United States vs China: Smart Buildings, Modernization and the Likely Leader in Five Years
- Mark Lafond, RA
- Oct 10
- 8 min read
Updated: Oct 12
Smart Buildings and the Great Powers Competition
Smart buildings have become the operating system of real estate, orchestrating sensors, networks, and software to manage comfort, safety, access, power quality, maintenance, and services across portfolios. The United States and China are locked in a competition to deploy these capabilities at scale, capture value in software and services, and convert building data into measurable productivity. This race will shape who owns the next decade of property operations, facilities engineering, and the surrounding vendor ecosystems. The analysis below focuses on economics, technology, security, standards, and return on investment. [1.]
What Counts as a Smart Building, and Why It Matters
A smart building combines three layers, connected equipment such as variable speed drives, heat pumps, lighting controllers, meters, and access systems, a secure network fabric across information technology and operational technology, and analytics that turn time series data into actions for optimization and maintenance. The resulting stack reduces operating expense, elevates tenant experience, and extends asset life. At scale, the stack changes the business model of operations from reactive work orders to predictive service with performance verification. Owners care because these outcomes increase net operating income, reduce downtime, and create new service revenue opportunities in demand programs and managed services. [2.]
United States Strengths, Software, Services, and Standards
The United States advantage starts with software depth and service maturity. Two decades of work on energy management information systems and fault detection and diagnostics gave owners a practical playbook, instrument assets, collect high quality data, run automated analytics, and close the loop through operator workflows and commissioning. Portfolio evidence shows persistent whole building savings typically in the high single digits when analytics are deployed and used regularly, with simple paybacks often near two years, numbers that are compelling for asset managers and institutional investors. The repeatability of those savings has pushed large owners to make analytics and continuous commissioning a standard scope in specifications. [3.]
Security guidance is another pillar. National frameworks for operational technology security define device identity and hardening, network segmentation between building automation systems and business networks, policies for remote access, vulnerability management, and logging. Integrators now encounter these requirements in procurement for sensitive facilities and in insurance questionnaires, which elevates vendors with strong cyber discipline and creates a trust moat for suppliers aligned with these standards. This alignment improves the resilience of building operations and reduces risk premiums in financing. [4.]
Procurement incentives and federal playbooks also matter. Deductions and credits improve project economics for advanced controls, metering, and electrification ready equipment in renovations and fit outs. Meanwhile, federal guidance on grid interactive buildings normalizes two way coordination with power systems, helping portfolios evaluate and contract for price response, peak shaving, and load management with clear methodologies. Together, these signals make analytics, advanced controls, and integration services the default for many upgrades, not optional add ons. [5.]
China’s Strengths, Scale, Connectivity, and Replication
China’s advantage is speed and scale. The country has built out dense connectivity and city level digital infrastructure over the past decade, reducing the marginal cost of instrumenting buildings and linking them into district or municipal platforms. That connectivity supports rapid rollout of access control, video, equipment telemetry, and automation, which in turn accelerates the diffusion of smart services across public buildings, campuses, and developer portfolios. Local governments often coordinate deployments across schools, hospitals, and administrative buildings, creating large, repeatable programs for vendors. [6.]
National assessment standards for building performance and technical standards for high efficiency and nearly zero energy construction give regulators, developers, and integrators a common language for procurement and verification. When provinces adopt aligned templates, replication speeds up because technical expectations, documentation sets, and testing routines are known in advance. This lowers transaction costs and helps vendors scale delivery teams quickly. [7.]
The present headwind is the property cycle. A slower pipeline for new construction reduces the easiest canvas for deeply integrated systems, and developers must manage balance sheet constraints. That shifts attention to stabilization, selective retrofit, and public sector modernization where governments can direct spending. The long term impact is likely a more selective private market coupled with steady public programs, rather than the breakneck pace of prior building booms. [8.]
The Technology Core Both Countries Are Converging On
Despite different market structures, both countries are converging on a similar stack that actually drives results. First, modern building automation systems that enable fine grained zoning and scheduling. Second, networked lighting controls and submeters to expand observability. Third, analytics via EMIS and FDD to surface hidden faults like simultaneous heating and cooling, failed sensors, economizer misbehavior, and valve leakage, quantify savings, and prioritize work. Fourth, digital twins that synchronize with field sensors for diagnostics and scenario testing, improving commissioning quality and shortening time to resolution for anomalies. Fifth, AI assisted optimization that uses occupancy, weather, and equipment signatures to recommend or automate setpoint and scheduling adjustments. In combination, these layers move operations from rule of thumb to data verified performance. [9.]
Field experience underscores that the biggest gains are not just in utility bills, they are in process control and labor productivity. When analytics rank issues by cost and comfort impact, technicians spend less time hunting for problems and more time fixing the highest value items. When twins provide context, teams diagnose faster and document changes better. When AI assists with scheduling and setpoints, equipment runtime drops and comfort complaints fall. These mechanics translate into fewer emergency dispatches, tighter vendor scopes, and more predictable maintenance budgets. [10.]
Economics and Productivity, Where Value Is Captured
For individual buildings, owners see four direct levers. Utility cost reductions from analytics driven optimization, typically high single digits at the whole building level for operators who actually use the tools. Labor efficiency as automated fault detection, measurement and verification, and guided workflows reduce mean time to diagnose and verify. Occupant experience through better environmental control and fewer hot or cold calls, an outcome that supports rent and retention. Asset productivity as predictive maintenance extends equipment life and informs capital planning with measured degradation rather than guesswork. These levers flow to the income statement and to the reserve plan, which is why they are compelling even without policy drivers. [11.]
For portfolios, the gains compound. Portfolios can standardize commissioning and analytics, create dashboards for benchmarking buildings against peers, and institutionalize operator training that sustains savings year after year. They can also participate in price response and peak shaving programs where permitted, monetizing flexibility. Critically, the recurring nature of verified savings and service revenue makes smart building programs resemble a durable service yield, which is attractive to institutional capital seeking predictable returns. This is one reason the United States service ecosystem, with strong verification practices and shared measurement methods, has grown steadily. [12.]
Security, Trust, and Supply Chains
Security now acts as a market separator. In the United States and allied markets, procurement increasingly references national frameworks for operational technology, rejects untrusted remote access patterns, and requires logging that allows owners to audit integrator behavior. Regulators have also tightened rules on certain telecommunications and surveillance equipment, which pushes projects toward vetted device suppliers and accredited labs. The downstream effect is a vendor landscape where compliance and traceability become selling points, not paperwork. Integrators that demonstrate segmentation, identity, and patch management across building automation, lighting, access, and cameras win sensitive work and command premiums. [13.]
China’s counterweight is domestic scale and cost. A vast connected stock allows manufacturers to iterate quickly, drive down unit costs, and export competitively priced controls and equipment to markets that prioritize affordability and speed. In many regions where new construction dominates and procurement emphasizes initial cost, Chinese suppliers will continue to expand share. Over the next five years, expect a pattern where cost sensitive markets import more Chinese gear, while portfolios with strict security and verification needs lean toward suppliers aligned with United States style standards. [14.]
The Role of Web3, Data Ownership, and Interoperability
As buildings generate richer operational data, owners and service providers face questions about data custody, traceability, and multi party workflows. Web3 concepts, tokenized identities for devices and services, and tamper evident logs can help in high trust and multi stakeholder contexts such as large campuses, public private partnerships, and performance based contracts.
Tokenized access to data streams, standardized schemas, and smart contracts that release payments on verified performance create cleaner commercial relationships between owners, integrators, and third party optimizers. The United States software sector is well positioned to pioneer these models because of its depth in cloud, developer ecosystems, and security frameworks, while China’s advantage remains in scaling device identity and provisioning across massive fleets. [15.]
Who Is Likely to Dominate in Five Years
Deployment by floor area, advantage China. Even with a slower real estate market, the sheer size of the connected stock and the ability of local governments to coordinate upgrades across public buildings point to continued leadership in the number of instrumented and automated facilities. Municipal platforms and district coordination will keep city scale deployments moving. [16.]
Value capture in software, services, and standards, advantage United States. The profit pools with the highest margins are in analytics, continuous commissioning, cyber secure integration, digital twins, and optimization services with verification. The United States has a mature methodology for measured savings, widely referenced OT security frameworks, and federal playbooks for grid coordination. These ingredients attract institutional capital and sustain recurring service revenue. Over the next five years, expect United States firms to lead in operating systems for buildings, analytics marketplaces, integration toolchains, and compliance driven services that export to allied markets. [17.]
Equipment manufacturing and exports, advantage China. Cost, scale, and speed favor Chinese suppliers in controls, drives, and increasingly sophisticated connected gear. These advantages are most powerful in new construction markets across Asia, the Middle East, and Africa, where standardized district templates lower soft costs and speed delivery. Expect more Chinese equipment paired with regional integration, while premium and security sensitive projects continue to lean on United States aligned stacks. [18.]
Security and trust, advantage United States. Where compliance, auditability, and interoperability with corporate risk programs are decisive, portfolios will prefer device and software stacks that meet rigorous frameworks and use accredited labs and testing. This preference shapes procurement, insurance, and financing, and it pushes value toward vendors who can demonstrate lifecycle security from device identity through patch management and logging. [19.]
Bottom line, by the early 2030s the United States is best positioned to dominate the smart building race in value captured through software, services, security, and standards, while China is likely to lead in installed base and hardware shipped. Owners and investors should design strategies that combine cost advantages from Chinese hardware with secure integration, analytics, and verification practices common in the United States. That blend will deliver the highest productivity and the most durable returns over the next five years. [20.]
Works Cited
[1.] Better Buildings Initiative. “Smart Energy Analytics Campaign, Final Results.” U.S. Department of Energy, 2019. https://betterbuildingssolutioncenter.energy.gov
[2.] Stouffer, Keith, et al. “Guide to Operational Technology Security, SP 800, 82 Rev. 3.” National Institute of Standards and Technology, 2023. https://csrc.nist.gov
[3.] Granderson, Jessica, et al. “Proving the Business Case for Building Analytics.” Lawrence Berkeley National Laboratory, 2019 to 2020. https://etas.lbl.gov
[4.] National Institute of Standards and Technology. “SP 800, 82 Rev. 3, Guide to Operational Technology Security.” 2023. https://csrc.nist.gov
[5.] U.S. Department of Energy, Federal Energy Management Program. “Grid Interactive Efficient Buildings for Federal Agencies.” 2022 to 2025. https://www.energy.gov/femp
[6.] RCR Wireless News. “China’s 5G Subscriber and Base Station Growth.” 2024 to 2025. https://www.rcrwireless.com
[7.] World Green Building Council. “Overview of China’s Assessment Standard for Green Building, GB T 50378, 2019.” 2022. https://worldgbc.org
[8.] Reuters. “China Property Market Outlook and Investment Trends.” 2024 to 2025. https://www.reuters.com
[9.] Cespedes Cubides, A. S., et al. “A Review of Building Digital Twins to Improve Energy Efficiency.” Energy Informatics, 2024. https://energyinformatics.springeropen.com
[10.] Lawrence Berkeley National Laboratory. “Fault Detection and Diagnostics Program Overview.” 2023. https://fdd.lbl.gov
[11.] Better Buildings Solution Center. “EMIS and FDD Case Studies and Savings Benchmarks.” U.S. Department of Energy, 2019 to 2023. https://betterbuildingssolutioncenter.energy.gov
[12.] U.S. Department of Energy, Building Technologies Office. “Grid Interactive Efficient Buildings, Resources and Playbooks.” 2022 to 2025. https://www.energy.gov/eere/buildings
[13.] Federal Communications Commission. “Covered Equipment and Authorization Policies.” 2022 to 2025. https://www.fcc.gov
[14.] Ministry of Industry and Information Technology, PRC. “5G Infrastructure and Enterprise Application Reports.” 2024 to 2025. https://www.miit.gov.cn
[15.] Gartner. “Blockchain and Web3 for Asset Operations and IoT.” 2023 to 2024. https://www.gartner.com
[16.] State Council Information Office, PRC. “Smart City and 5G Deployment Summaries.” 2024 to 2025. http://www.scio.gov.cn
[17.] National Institute of Standards and Technology. “OT Security Baselines and Profiles.” 2023. https://csrc.nist.gov
[18.] International Energy Agency. “Connected Equipment, Controls, and Emerging Building Systems Markets.” 2023 to 2024. https://www.iea.org
[19.] U.S. General Services Administration. “IT and OT Convergence Guidance for Federal Facilities.” 2022 to 2024. https://www.gsa.gov
[20.] Lawrence Berkeley National Laboratory. “Smart Buildings and Analytics, Portfolio Performance Evidence.” 2019 to 2024. https://eta.lbl.gov
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