
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
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.
CARES Act of 2020
There are several provisions contained within the CARES Act to provide relief for residential landlords and
tenants. First, tenants experiencing hardship as a result of the 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 120 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 120-day period is
up, it is likely they will get evicted due to nonpayment, which will severely undercut the industry during the
outlook period.
Industry Assistance The level of industry assistance is Low and the trend is Steady
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.
Key Statistics
Industry Data
Domestic
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Rental Vacancy
($m) ($m) (Units) (Units) (Units) ($m) ($m) ($m) ($m) Rate (%)
2011 782,339 655,365 2,687,449 2,608,752 4,263,406 N/A N/A 144,498 N/A 9.52
2012 818,871 691,182 2,739,682 2,659,940 4,330,587 N/A N/A 149,908 N/A 8.68
2013 855,776 702,108 2,805,815 2,724,779 4,420,387 N/A N/A 150,988 N/A 8.32
2014 897,763 752,667 2,910,867 2,826,557 4,565,163 N/A N/A 158,348 N/A 7.55
2015 943,317 785,182 3,013,382 2,927,152 4,701,207 N/A N/A 166,366 N/A 7.05
2016 976,338 812,069 3,068,528 2,978,086 4,789,446 N/A N/A 169,638 N/A 6.85
2017 1,006,874 663,650 3,191,321 3,090,863 4,932,759 N/A N/A 174,309 N/A 7.18
2018 1,040,740 869,963 3,328,473 3,223,698 5,105,716 N/A N/A 180,993 N/A 6.88
2019 1,060,152 866,520 3,448,482 3,339,929 5,265,442 N/A N/A 188,981 N/A 6.75
2020 1,083,547 885,883 3,548,136 3,437,846 5,395,437 N/A N/A 193,547 N/A 6.78
2021 1,081,581 874,302 3,618,218 3,510,577 5,442,060 N/A N/A 194,815 N/A 6.90
2022 1,078,082 859,110 3,682,143 3,577,449 5,478,429 N/A N/A 195,730 N/A 7.05
2023 1,073,662 842,854 3,740,384 3,638,793 5,506,554 N/A N/A 196,374 N/A 7.22
2024 1,069,419 826,796 3,798,972 3,700,671 5,532,996 N/A N/A 196,973 N/A 7.38
2025 1,066,431 837,937 3,852,307 3,757,090 5,557,642 N/A N/A 197,564 N/A 7.53
Annual Change
Domestic
Revenue IVA Establishments Enterprises Employment Exports Imports Wages Demand Rental Vacancy
(%) (%) (%) (%) (%) (%) (%) (%) (%) Rate (%)
2011 2.47 2.48 -0.12 -0.06 -0.61 N/A N/A 1.41 N/A -6.85
2012 4.66 5.46 1.94 1.96 1.57 N/A N/A 3.74 N/A -8.93
2013 4.50 1.58 2.41 2.43 2.07 N/A N/A 0.72 N/A -4.04
2014 4.90 7.20 3.74 3.73 3.27 N/A N/A 4.87 N/A -9.31
2015 5.07 4.31 3.52 3.55 2.98 N/A N/A 5.06 N/A -6.63
2016 3.50 3.42 1.83 1.74 1.87 N/A N/A 1.96 N/A -2.84
2017 3.12 -18.3 4.00 3.78 2.99 N/A N/A 2.75 N/A 4.74
2018 3.36 31.1 4.29 4.29 3.50 N/A N/A 3.83 N/A -4.19
2019 1.86 -0.40 3.60 3.60 3.12 N/A N/A 4.41 N/A -1.82
2020 2.20 2.23 2.88 2.93 2.46 N/A N/A 2.41 N/A 0.45
2021 -0.19 -1.31 1.97 2.11 0.86 N/A N/A 0.65 N/A 1.72
2022 -0.33 -1.74 1.76 1.90 0.66 N/A N/A 0.46 N/A 2.27
2023 -0.41 -1.90 1.58 1.71 0.51 N/A N/A 0.32 N/A 2.37
2024 -0.40 -1.91 1.56 1.70 0.48 N/A N/A 0.30 N/A 2.22
2025 -0.28 1.34 1.40 1.52 0.44 N/A N/A 0.30 N/A 1.95
Key Ratios
Imports/ Exports/ Revenue per Wages/ Employees per
IVA/Revenue Demand Revenue Employee Revenue estab.
(%) (%) (%) ($'000) (%) (units) Average Wage ($)
2011 83.8 N/A N/A 184 18.5 1.59 33,893
2012 84.4 N/A N/A 189 18.3 1.58 34,616
2013 82.0 N/A N/A 194 17.6 1.58 34,157
2014 83.8 N/A N/A 197 17.6 1.57 34,686
2015 83.2 N/A N/A 201 17.6 1.56 35,388
2016 83.2 N/A N/A 204 17.4 1.56 35,419
2017 65.9 N/A N/A 204 17.3 1.55 35,337
2018 83.6 N/A N/A 204 17.4 1.53 35,449
2019 81.7 N/A N/A 201 17.8 1.53 35,891
2020 81.8 N/A N/A 201 17.9 1.52 35,872
2021 80.8 N/A N/A 199 18.0 1.50 35,798
2022 79.7 N/A N/A 197 18.2 1.49 35,727
2023 78.5 N/A N/A 195 18.3 1.47 35,662
2024 77.3 N/A N/A 193 18.4 1.46 35,600
2025 78.6 N/A N/A 192 18.5 1.44 35,548
Additional Resources Federal Home Loan Mortgage Corporation

http://www.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
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
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. The cost of benefits is also included in
this figure.
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INDUSTRY REPORT 53

Real Estate and Rental and Leasing in

Welcome home: Sector growth has been supported by increased construction

John Madigan | April 2020

WWW.IBISWORLD.COM 1-800-330-3772 INFO@IBISWORLD.COM

AT A GLANCE...................................................5 MAJOR COMPANIES......................................24

Key External Drivers.......................................................... 9 KEY STATISTICS.............................................30

About This Industry

Supply Chain Supply Industries Demand Industries

Construction Machinery Manufacturing - Mining

SUV & Light Truck Manufacturing - Retail Trade

Woodworking Machinery Manufacturing - Healthcare and Social Assistance

Home Builders - Finance and Insurance

Apartment & Condominium Construction - Manufacturing

Housing Developers - Consumers

Industrial Building Construction - Accommodation and Food Services

Commercial Building Construction - Public Administration

Major Players United Rentals 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

Similar Industries 52593 - Real Estate Investment Trusts in the US

53111 - Apartment Rental in the US

Operators in this industry act as lessors of buildings used as residences or dwellings.

53212 - Truck Rental in the US

$1.1tr 2.8% -0.3%

47.6% 17.9% 3.3%

Strengths Weaknesses Opportunities Threats

High Product/Service High Revenue Growth Low Outlier Growth

Low Revenue per High Performance Drivers

Industry Structure Level Trend Level Trend

Life Cycle Mature Regulation Level Medium Steady

Revenue Volatility Low Technology Change Medium

Capital Intensity High Barriers to Entry Low Steady

Industry Assistance Low Steady Industry Globalization Low Steady

Concentration Level Low Competition Level Medium Increasing

Key Industry Data

Products & Services

o Rental vacancy rates

o Value of residential construction

o Per capita disposable income

o Yield on 10-year Treasury note

Industry Performance It is important to consider the effect of the global outbreak of

Cash crunch looming

Luxury real estate limits affordable supply

Industry Data Domestic

Slowdown in the Real Estate subsector

Rental and leasing services keep steady

Products & Services Segmentation

Products & Services

Real Estate (NAICS 531)

Rental and Leasing Services (NAICS 532)

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

International Trade Exports in this industry are Low and Steady

Imports in this industry are Low and Steady

Barriers to Entry Checklist

Life Cycle Stage Mature

Technology Change Medium

Regulation & Policy Medium