The vast majority of commercial buildings are yet to fully exploit the potential of intelligent control systems, let alone attempt to integrate multiple business and building systems together into the building Internet of Things (BIoT). That’s according to our latest research report The Internet of Things in Smart Commercial Buildings 2018 to 2022, which identifies a huge and untapped market segment that ripe for solutions to fit its profile.
“BIoT technology penetration for Small and Medium Sized Commercial buildings in particular, is well behind the curve in terms of adoption. This situation is largely a consequence of the business models and economic imperatives that have historically driven the building controls market,” explains the comprehensive report analyzing every aspect of the complex BIoT market.
As you might expect, large commercial buildings will often have dedicated facilities managers as well as dedicated building management budgets. They are, therefore, more likely to invest in building management systems and services while striving to improve building energy performance. Smaller commercial buildings, on the other hand, do not have the budgets available to implement BAS solutions, nor the means to hire dedicated building operations staff.
“Although the cost of building controls solutions is steadily declining thanks to the proliferation and falling cost of sensor technology deployment costs of even the most basic BAS system remain beyond the means of most smaller businesses,” the report highlights.
According to 2016 figures, the average cost to deploy a BAS ranged from $2.50 per square foot to $7.00 per square foot, meaning even for a 50,000 square foot building costs would be between $125,000 and $350,000 for a complete install. BAS systems also often rely on maintenance by experts with experience in calibration, tuning and replacement of sensors and actuators. Costs continue to gradually decline but we are still far off a price point that would open up this potentially huge market.
The 2012 Commercial Buildings Energy Consumption Survey (CBECS) by the Energy Information Administration (EIA) indicated that small and medium sized commercial buildings of 100,000 square feet or less, represent a staggering 98% of commercial buildings in the US. They also hold 65% of the total commercial floorspace, compared to 35% for larger buildings.
“This situation strongly indicates that a potential 98% of the market in the US alone remains largely untapped,” suggests the report. “This market also looks set to grow in importance over times, particularly in the retail sector, where evolving consumer preferences for convenience and accessibility are pushing more “big box” retailers to focus their attentions on smaller-format stores,” it continues.
Leading european grocery retailers such as Tesco, Walmart subsidiary Asda, and Carrefour, have long been shifting their priorities from megastores to smaller format stores, now US retail giants such as Target and Best Buy are following suit. It is not just consumer preference driving this change, smaller outlets offer benefits to the retailer too. Smaller stores tend to have lower capital outlay and running costs per square meter. They also take up less space in urban environments, allowing retailers to capitalize on the potential of large population centers.
Smaller commercial buildings have the potential to be far more energy efficient too. A study by Preservation Green Lab, The New Buildings Institute, the U.S. Department of Energy and the National Renewable Energy, suggested that small structures could cut energy use from 27% to 59% through the deployment of smart building technologies. Consequently we are seeing an increasing trend, in energy policies in many developed countries, to create incentives for greater adoption of BAS by smaller buildings.
“We’ve noticed a growing interest in tracking energy use in buildings smaller than 100,000 square feet in size, due to more stringent energy codes — California’s Title 24 comes to mind — and increasing energy costs. Building owners and operators may want to take advantage of the opportunities provided by building management systems,” explains to Kevin Callahan, product owner and evangelist at Alerton.
What is needed is a set of solutions designed for this huge, untapped market, and as connectivity, sensor and processing costs continue to fall these solutions are beginning to emerge.
“We are seeing a steady increase in the number of targeted offerings focused more on automation and BIOT services for small and medium sized buildings,” suggests the report. “New wirelessly connected monitoring and control solutions for building systems, that are non-invasive, cost-effective and user-friendly are being launched to deliver automation of HVAC, lighting, and plug loads. These solutions are often based on off-the-shelf components such as smart thermostats and their setup requires little or no specialist expertise.”
Currently these kinds of solutions are being focused on certain types of buildings such as retail or restaurants where they can offer energy saving potential at a reasonably attractive price point. One report by CANDI controls, prior to their acquisition, highlighted an IoT based energy management system solution as low as $0.75 per square foot, which converts to only $12,500 for a 50,000 square foot building, which is at least 5x less expensive than traditional BAS based approaches.
Beyond off-the-shelf solutions, other providers are championing a Software-as-a-Service (SaaS) route to capture this market. While the SaaS approach may not provide the same level of enterprise systems integration as a comprehensive BIoT approach, it can allow businesses to benefit from low initial cost and advanced third-party analytics that interpret energy usage data. Thereby providing a cost effective means of reducing energy consumption.
“As small buildings owners are often concerned about both the cost and complexity associated with BAS management, both the traditional building automation industry and new market entrants are attempting to develop more flexible, light-weight, cost effective solutions, along with intuitive analytics tools to compete for a slice of the market,” our in-depth BIoT report The Internet of Things in Smart Commercial Buildings 2018 to 2022 explains.