A fest of light controls for small commercial buildings
Smart Building Insight - SPECIAL ISSUE - December 2025 from Aamidor Consulting
Happy holidays to all! As promised here’s our deeper dive into the small commercial buildings light controls opportunity (sorry for the mouthful).
Before we jump in: There’s still one more standard issue next week, and then our second In Case You Missed It (ICYMI) issue going out in early January, before we start up our standard issues in the new year.
Small commercial building controls - our take
A few months ago, we shared a few teasers as the start of our analysis of the controls opportunity in small commercial buildings (also known as light controls). You can find the first piece here, which argued that the opportunity for controls in small commercial buildings isn’t as significant as the top line numbers would indicate. For one, many small commercial buildings are 5,000 sq ft or less, comparable to a very large home (which may just require a dumb and not-connected thermostat). Additionally, a significant number of commercial buildings - about 17 percent - are not heated (and even more are not cooled), which also removes the need to deploy controls. Moreover, the demand for commercial controls will be dependent on the building’s use. That article focused on some buildings that are not good fits for controls, but this article focuses on those buildings that are.
And, as a follow up, we started to highlight some of the verticals that are interesting opportunities for light controls, such as retail sites, restaurants, and grocery stores. We’ll get into more details here.
In this analysis, we will:
More deeply analyze the market opportunity for small commercial controls
Highlight that some of these building types are very interesting targets for small commercial controls, and estimate the number of sites in the US that are viable targets
Estimate current vendor penetration in the market and vendor fragmentation
Consider the value proposition for small commercial controls
PART 1: The market opportunity
In the first teaser post, we provided some details on the building types where controls likely aren’t needed in small commercial buildings. But, where are they needed? The key verticals are listed below (and also analyzed in some depth in our second teaser):
Restaurants: Many chain restaurants operate and monitor the portfolio (or portions of it) centrally and consistently.
Retail: Similar operating approach to restaurants, with similar equipment (but less refrigeration).
Grocery: Mission critical refrigeration assets, centrally/regionally owned and managed.
And, there are some secondary markets where controls may be used:
Small offices: Very fragmented in all ways, but some of the 50K sq ft and less buildings could also use light controls.
Education (specifically preschool, elementary and middle schools): These sites may be small enough for a less robust building automation option, but the owners typically also have high schools and more complex buildings. They may contract with a single vendor for traditional BAS.
Warehouse: May be owned by institutional investors (who also own other asset classes); of the spaces that are conditioned, they may simply have thermostats and rooftop units.
And, as we’ll show below, there is more concentration in owners/operators among the first three bullets above - especially when compared to other asset classes.
As a secondary target, small office buildings are viable for light controls. But, given the varied and separated spaces (sometimes dictated by tenants), we think the required product offering may be fundamentally different than what is deployed in a retail or restaurant space. There also are many very small offices (just over half of all office buildings in the US are under 5,000 sq ft - 518,000 of the total 970,000 office buildings). But, only 188,000 office buildings have a building automation system (though 719,000 of them report conducting regular HVAC maintenance, another sign of some sophistication in operations). A 5,000 sq foot office building may spend $3/sq ft on energy per year, so a BAS for $1.50-4/sq ft (plus the ongoing service costs) will likely not have a strong ROI. Overall, it seems like some of the non-BAS smaller offices are a good target for small commercial controls, if one can get around the fragmented buyer landscape. But, it’s harder to estimate just how many of them are real targets. Among the 500,000+ small office buildings - some of them likely operate like homes - in fact, 321,000 office buildings have residential air conditioners.
As we noted in the past teasers, there are a number of building types with many small buildings. But, when looking at the characteristics, it’s clear they just aren’t going to be targets for building automation systems (heavy or light). Our first teaser covered this, noting that, for example, many warehouses aren’t heated or cooled (and warehouses make up 17 percent of all buildings). There are plenty of other examples, too…
Another example: service buildings, which include
