The planet’s 1.55°C temperature spike rewrote the rules of commercial real estate. 2024’s lethal heatwave proved that outdated HVAC systems are just inefficient today. Now, a $74.8 billion revolution is proving to be a hidden $120 billion gold rush, unfolding within your office walls!
This blog explores the commercial HVAC market’s demand, trends, and revenue in recent years as well as for the next few years to come.
Key Takeaways
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Market Overview & Key Statistics
By the end of 2025, the total HVAC market revenue is estimated to be $271.9 billion (2.96% CAGR). The United States will contribute the most with $129.6 billion. China follows with $69.21 billion.
In the commercial HVAC sector, the market generated $74.81 billion in 2024. Most products sold were:
- Air handling units ($12.4 billion)
- VRF systems ($11.41 billion)
- Chillers ($9.04 billion)
It is estimated to be $82.3 billion by the end of 2025 and $120.63 billion by the end of 2029 (7.7% CAGR).
The smart HVAC controls segment has the most growth potential ($8.31 billion by 2029). Heat pump usage for offices is expected to grow 15% annually.
In US commercial buildings, the top three energy consumers are office buildings, hospitals, and data centers. Space heating consumes 32% of the total energy usage, and ventilation consumes 10%. Smart HVAC cuts this cost by 15-25%.
Regional Breakdown of Commercial HVAC Demand
Asia-Pacific leads the commercial HVAC growth, contributing 44% of the global sales. North America and Europe follow with 34% and 17%.
| Region | 2024 Revenu | 2025 Projection | 2029 Projection | CAGR |
| Asia-Pacific | $32.9B (44%) | $36.2B | $53.1B | 8.1% |
| North America | $25.4B (34%) | $28.5B | $41.8B | 8.8% |
| Europe | $12.6B (17%) | $14.1B | $16.9B | 3.4% |
The main growth factors behind each region are:
- U.S. SEER2 regulations for North America
- India’s smart cities and China’s data centers for Asia-Pacific
- EU Ecodesign Directive for Europe
Commercial HVAC Market Leaders
Although Daikin is leading in terms of the overall HVAC sales, Trane generates most of the market revenue from commercial HVAC sales.
The commercial HVAC market share leaders are:
| Company | Commercial Revenue (2024) | Global Commercial Market Share | Tech Edge |
| Trane | $14.2B | 19% | ThermaView AI |
| Carrier | $12.8B | 17% | Abound cloud platform |
| Daikin | $10.5B | 14% | IoT-enabled SkyAir |
| Johnson Controls | $9.1B | 12% | Digital twin integration |
| Lennox | $5.6B | 7.5% | Varix VRF systems |
| Others | $22.6B | 30.5% | – |
Among them,
- Trane generated 40% of its revenue from high-efficiency chillers in data centers.
- Carrier’s commercial focus is on the retail/store HVAC (25% of revenue).
- Daikin generates 55% of APAC revenue from VRF systems.
- Johnson Controls’ commercial focus is on smart hospitals and campuses with its OpenBlue AI.
Different companies focus on different growth strategies. However, acquisitions, partnerships, and R&D expenditure are a common theme across them all.
Commercial HVAC Market Demand Drivers
The main driver behind commercial HVAC systems for the last few years was outdated HVAC systems. The systems were mostly outdated due to refrigerants and efficiency requirements.
Here are the reasons behind the growth of the commercial HVAC market:
1. Regulatory & Energy Efficiency Mandates
- U.S. and North America’s SEER2 standards (2023 onwards) push higher efficiency for commercial systems. 30% of U.S. commercial buildings must upgrade their HVAC systems by 2027 to comply with this.
- The Inflation Reduction Act (IRA) offers a tax deduction up to $5/sq ft for energy-efficient retrofits in commercial buildings.
- In Europe, EPBD mandated smart HVAC controls in commercial buildings that surpass either 2,000 sqm or a rated output of 70kW by 2027. Ecodesign regulations are set to phase out all non-compliant chillers and boilers by the end of 2025.
- India’s Energy Conservation Building Code (ECBC) mandated VRF systems and heat pumps in new commercial buildings. China’s Dual Carbon Policy targets the overall HVAC energy use to reduce 30% by 2030.
2. Climate Change and Extreme Weather
Heat waves are getting pretty common, especially in the U.S., Europe, and India. 2024 was the warmest year on the record. The global temperature was 1.55°C above the pre-industrial era (WMO).
It is no surprise that businesses are focusing on cooling more in these rising temperatures. According to the IEA, the commercial cooling demand is already up by 20%.
Post-COVID, ASHRAE Standard 241 (2023) enforces air filtration and ventilation upgrades in offices and hospitals. So, the smart ventilation systems sales are also expected to grow in the following years.
3. Technological Advancements
Smart and connected HVAC systems are on the rise. With that comes the increase of IoT and AI-driven optimization in commercial systems, too.
Predictive maintenance reduces the downtime by 30%. This is a huge advantage for businesses that need more operational time for more outputs. Trane’s BrainBox AI is already reported to cut energy use 15-25% in commercial buildings.
Electrification is another growing trend. Heat pump adoption is already growing with a CAGR of 15% in North America/Europe. Amazon warehouses have reported shifting to electric heat pumps instead of traditional cooling systems.
4. Urbanization and Commercial Real Estate Growth
According to Dodge Construction Network, the global commercial construction grows 4.2% each year. The number of data centers is also on the rise, so is the cooling demand of them.
With India’s smart city mission, almost $1.2 trillion was invested, which is also a huge growth factor behind Asia-Pacific’s commercial HVAC demand.
5. Economic and Operational Cost Demands
Operation cost is a legitimate concern for all businesses. The inflation rate is also high. Business owners are always looking for cost and energy-saving options.
Smart HVAC is the gateway for these businesses to save more.
The HVAC system is responsible for almost 40% of the total commercial energy use. Smart HVAC cuts this cost by 20-30%. Predictive maintenance (with AI sensors) reduces repair costs by 25%.
To save more on their operations, the businesses are always dependent on newer upgrades, which contributes to the commercial HVAC demand.
Emerging Trends in the Market
The AI buzzword isn’t limited to the tech world. Artificial Intelligence has made its way into the HVAC industry. Together with other factors, like demand for compact systems, it will dominate the HVAC market in the following years.
In commercial HVAC, some of the recent and upcoming trends are:
1. AI-Powered Predictive Maintenance
Predictive maintenance prevents failure in the HVAC system. Machine learning analyzes the breakdown patterns to predict and warn users about failures before they occur.
BrainBox AI case studies showed a 30% reduction in downtime and a 20% reduction in energy waste from predictive maintenance.
This market for AI-driven optimization is expected to reach $4.5 billion by 2027.
2. Cloud-Based HVAC Management
The integration of cloud computing technology in the HVAC system means it can monitor, control, and optimize the system remotely over the internet. Trane’s Thermaview and Carrier’s Abound are already being used for remote monitoring of large office complexes and energy analytics for retail chains.
45% of U.S. commercial buildings are expected to use cloud-based HVAC controls by 2027.
3. Shift from Gas to Electric HVAC
The global heat pump market is already valued at $88.9 billion in 2025. North America and Europe have a 15% CAGR adoption rate for heat pumps. All Amazon warehouses are set to transition to electric heat pumps by 2026.
The reason behind this shift towards electric heat pumps can be:
- Decarbonization policies like the EU’s Heat Pump Action Plan and the U.S. IRA tax credits.
- Lower operational costs of heat pumps (3-4 times more efficient than gas boilers).
4. Green Refrigerants and Low-GWP Solutions
Global warming and eco-friendliness are more important in the HVAC industry now than ever.
Some regulations have been in motion against high global warming potential (GWP) refrigerants:
- The U.S. AIM Act banned the use of high-GWP refrigerants. R-454B is replacing R-410A in already used HVAC systems.
- EU F-Gas Regulation mandates a 70% reduction of HFC emissions by 2030.
As a result, 40% of new chillers (for large-scale cooling) now use R-32 as refrigerants. Supermarket chains like Walmart and Aldi are adopting CO2-based refrigeration.
5. Modular and Rooftop Units
Retail spaces and warehouses are focusing more on rooftop units (RTUs) to save space. These units are 30% faster to install compared to traditional HVAC systems. FedEx’s distribution centers are already using solar-powered RTUs to cut grid reliance.
The market for prefabricated and modular HVAC is expected to hit $9.8 billion by 2029 with a 7.2% CAGR.
6. Indoor Air Quality (IAQ) as a Service
According to the ASHRAE standards, offices now need more ventilation spaces. Indoor air quality has been a great concern overall, especially in the post-pandemic era. IAQ monitoring systems alone are expected to be at $6.2 billion in revenue in 2027.
7. Decentralized and Zoned HVAC Systems
Daikin case studies show variable refrigerant flow (VRF) systems are 30% more efficient than traditional systems. They are ideal for mixed-use buildings, hotels, and offices. Starbucks uses them for pre-zone temperature control.
The VRF market size is growing at a CAGR of 8.7% (estimated $17.3 billion by 2029).
Challenges
Although the commercial HVAC demand is always growing, the market has its unique challenges:
- High Costs: VRF/large-scale chillers require 20-40% higher upfront investment. The payback period is generally 5-7 years for retrofits. IoT sensors and AI software add $2-5 per square foot on average. Due to these budget constraints, only 15% of U.S. strip malls have upgraded to SEER2-compliant systems.
- Labor Shortage: According to ACCA, there were 80,000 unfilled HVAC jobs in the U.S. the previous year. 30% of HVAC engineers are set to retire by 2030 in Europe.
- Training Gaps for New Technologies: New technologies are the growth factor of commercial HVAC demand. At the same time, a lack of knowledge creates a problem for customers to access them. 60% of contractors don’t have the certifications to install IoT-enabled systems.
- Supply Chain Disruptions: China dominates in heat pump production, with almost 70% of the total heat pumps. With the trend of adopting electric heat pumps, Tariffs threaten the affordability in the U.S. and Europe.
- Compatibility Issues for Retrofitting: 40% of U.S. offices use pre-1990 build structures. Ductworks used on those buildings limit the heat pump and VRF adoption. Modifying the ductwork results in more initial cost.
- Inconsistent Global Standards: The U.S. uses SEER2 as the HVAC efficiency standard. Meanwhile, Europe uses EPBD. Other countries or regions use their own metrics. Countries like India don’t have any refrigerant laws. Manufacturers struggle to make 5-10 variations of the same product for global markets.
| Challenge | Key Stat / Insight | Label |
| High Costs | VRF systems cost 20–40% more upfront; IoT adds $2–5/sq.ft. | Expensive upgrades |
| Labor Shortage | 80K HVAC jobs unfilled in U.S.; 30% engineers retiring by 2030 in EU | Technician shortage |
| Training Gaps | 60% of contractors lack IoT system certifications | Skill gaps |
| Supply Chain Disruptions | China makes 70% of global heat pumps; tariffs impact affordability | Global supply risks |
| Retrofitting Compatibility | 40% of U.S. offices built pre-1990 with outdated ductwork | Retrofit limitations |
| Inconsistent Global Standards | Different efficiency laws (SEER2, EPBD, etc.) cause manufacturing strain | Standards mismatch |
Conclusion
The commercial HVAC industry is at the intersection of technological innovation and environmental urgency. Businesses are always depending on newer technologies to save their energy and costs. As a result, the demand for commercial HVAC is also skyrocketing.
With the sector’s upward growth, it underscores a critical truth: the future of commercial spaces will be defined not just by how we use an HVAC system, but by how intelligently, efficiently, and sustainably we do that.
Methodology
The blog uses a mixed-methods approach, combining quantitative market data with qualitative policy and technology analysis. The represented data is primarily from Statista and secondary sources to analyze the commercial HVAC market. The research framework is as follows:
- Industry reports from Mordor Intelligence, ASHRAE, IEA, AHRI, Business Research Insights, Eurovent, and Arizton.
- Company revenue breakdowns from Trane, Carrier, and Daikin annual reports (2023-2024).
- Regulatory policies from the U.S. DOE, the EU EPBD, and India’s ECBC.
- Energy use statistics from the U.S. EIA and Eurostat.
The revenue figures are in U.S. dollars and segmented mostly by regions and brands. We prioritized recent (2023-2024) datasets from authoritative sources while accounting for regional reporting differences. All projections use conservative CAGR calculations based on pre-pandemic (2019) and current growth trajectories. The focus remains strictly on commercial applications, excluding residential HVAC data to maintain sector-specific accuracy.
I’m Francis Kaspar, a 35-year-old HVAC technician with over 10 years of experience in the industry. I hold a certification in HVAC technology from Texas State Technical College, where I gained hands-on skills that shaped my career.
Currently, I’m working at The Chill Brothers, specializing in AC installation, repair, and energy-efficient solutions. Outside of work, I enjoy spending time with my wife and two kids.
I’m also passionate about sharing my HVAC knowledge written by articles that provide practical tips and tricks for homeowners.
