The rental economy: Opportunity for alpha through circularity, growth and sustainability

Three important points to consider when investing in the rental economy:

1. The rental economy aims to promote the repeated and cooperative use of goods. This can not only promote efficiency, but also the sustainable use of resources.
2. With its focus on reuse, the rental economy is part of the circular economy. The transition to circular processes offers opportunities for higher returns compared to the market.
3. The US government's policy is not detrimental to the sustainable concept of the rental economy – on the contrary.
   

"From rags to riches": The English saying literally describes the company history of Cintas – a U.S. company that, like few others, can stand for the American Dream.

Because with "rags," with rags in other words, everything began at Cintas in 1929. The small company collected dirty cloth rags, cleaned them, and resold them for use in factories. Nearly 100 years later, this has become a billion-dollar business; in 2024, the company generated revenues of USD 9.6 billion and served over 1 million customers beyond the U.S., extending to Canada and Latin America. The lion's share of the business still revolves around textiles. However, it now involves all kinds of workwear, from uniforms to specialized equipment for fire protection. The DNA of 1929 remains intact: Cintas rents out workwear for a fee, takes back dirty and damaged items, and thus relieves customers of this burden.

The Rental Economy: an established business model that can offer structural growth and above-average returns

The company can therefore be considered a pioneer of the so-called Rental Economy (see box below): an economic model that aims at the repeated and cooperative use of goods, thereby promoting a sustainable and efficient use of resources.

The Rental Economy, as a subfield of the sustainable investment theme of the circular economy, may therefore offer, in our opinion, opportunities for excess returns compared to the broader market – the much-vaunted "alpha."

And this, fittingly, especially in the U.S., where the government of U.S. President Donald Trump at first glance does not seem to have much interest in the topic of sustainability. However, as we have already shown, the Trump administration's focus on investments and jobs in the U.S. as well as on critical raw materials can also support the Rental Economy.

In our view, the Rental Economy benefits from several drivers – these act both structurally and cyclically on the topic and can promote both growth and sustainability.

1. Structural drivers of the Rental Economy

As we have already shown, the economic and sustainable advantages of the Rental Economy go hand in hand: Sharing or renting equipment, services, and resources saves time and money for participants. Waste and material wear can be reduced, thereby supporting sustainability; innovative processes also lead to more efficient use of resources, labor, and energy.

Such advantages are well known from outsourcing, where the focus is primarily on cost and efficiency gains. This trend has structurally shaped the global economy and, in our opinion, is likely to continue and persist in the long term. A specific indication of this can be found in a survey conducted by U.S. broker Wells Fargo Securities in 2023 on Cintas' niche market in the U.S.: the rental of uniforms and workwear. More than half of the U.S. companies surveyed indicated that they could outsource procurement to a third party within twelve months (see chart below).

Rental Economy: Sought-after outsourcing of workwear (percentages)

A similar development can be seen in heavy equipment and machinery for construction – a resource-intensive sector where the principles of the Rental Economy are well advanced. Here, the global market leader United Rentals observed in a presentation for the second quarter of 2025 that the U.S. market for rented construction and industrial equipment saw an average annual investment growth of 5.2% between 1997 and 2022. In 2023, United Rentals held a 16% share of this market.

In the rental of construction equipment, the trend toward increased investments in real estate and infrastructure overlaps with the trend toward the sharing economy: As United Rentals further demonstrated, market growth for the rental of construction machinery has significantly outpaced U.S. construction spending (excluding residential real estate) during this period (see chart below). The company could also benefit from the massive datacenter build for many years to come.

Rental Economy: Market for renting construction machinery grows faster than the construction industry (growth in %)

In particular, in the U.S., the trend toward increased infrastructure spending could gain momentum – and thus become a cyclical driver of the sharing economy.

2. Cyclical drivers of the Rental Economy

In the United States, the Trump administration plans massive investments in infrastructure and the "reindustrialization" of the domestic economy with its "America First" policy. In our opinion, both directions could benefit equipment rental:

• Trend toward reindustrialization: Consulting firm Capgemini for instance predicts in a study of 2025 that "onshore" activities of companies in the U.S. (and also in Europe) could increase by 48% over the next three years. This "reshoring" is further fueled by additional measures from the U.S. government: The massively increased import tariffs, according to Capgemini, lead nearly two out of three U.S. managers to consider bringing activities back home. The new tax law "One Big Beautiful Bill" (OBBB) further rewards investments in the domestic market with tax rebates: U.S. asset manager Plante Moran, for example, estimated in August 2025 tax relief for 2026 and 2027 at up to USD 600 billion annually.
• Trend toward infrastructure investments: A clear objective of the U.S. government is also to massively increase investments in public infrastructure, such as transportation or power networks; policies also favor spending on expanding the semiconductor industry and data centers in the race for supremacy in artificial intelligence (AI). All of this could lead to massive demand in the construction industry, further driven by the prospect of generally declining interest rates in the United States.
• Trend toward labor shortages: In our opinion, the U.S.'s strict immigration policies and demographics could lead to a shortage of labor. Efficient processes and the outsourcing of tasks and equipment to third parties will become all the more important.

In our view, U.S. policies could therefore bring the advantages of the Rental Economy even more into focus. This offers interesting starting points for investors interested in the "reuse" principle as part of the four Rs and the sustainable investment theme of the circular economy. However, since this is still a relatively young and not yet widely established field among investors, in-depth market knowledge can be useful. This is to identify companies that have positioned themselves over the years to benefit from the topic – and that, in addition to growth prospects, may also provide stable capital returns.

Investment theme «Circular Economy»: Insights