Like many emerging technologies, the Internet of Things (IoT) has taken us on a rollercoaster of hype as it promises to fix every problem, and reach every corner of society —as a result, forecasts on IoT proliferation have varied widely over recent decades. However, our latest IoT research now shows an increasingly stable consensus emerging on IoT adoption rates across the sector. It seems the hype around the IoT is finally dissipating, revealing a healthy market with strong growth on the horizon.

Our new study on the IoT in Smart Buildings (BIoT), estimates that the total number of IoT device numbers are set to more than double over the next 5 years, resulting in a total of 34.7 billion devices forecast to be in operation by 2028. While far short of the early hype, that figure still means we will have around four IoT devices for every human on Earth in 2028, putting the sector’s achievement in context.

In 2011, Cisco made the most well-cited prediction of the 2010s, projecting that 50 billion devices to be connected to the internet by 2020. Retrospective analysis now shows the actual number of connected devices in 2020 to be around 12 billion —76% less than Cisco’s estimates— such was the excitement around the IoT. Today, the convergence of growth forecasts creates an unprecedented certainty that should inspire new confidence across the market.

“At Memoori, we have tended towards a slightly more pessimistic view of market growth potential than other analysts, with our annual growth estimates for both device proliferation and revenues generated often between 1-3% lower than other analyst firms,” the new study explains. “We see recent downgrades to overall growth projections as a more accurate reflection of market realities, and therefore now have an increased level of confidence in the accuracy of this consensus around overall IoT market size and growth potential than we have had in previous years.”

One chart, of more than 20 included in the report, shows the total installed base of connected devices between 2020 and 2028. The median estimates of IoT device proliferation in the wider IoT form part of the analysis conducted to guide our estimates for the number of devices being used as part of the BIoT as discussed in the detailed report, which also includes a spreadsheet containing the data from the report and high-resolution presentation charts showing the key findings.

For commercial real estate specifically, our latest forecast sees the number of devices used in commercial smart buildings growing at 13.7% CAGR for the forecast period, rising to an estimated 3.25 billion by 2028. Our analysis indicates that smart commercial buildings currently represent around 11.8% of the total installed base of IoT devices around the world, a proportion which we expect to fall slightly to around 9.4% by 2028.

“Companies are launching new IoT-enabled device offerings to service every conceivable need in a building, including parking, access, security, ventilation, lighting, cyber security, and energy management,” the new report reads. “The proliferation of IoT devices, in combination with data from enterprise systems and 3rd party datasets, continues to offer huge opportunities for improving the performance of buildings. It has become easier and cheaper than ever to generate data on the performance of buildings, and the systems within them, on a more granular level.”

IoT Devices in Commercial Buildings Market

Building on research in recent months, the 2023 edition of the report explores the opportunities that have arisen due to COVID-19, especially for vendors. Overall, the pandemic has served to strengthen the use case for IoT in smart buildings despite also causing delays in the deployment of new devices through manufacturing shutdowns, supply chain disruptions, and site access restrictions in the early years of the crisis. Since then, pent-up demand and supply chain pressures have eased, leading to an estimated growth of around 14.5% per annum in 2021 and 2022.

Offices remain the dominant market for the BIoT, albeit with a moderate downgrade to our growth projections for that sector. The retail sector comes second in terms of number of installs, but healthcare, hospitality and almost all verticals investigated in the report show strong growth of at least 12% over the forecast period, suggesting a broader and more stable market moving forwards.

Security remains the leading application in the BIoT space, but rising sustainability regulations and corporate ESG trends are driving more and more businesses to increase their HVAC and energy management spending to reduce their energy consumption. The fastest growing BIoT tech covered by the report, however, are sensory applications related to occupancy and space utilization.

Geographically, Asia Pacific is becoming increasingly dominant in terms of the total IoT device installs, and also catching up somewhat in terms of number of devices per head and enterprise IoT spending.  The installed base of commercial building IoT devices in North America and Europe is relatively similar, we expect the total number of devices installed in these regions will grow close to the same rate for the forecast period.

“Memoori estimates the number of connected IoT devices installed in commercial smart buildings was over 1.5 billion in 2022. We see a greater proportion of companies are now moving beyond the conceptualization and planning phases into the adoption phase for their IoT deployments. Numerous surveys also indicate a notable rise in the average number of IoT devices being deployed per project, with many device rollouts now including thousands or even tens of thousands of devices.”

A consensus on IoT proliferation in the coming years now sets the stage for a more mature and realistic smart buildings market to start growing into its potential one device at a time.