Smart Building Management Business Ballooning to $2.4 Billion by 2016

Think all the talk about investing in so-called "smart buildings" is just greenwash? Think again. The smart building business is set to grow to $2.4 billion each year by 2016--compared to just $900 million in 2010. According to a recent report from Pike Research, the market will grow as new investors, including IT vendors, building management system vendors, and energy efficiency companies become involved.

Why is this happening now? One word: profits. It's all due to "the strong return on investment (ROI) that such deployments can bring to building owners and managers,” explained research analyst Jevan Fox in a statement. "Most of the industry focus is on larger buildings today, but over the next few years, vendors who can provide an attractive ROI to buildings smaller than 200,000 square feet will reap large benefits."

Smart buildings are a worthwhile investment for building owners because they will see returns much more quickly than a homeowner who installs, say, smart thermostats and lighting systems. Products that building managers might invest in include lighting optimization software, energy analytics systems (for smart meter-equipped buildings), and energy waste detection software.

The prototypical smart building project comes from IBM, which is turning its 280,000 square foot headquarters in Armonk, New York into a pilot for the company's Smart Building initiative. Features of the system include a building management system that keeps track of 7,600 points of data about system performance (i.e. hot water, HVAC, security), automatically generated energy and operational alerts, and security badge scans that keep track of how many people are in a building at any given time (to optimize lighting and heating).

Companies like IBM and Johnson Controls that focus on smart building projects can expect a windfall in the coming years as building managers realize that these high-tech, ultra-complex systems actually pay off.