What the Herc-H&E Merger Means for Property Owners

Herc Rentals, the third largest equipment rental company globally, is set to acquire H&E Equipment, the fifth-largest, in a significant mid-2025 merger valued at $3.83 billion. This acquisition will create a new combined entity with an established $5.2 billion in annual revenue, positioning Herc as a dominant force in the North American rental landscape.

While this transaction represents strategic growth for Herc and a reshuffling of competitive dynamics within the industry, it also carries significant implications for commercial property owners. For landlords leasing space to either of these companies, this consolidation may bring both challenges and new opportunities.

Merger Overview and Real Estate Implications

Herc’s acquisition of H&E is about more than market share, it’s about operational scale and efficiency. Herc operates 453 locations, while H&E has 160. However, the merged company is not expected to maintain all 613 branches. In pursuit of $125 million in projected cost savings, Herc plans to consolidate operations, which will likely lead to location closures in areas where the two companies overlap.

• Consolidation Risks: Overlapping locations, especially in the South, Southeast, and Northeast, may face lease terminations as Herc streamlines its footprint.
• Stronger Tenant Credit: The merger company’s financial strength enhances property values for NNN leases, with a projected $5.2 billion revenue.

What This Means for Owners

Lease termination risk is a key concern, particularly for properties in overlapping markets. Property owners may face consolidation-related vacancies, especially significant given the industrial vacancy rate stood at 6.8% as of Q3 2024.

However, there is also expansion potential for retained locations, as these sites could see renewed investment, longer lease terms, or expanded footprints to accommodate Herc’s integration of a larger fleet and specialty equipment. Understanding these dynamics will be critical for owners aiming to mitigate risks and capitalize on emerging opportunities.

Strategic Next Steps

Engage in Lease Renegotiation

If your lease is nearing expiration—or if your location plays a strategic role in the company’s regional operations, this is a good time to approach Herc’s real estate team. Proposing lease extensions, or other favorable lease terms can help secure long-term commitments and increase your property’s value.

Market Expansion Potential

Properties with adjacent or surplus land could benefit from Herc’s expanded needs post-merger. As the company consolidates fleets and services, it may seek to expand certain retained locations. Property owners with room to grow should proactively engage with the company to discuss buildouts or operational expansions.

Evaluate a Potential Sale

With Herc poised to emerge as an even larger tenant, investor interest in these leases may rise— especially among those targeting stable, long-term NNN assets. If you’ve been considering a sale, this could be an opportune time to explore market interest while tenant visibility and perceived stability are high. (Contact a specialized Matthews™ agent if you are interested in seeing a complimentary pricing analysis specific to your assets.)

Conclusion

The Herc-H&E merger presents both risks and opportunities for property owners. By taking proactive steps— such as evaluating potential consolidation, engaging with stakeholders, exploring alternative tenants, and staying informed on market trends, can position themselves advantageously. Whether it leads to securing a stronger tenant, supporting expansion, or executing a strategic sale, adapting early is key to navigating this evolving landscape with confidence and success.