The global smart building market is expected to reach $121.6 billion in 2026

According to a report released by market research firm MarketsandMarkets, the global smart building market is expected to grow from US$72.6 billion in 2021 to US$121.6 billion in 2026, with a compound annual growth rate (CAGR) of 10.9% during the forecast period. Various factors such as increasing demand for energy-efficient systems, rising adoption of IoT-enabled BMS, and increasing industry standards and regulations are expected to drive the adoption of smart building solutions and services globally.

The global smart building market is expected to reach $121.6 billion in 2026

IoT is having a significant impact on the commercial real estate (CRE) industry as the rising adoption of IoT-enabled BMSs leads to increased building operational efficiencies, improved tenant relationships, and new revenue-generating opportunities. Install and use an IoT-enabled BMS to improve building performance efficiency and use sensor-generated data to enhance building user experience.

In addition, a single infrastructure can be leveraged to run all building management solutions with minimal or no manual intervention. An IoT-enabled BMS can be used for a variety of purposes, including reducing energy usage, repairing and maintaining building systems, and reducing building management costs. Owners use data collected from various sensors, including indoor air quality and space utilization, to adjust air conditioning and lighting systems at the building level in real time, reducing energy costs and optimizing the interior environment for intended purposes.

IoT technology offers owners the opportunity to have direct dialogue and build relationships with building users and their tenants. Sensors in malls can help landlords connect directly to various customers and offer their services, thereby building relationships with customers and enhancing tenant engagement. Hence, IoT-enabled BMS is expected to drive the growth of the smart buildings market.

According to G6World’s forecast, IoT will save close to 1.8PWh of electricity and an additional 3.5PWh of hydrocarbon usage, resulting in a total of 5.3PWh of energy savings by 2030.

Blocking factor: Lack of cooperation among standards bodies

IoT and existing smart building technologies will require strong collaboration between standards bodies, business, government and other stakeholders to work together. This collaboration in building smart cities is critical to realizing the fullest potential of these technologies. Various building managements such as property and tenant management and facilities management have their own requirements and operating systems. These systems are not necessarily designed to integrate with other systems, making it difficult to obtain information from building systems.

Opportunity: Rising in the smart city trend

Smart buildings play an important role in smart cities; however, smart buildings and smart cities are developed independently of each other. Buildings with sensor networks can monitor power and water usage in real time, track sustainability performance, and interact with other smart city parts. Governments across the globe are investing heavily in smart city projects that are helping to drive the adoption of smart buildings across regions. Hence, smart city initiatives launched by various governments are expected to drive the growth of the smart buildings market.

For example, in November 2020, Transport for Greater Manchester (TfGM) and VivacityLabs announced the launch of AI-controlled smart traffic intersections to improve safety and reduce urban congestion during the COVID-19 pandemic.

Challenge: Increased privacy and security concerns due to IoT-enabled devices

Many buildings are now integrating smart technologies into their design and operations. The adoption of technologies such as IoT and sensors offers great convenience to both tenants and landlords. However, the adoption of these technologies poses a security threat to buildings. Most IoT devices and sensors have weak security, use non-standard communication protocols, and are operated by unpatched legacy software, which can expose smart buildings to various vulnerabilities. Hackers always scan their targets for technical weaknesses in order to infiltrate a particular network and steal valuable data or control facilities.

For example, cybercriminals infiltrate commercial activity statements to stop passenger elevators from working, obtain security information from closed-circuit television (CCTV), and interrupt power to entire buildings or parts of them. A well-planned cyber attack involving readily available IoT devices and sensors in any smart building could expose sensitive data stores, servers, and employee and customer information that could be used for malicious purposes. Hence, increasing privacy and security concerns owing to the adoption of IoT-enabled devices are restraining the growth of the smart buildings market.

Services are expected to account for a higher CAGR during the forecast period

The smart buildings market solution providers offer various services. Smart building solutions are categorized into consulting, implementation, support and maintenance. The services segment is expected to witness a promising future as the smart buildings market continues to evolve, requiring proper pre- and post-consulting, deployment, and overall management of solutions. Smart building service providers help implement smart automation and technology to efficiently operate and maintain buildings in a cost-effective manner. The benefits of adopting smart building services include the need to implement optimal solutions that improve building performance, reduce energy and lower operating costs.

North America will hold the largest market share during the forecast period

According to statistics, North America accounted for the highest market share of the smart building market in 2021. North America is estimated to hold the largest share of the overall smart buildings market during the forecast period. The US holds a large market share in the region. North America leads the global market in terms of the usage of smart building-based solutions and services. For example, U.S. organizations are investing heavily in smart building measures, such as building controls and building systems integration, to take advantage of energy efficiency and energy storage and provide smarter, safer, and more sustainable buildings. At the same time, the Government of Canada is taking steps to support Canada’s commitment to protecting the environment and its resources by improving the energy efficiency of federal buildings and reducing greenhouse gas emissions,

major market participants

Smart buildings market vendors have implemented various types of growth strategies such as new product launches, product upgrades, partnerships and agreements, business expansions, and mergers and acquisitions to strengthen their offerings in the market. Major suppliers in the global market include Cisco, IBM, Honeywell, Siemens, Johnson Controls, Huawei, Intel, PTC, ABB, Hitachi, Schneider Electric, Legrand, Bosch, etc.

Recent Market Dynamics

In January 2022, Johnson Controls completed the acquisition of FogHorn, a leading developer of artificial intelligence software at the edge for industrial and commercial Internet of Things (IoT) solutions. Through the pervasive integration of Foghorn’s world-class Edge AI across Johnson Controls’ OpenBlue solutions portfolio, it accelerates the realization of the vision of intelligent, autonomous buildings that can continuously learn, adapt and automatically respond to the environment and people’s needs.

In September 2021, Legrand presents the Living Now design, characterized by extreme purity of design and geometric precision, suitable for all homes. It can be installed to show its innovative potential for connected smart systems.

In December 2020, Hitachi, Ltd. announced the development of an IoT platform to bring buildings the high-added value required for the new normal, including improving building management efficiency and building user comfort.

In June 2020, Siemens and Composite Energy Services (CES) signed a new value-added partnership for Siemens Building Technologies to offer Siemens BAS fields to customers of CES. The partnership will allow CES to offer advanced options related to new construction or retrofit of existing building control systems.