Global Smart Office Market is witnessing astonishing prospects: Expected to Reach USD 73,109.67millionin 2027

Published | 26 July 2021

A study recently conducted by the strategic consulting and market research firm, BlueWeave Consulting, revealed that the global smart office market reached USD 31,029.79million in 2020 and is further projected to reach USD 73,109.67million by 2027, growing at a CAGR of 11.42% during 2021-2027 (forecast period). The global smart office market growth is positively impacted by the rising potential of 5G technologies penetration rates globally. It is accompanied by the rising adoption of IoT technologies in augmenting the connectivity of an employee with the organization. The rising government initiatives for technology infrastructure and enhancement of work culture in the developed countries is further boosting the growth of the global smart office market.

Advancements of IoT in smart office offeringsis benefiting the growth of the global smart office market

The advent of IoT is one of the major factors contributing to the rising potential growth of the global smart office market. The smart office includes smart solutions like lighting technologies, smart security and surveillance systems and others. The rising IoT industry and connectivity devices has driven various industries and offers advantages such as better time management, connectivity with employees, office functions, and analyzing the work productivity of their employees. According to the 5G Readiness index estimate of the European Commission; In 2021, Finland received the highest rating for 5G network readiness in the world. Since 5G plays a pivotal role in enhancing the capabilities of the IoT technology, the growth of the 5G network is allied to the growth of IoT. Since the countries are working on the deployment of 5G network infrastructure; It is thus driving the growth of the global smart office market.

Rise in demand for sensor networks and smart office solutions for energy efficiencyis bolstering the growth of global smart office market

Many organizations have started incorporating smart offices solutions to reduce their operational costs and optimize energy usage. Smart office solutions have proven pivotal in optimizing the energy usage of an organization and limit the wastage that was earlier consumed. The energies leveraged in an organization have inflated the operational costs, posing a threat to smaller organizations in terms of operating costs. Initially, the companies are reluctant to opt for smarter solutions for improving energy efficiency by leveraging lightning sensors and networks. However, companies have started laying due emphasis on smart lighting hardware solutions for automatically adjusting the consumption levels according to the requirements, thereby optimizing the energy usage, which is augmenting the growth of the global smart office market. Additionally, these smart office solutions have also improved the diagnosis of the organizations in identifying the problems related to their energy efficiency, which helps in reducing operational costs.

Major growth in demand coming from software segment in the global smart office market

Based on components, the global smart office market can be segmented into Hardware, Software, Services. The software sub-segment accounted for the largest share in the market in 2020. In comparison to this, the hardware sub-segment is expected to witness the fastest CAGR in the upcoming years. Under the software solutions, the companies utilize the latest technologies like cloud computing for scaling their businesses and solving problems related to worker productivity. Some of the most commonly used smart office software includes payroll software, time and attendance software, CRM software, location and indoor positioning software, proximity software, employee communications software, and others. The software solutions have helped various organizations to tap into areas that have proven pivotal in improving their employee productivity and smoothen the working of an organization. These factors have contributed to the growth of the global smart office market.

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Retrofit office type occupies the largest market share in the global smart office market

Based on office type, the global smart office market is bisected into Retro Fit and New Construction Offices. The retrofit offices accounted for the larger share in the global smart office market in 2020. In contrast to this, the new construction offices segment is projected to register the fastest CAGR over the upcoming years. Retrofit offices refer to those offices that have already been manufactured but got renovated for use. Many of the developed, as well as the developing countries, have started adopting smart office solutions. However, the companies are still sceptical of incorporating these solutions in a new construction office, already equipped with the facilities to adopt such technologies.

The primary factor being the rising commercial space prices accompanied by a shortage of availability of commercial spaces. It is thus contributing to the unwanted construction costs. According to an estimate from Commercial Buildings Energy Consumption Survey (CBECS) released in December 2020, the U.S. recorded a 6% jump in sales of commercial spaces and registered 5.8 million sales in 2018. It indicates that the companies find the retrofit set-up to be an optimal choice over new construction offices. Additionally, the sluggish 5G network growth in the developing countries have wanted companies to stick to the retrofit method. It is thus positively impacting the growth of the retrofit offices in the global smart office market.

Global Smart OfficeMarket: Regional Insights

Based on region, the global smart office market is bifurcated into North America, Europe, the Asia-Pacific, and the Rest of the World. The North American region acquired the biggest share in the global smart office market. The factors attributable to the growth include the growing penetration and adoption of 5G network technology, rising incorporation rates of IoT, and the presence of major players like Cisco Systems Inc. and United Technologies Corp. According to one statistic released by the Center for Strategic and International Studies, the North American continent has more than 2000 cities ready for the 5G network. The area captures an estimated population of 200 million people. As a result, the rising penetration rates of the 5G network induces companies to opt for the technology that enhances the connectivity between the employees and the organization. Additionally, the companies could find it cheaper to incorporate smart office solutions in the region than in other areas. All of these factors are positively impacting the global smart office market.

Global Smart Office Market- COVID-19 Impact Analysis

After the declaration of the WHO for COVID-19, the world had to undergo measures for social distancing. The supply chain for the 5G technology chipsets got disrupted, and the offices had to remain shut for a long period.  Various measures were taken to curb the spread of the virus. However, the widespread growth of coronavirus led to a decline in the production of chipsets responsible for the functioning of smart office solution devices. In contrast to this, the software smart office solutions also registered a major hit. As the vaccine rollout is surging the countries are looking forward to heading to their offices with relaxations in the social distancing norms. Additionally, the software upgrades in the recent past may help the companies to analyze the social distancing, and the operations of the employee to restrict the risk of spread of the virus may improve the growth of the global smart office solutions market. The growing emphasis on climate change is encouraging companies to opt for energy-efficient solutions. It is expected to raise the growth prospects of the market in the future.

The leading playersin theglobal smart officemarket include Some of the key players in the global smart office market include Lutron Electronics Co., Inc.,ABB Ltd., Crestron Electronics, Inc., Cisco Systems Inc., Schneider Electric SE, Siemens AG, Johnson Controls International Plc, Honeywell International Inc., Signify Holding, ASSA ABLOY AB, and others prominent players. The presence of some technology giants in the global smart office marketgreatly diminishes the opportunities for new entrants to enter the market. Additionally, the global smart office market requires high initial capital investments, which is not feasible for some small players. The smaller players have found it difficult to establish their presenceas a result of this consolidation.

In February 2021, ABB Smart Buildings announced its support in the construction of the NDB (New Development Bank). The bank is headquartered in Shanghai, China. The company is looking forward to installing an integrated and intelligent building control system for managing indoor lighting, windows and electric curtains, which are expected to be equipped with over 8,000 control circuits. Such energy-efficient solutions are expected to increase the bank's savings by over 15% in comparison to traditional systems.

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