IoT in commercial buildings market to grow at over 10% to 2028

Stockholm, Sweden

The IoT in Commercial Buildings market is projected to continue along its growth path for some years to come, with factors such as building sustainability and rising energy costs driving the market.

The latest analysis from research company, Memoori, indicates that the BIoT market grew to $53.5 billion in 2022, representing a 13% rise from 2021. Performance was slightly down from the company's forecast of 13.8% for the year due to several factors, including a slower-than-anticipated overall economic recovery, a lack of chipsets, and disrupted supply chains. Memoori forecasts that the BIoT market size will grow at a CAGR of 10.33% to $96.5 billion between 2022 and 2028.

This latest Q2 2023 market report focuses on market sizing, applications and opportunities in the Internet of Things market, as well as a comprehensive evaluation of the drivers and barriers to adoption that are specific to the Commercial Real Estate sector.

Real estate stakeholders are investing not only to improve the sustainability credentials of their assets but also to enhance their performance, resulting in better rent and yields, and it is this factor that the Memoori analysts suggest is driving the BIot market adoption.  As well as the fact that energy costs are expected to continue increasing, and the focus on energy-efficient technologies and sustainable solutions is likely to remain a significant priority for many companies.

Challenges & barriers

Cyber security is a crucial consideration for the growing number of smart buildings, which are increasingly susceptible to cyber attacks. Smart building systems and devices often lack dynamic patching capabilities, and facilities management teams may lack the IT skills required to manage cyber security.

The research shows that the building sector is making progress towards sustainable development and reducing energy consumption. The EIA’s 2018 CBECS consumption and expenditures survey found that commercial buildings consumed 12% less energy per square foot of floorspace in 2018 than in 2012. However, the building sector still falls short of the targets required for sustainable future development, as buildings and building construction contribute to one-third of global energy consumption and almost 40% of CO2 emissions.

To achieve net zero by 2050, building owners and operators must redouble their efforts in new construction and retrofits. The IEA is now calling for an increase in retrofit rates of 2.5% annually by 2030, up from less than 1% today.

The Building Internet of Things market is complex and multifaceted, involving a wide range of players from traditional building automation companies to specialised manufacturers, ICT vendors, property firms, and software vendors offering middleware, platforms, and cloud-based data analytics services. While some companies offer end-to-end BIoT solutions, others specialise in specific areas such as data intelligence, automation, or energy optimisation and analytics.

Rapidly expanding startup landscape

The smart building startup landscape is also expanding rapidly, with a 20% increase in the number of new entrants founded since 2021. Consolidation is expected in the wider platforms space, but there remain considerable market opportunities for cloud-based software offerings for specialist applications or vertical markets.

While the level of fragmentation in the BIoT market can act as a source of confusion and frustration for buyers, leading platform solution providers are beginning to emerge, and the user base seems likely to coalesce around a more limited number of platform providers.

This report aims to provide valuable information to companies so they can improve their strategic planning exercises and look at the potential for developing their business through mergers, acquisitions and alliances.

Project considerations

Within the report Memoori shows the potential strategies that stakeholders in a smart building project might need to consider, for example, their priorities and KPIs, and the project phases they might be involved in under traditional and best practice approaches. Encouraging collaboration, communication, and standardised practices among stakeholders can help bridge the gap and foster innovation.

The integration of Internet of Things technology into building design is a complex process that requires coordination and alignment among all parties involved. A comprehensive and cohesive design approach involving key stakeholders from the earliest stages leads to improved decision-making and better outcomes.


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