While the total construction market in the United States has grown at a modest compound annual growth rate (CAGR) of 2.4 percent from 2012 to 2014, IHS found in its recent report titled the World Market for HVAC Equipment that 65.2 percent of total HVAC units sold into nonresidential buildings were retrofit sales.
Due to the large installed base of equipment in the United States following the 2009 economic collapse, IHS was not entirely surprised by the high retrofit rate of HVAC systems; nevertheless, it was interesting to see the broad variations that can occur among end-users within the same country.
For example, using building stock and construction statistics, IHS found that 79 percent of air handling units (AHUs) sold into the education market in the U.S. went to retrofit projects, which equates to roughly 12,000 schools replacing one AHU. In comparison, only 58 percent of AHUs sold in the industrial market went into similar retrofit projects, which equates to 10,000 industrial buildings making one AHU replacement. This shows that while industrial building has rebounded, in both new construction and spend, budgets for buildings in the education vertical have been more geared to maintaining existing structures.
Understanding the differences in the retrofit and new build markets has been extremely important for manufacturers over the past five years as economic progress has been slower than expected. As the United States continues its recovery and budgets are refreshed, tracking the retrofit and new build markets will remain an important metric for growth opportunity, especially as energy efficiency recommendations continue to evolve.