Smart buildings are entering a transformative phase, driven by sustainability goals, technological innovation and evolving user expectations. According to ABI Research’s latest whitepaper, the sector is undergoing a strategic overhaul across key areas like retrofitting, energy efficiency, data-driven operations and smart campus development. These shifts are accelerating market growth and creating new opportunities for technology vendors, building owners and service providers alike.
Shifting priorities in a post-pandemic landscape
The COVID-19 pandemic catalysed long-term changes in urban and workplace dynamics. Hybrid work, lower office occupancy and a push for healthier indoor environments have made mixed-use developments more attractive. ABI Research notes that these will soon represent 50 to 70% of new residential and commercial buildings. While North America and Europe are focused on retrofitting, growth in new smart infrastructure is being driven by Asia-Pacific.
This market evolution is underpinned by critical priorities: reducing energy consumption, meeting environmental regulations, enhancing occupant well-being, and leveraging digital tools for operational efficiency.
These are some of the technology trends reshaping the market:
Cybersecurity at the core
With the rise of connected systems, smart building design is increasingly incorporating cybersecurity at the architectural level. IT experts and system integrators are collaborating earlier in the design process to mitigate risks.
Interoperability and system integration
Seamless communication between building management systems (BMS), IT infrastructure and facilities management is crucial. Eliminating data silos enables better decision making and multi-vendor system setups.
Strategic partnerships and market expansion
Major players like Siemens, Enlighted, Bosch, and Johnson Controls are expanding through acquisitions and collaborations to enter new markets. These partnerships are particularly impactful in verticals such as healthcare, education and hospitality.
Retrofits and decarbonisation
By 2050, around 80% of the global building stock will already be built, making retrofitting a key priority. Retrofitting not only boosts energy efficiency but also establishes data baselines for better resource and emissions tracking.
Smart monitoring and digital twins
Real-time monitoring tools, dashboards and digital twins are becoming essential for predictive maintenance and extending equipment lifespan, especially amid shortages of skilled facility managers.
Growth in smart residential solutions
Smart home adoption is rising, particularly in multi-dwelling units, aided by EU subsidies and mandates phasing out inefficient lighting like CFLs. OEMs are partnering with utilities and builders to deliver integrated residential solutions.
ABI Research identifies three core technologies leading the smart building transition:
Commercial HVAC systems
Valued at $225,6 billion in 2023, commercial HVAC systems are shifting from traditional hardware to smart, connected solutions that integrate AI for energy optimisation. Variable refrigerant flow (VRF) systems are gaining popularity for their flexibility and efficiency. Total HVAC revenue for data centres alone is projected to grow from $7,7 billion in 2024 to $16 billion by 2030.
Networked lighting control
Smart luminaire installations are expected to triple, from over 200 million in 2024 to nearly 600 million by 2030. Growth is being driven by regulatory pressure and efficiency targets. Leaders like Signify and Acuity Brands are integrating sensors to optimise lighting according to occupancy and time of day.
Safety and security systems
Fire detection, motion sensing and perimeter security systems will see strong growth, with the installed base projected to reach 7,3 billion units by 2030. Smoke and fire detectors remain dominant, while emerging niches include indoor air quality and leak detection.
To meet modern expectations, the industry is evolving in three key ways:
Forging strategic alliances: Major players are acquiring niche firms and entering cross-sector collaborations to broaden offerings. For example, Siemens’ acquisition of Danfoss Fire Safety strengthens its data centre capabilities. These alliances enhance product integration and accelerate market access.
Revitalising urban infrastructure
Many cities are tackling high vacancy rates by converting underutilised office buildings into mixed-use spaces. These projects demonstrate the growing importance of adaptive reuse in urban planning.
Modernising educational facilities
Only 10% of the world’s 11 million educational buildings use smart technologies. Universities are now embracing smart campus models that combine modular platforms, integrated energy systems and performance-based upgrades. These investments, often supported by government incentives, help institutions reduce carbon emissions while improving operational resilience.
Best practices for vendors
ABI Research outlines key recommendations for technology providers looking to gain competitive advantage in this rapidly changing landscape:
• Invest in cybersecurity and system interoperability.
• Prove value through measurable results in energy, water or cost savings.
• Collaborate with ecosystem partners for broader market access.
• Embrace renewable energy tech and predictive maintenance.
• Do not let data silos persist as this undermines integrated operations.
• Do not skip user education on the benefits of new systems.
• Do not ignore real-time data; valuable insights often go unused.
• Do not delay compliance with emerging environmental regulations.
• Do not push new tech without clearly demonstrating ROI.
Conclusion
Smart buildings are no longer niche, they’re central to modern urban development, climate strategies and digital transformation. The coming years will be defined by how well stakeholders can retrofit legacy buildings, integrate intelligent systems and collaborate across disciplines. With the right approach, the smart building market promises to deliver not just energy savings, but healthier, safer and more responsive spaces for the people who use them.
To download the whitepaper visit www.tinyurl.com/mr37p7ew
For more information contact ABI Research,
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