Focus of energy efficiency retrofits shifts to smaller commercial buildings

With many large commercial buildings currently engaged in energy efficient retrofits, the focus is expected to shift to smaller facilities over the next few years.

Small and medium commercial buildings (SMCBs) represent the majority of commercial premises, making this a sector with enormous potential. According to a new analysis by Navigant Research, the global market for SMCB energy efficiency retrofits is set to grow from $24.1bn (£18.6bn) in 2016 to $38.6bn (£30bn) in 2025.

“Energy efficiency retrofits can improve building performance, reduce consumption and save operating costs,” explained Christina Jung, research associate with Navigant Research. “Tailored solutions and business models that take into consideration the fact that SMCB market is diverse and large, consisting of buildings of all ages, sectors, and management regimes, will be able to capture the great potential SMCB market holds.”

SMCBs range in size from less than 10,000 square feet up to 100,000 square feet. Navigant notes that, until now, these have not seen the same penetration of energy efficiency technologies as larger facilities because of the lower expenditures on energy management, lack of customer education, perceived high risk of SMCB retrofit financing, and split incentives between the building owner and tenant.

Most service and technology providers have already focused their marketing and sales on the larger buildings, due to the ability to generate more revenue and benefit from a shorter return on investment (ROI) period, and SMCBs are the next step.

Approximately two-thirds of all buildings floor space around the world is occupied by SMCBs and more than 90% of commercial buildings are small or medium, according to the report.

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