Thanks to the proliferation of the Internet of Things, artificial intelligence, automation and consumer-facing companies including Google and Amazon, the smart home market is taking off, and is expected to grow at an annual clip of 25.3% between now and 2026.
That is boosting a similar market for smart commercial buildings as those technologies, standards and ideas begin to bleed into the enterprise and provide companies with the same level of connectivity, automation, convenience, and digital tools as their residential counterparts.
According to Mordor Intelligence, the smart home market was valued at $79.13 billion in 2020 and is expected to reach nearly $314 billion by 2026, a compound annual growth rate (CAGR) of 25.3%.
For smart buildings, that opportunity is also growing. Per Mordor Intelligence, the smart building market was valued at $82.55 billion in 2020 and is expected to reach $229.1 billion by 2026, good for a CAGR of more than 18.5%.
The pro AV industry and system integrators are a growing part of those markets, and due to the proliferation of the Internet of Things and a rapid acceleration towards a digital transformation due to COVID-19, the smart building opportunity has never been larger.
The smart building opportunity
During a recent RISE Spotlight event on smart buildings, AVIXA senior director of market intelligence Sean Wargo said AV system integrators are well equipped to seize some of that potential growth since integrators are already providing similar services to smart building markets.
According to Wargo, these are the largest smart building markets, their annual revenue and their CAGR:
- Corporate: $52.0 billion, 5.9%
- Media and entertainment: $37.9 billion, 7.8%
- Venues and events: $28.0 billion, 7.6%
- Education: $22.4 billion, 4.7%
- Retail: $19.7 billion, 6.7%
- Government and military: $16.1 billion, 7.3%
- Residential: $12.4 billion, 2.0%
- Transportation: $11.7 billion, 9.5%
- Hospitality: $8.7 billion, 5.9%
- Energy and utility: $7.3 billion, 10.4%
- Healthcare: $5.4 billion, 5.4$
- Cinema: $3.1 billion, 5.3%
“As you look across the broad array of markets that pro AV serves – from corporate, media, entertainment, residential, transportation – it’s really everywhere,” Wargo said.
Integrators are also already well-versed in the same kind of technology solutions involved in smart buildings.
Those solution areas, their annual revenue, and CAGR are:
- Conferencing and collaboration: $38 billion, 3.3%
- Learning: $33 billion, 3%
- Digital Signage: $31 billion, 7.5%
- Content distribution and media: $29 billion, 5.5%
- Security, surveillance and safety: $24.6 billion, 11.4%
- Live events: $22.7 billion, 7.9%
- Performance and entertainment: $22.3 billion, 5.3%
- Command and control: $13.6 billion, 6.1%
- Simulation and visualization: $12.8 billion, 7.5%
“So if you took a little bit across these, you might start to realize how large an opportunity this is,” Wargo says.
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The call for connectivity & intelligence accelerates
The pandemic forced employees around the world into their homes, and now as the pandemic is beginning to subside, organizations are transitioning to a hybrid work environment in which some employees will return to the office and some will remain at home.
Now, building developers and designers need to future-proof commercial spaces for those kinds of uses, Angelica Krystal Donati, CEO of development firm Donati Immobiliare Group, said during a roundtable discussion during the RISE event.
“I do feel strongly that (the pandemic) was the push we needed to realize that a lot more flexibility can be introduced and can become structural to our way of working,” Donati said.
Just like workers need remote access to company systems and networks, smart buildings offer facility managers remote access to key building systems.
“One aspect we can’t ignore is the efficient remote management of buildings, which is only feasible if you have interconnected sensors,” Donati said.
This technology not only tells the customer if its systems are running property, but also how many people are in the building at any given moment, when they come in, when they leave and where they are.
“The whole point of smart buildings is to increase connectivity, but also to increase the data that the building provides so the building can be run more efficiently,” Donati said.
What needs to happen to penetrate the smart building market
Due to a variety of cultural and organizational factors, marrying intelligent technology and building infrastructure has historically been difficult, especially as technology more marketed to the consumer or smart home buyer makes its way into commercial spaces.
Corporate markets may not be ready for some of that technology, but the larger issues are cultural and organizational, said Julian Phillips, senior vice president of global workplace solutions at AVI-SPL.
Speaking on a panel during the virtual RISE event, Phillips said building architects, engineers and designers are usually not on the same page as technology providers.
“Those that design buildings and interior design have a very different design principle and set of protocols to those that design and implement technology,” Phillips said.
To realize the full potential of the smart building market, those two disciplines need to integrate with one another to solve some of these issues.
Another big hurdle to entering the smart building market is integrating the myriad building solutions currently on the market. Solutions like HVAC, lighting, access control and more can all come with their own application, forcing facility managers and employees to use many different smartphone apps to control the systems.
“And that’s, of course, insane,” said Erik Ubels, a smart building expert and owner and senior consultant of MetisReal.
The solution would be one common app – at least for the majority of the building’s systems – Ubels said.
That’s one of the main reasons customers can balk at a smart building project, especially since there isn’t really one solution provider that serves the general smart building market, according to Ubels.
“We definitely have to do better with the integration of all those different sensors with (fewer) gateways and more common technology .. to make this go forward,” Ubels said.
