Smart lighting forecast of $20.5 billion puts connected switches and relays in focus

MarketsandMarkets projects the global smart lighting market will grow from $11.00 billion in 2026 to $20.50 billion by 2032, a compound annual growth rate of 10.9%. In a blog post published October 14, 2026, the research firm says IoT-enabled smart lighting drives growing demand for connected switches and automated relay units that provide centralized control and improve operational efficiency.

The real shift is in what lighting responds to. The firm describes traditional systems giving way to ones that react to occupancy, daylight availability, user preferences and building operating schedules, as building owners try to cut electricity use and improve occupant comfort. A market that nearly doubles in six years raises a practical question for anyone running a building. Is the money in the fixtures, or in the control layer that decides when they burn?

Most of the savings come from controls

A feature in Consulting-Specifying Engineer looks at Power over Ethernet (PoE) and wireless controls in hospitals and other critical facilities, and it cites research from the American Council for an Energy-Efficient Economy. ACEEE's finding comes in layers. New fixtures get a building part of the way, and the controls added on top deliver more than the fixture swap did.

The top tier asks for a lot. In the magazine's description, a fully integrated system means LED luminaires plus sensors and controls connected to a centralized management system, with adaptive learning capability on top of data analytics. Each step up the ladder adds intelligence, not just hardware.

MarketsandMarkets explains how that intelligence earns its keep. Sensors detect occupancy and measure ambient brightness, then send that data to lighting controllers that adjust illumination against predefined conditions. Dashboards and mobile apps let building managers spot unnecessary energy consumption. That feedback loop is what moves a building beyond basic on-and-off switching, and it suggests why the ACEEE layers stack the way they do: a better lamp still burns in an empty room, while a sensor-driven controller can switch it off.

That explains MarketsandMarkets' attention to switches. A connected switch keeps the familiar wall control and adds remote operation, programmable schedules, scene selection and links to voice assistants or building automation platforms. Occupants can still adjust lighting to their preferences, while facility managers set consistent operating rules across meeting rooms, reception areas, corridors and shared workspaces.

The firm gives the example of a facility manager setting separate schedules for conference rooms, workstations, storage areas and common spaces, then pairing the switches with occupancy and daylight sensors so lighting adjusts without anyone touching it. Depending on the product architecture, some systems also let authorized users control lights remotely when rooms are unoccupied or operating hours change. Turning lights off in empty rooms on a schedule is a small thing, but for operators managing many rooms it could add up.

Relays or Ethernet: two wiring paths

The relay is the less glamorous half of MarketsandMarkets' pairing, and it could be the more consequential one for older buildings. Paired with connected switches, the firm says, automated relay units support flexible lighting schedules, occupancy-based automation and centralized monitoring.

The firm says IoT-enabled lighting is suitable for both new construction and the modernization of existing properties. That could matter for operators who do not plan to rewire their buildings. Relays that bring existing circuits under software command are what would make that retrofit route practical.

Consulting-Specifying Engineer, in a peer-reviewed feature, describes the other path in detail. PoE, it notes, is long established as a reliable system in the mechanical, electrical and plumbing industry, with examples in commercial buildings, hotels and public leisure spaces. A traditional AC lighting system runs line-voltage cable in conduit to deliver power, uses separate 0-10 V or DALI wiring to handle control, and depends on 120 or 277 V panelboards.

PoE systems work differently. A single Cat6 Ethernet connection carries both data control and low-voltage DC power, and a PoE network switch serves as the power source. In a diagram from Smith Seckman Reid Inc. that accompanies the feature, a network controller and user interface manage luminaires and auxiliary devices through that switch. Carrying power and data on one cable, the magazine says, simplifies installation and reduces complexity compared with line-voltage wiring.

The difference is greatest when a floor plan changes. In older systems, rezoning means physically rewiring. Because every PoE fixture and sensor has its own intelligence, the same change is made in software. Backup power is another gap. PoE can automatically draw on any existing generator or IT uninterruptible power supply infrastructure, while traditional lighting needs specialized AC inverters to stay powered during an outage.

The most ambitious case in the feature comes from Fort Worth, Texas. There, the Sinclair Hotel relies on PoE both to power and to control every piece of its lighting, along with its window treatments, mini refrigerators and smart bathroom mirrors. This suggests where the economics of PoE could split from those of a relay retrofit. After the network is installed, lighting is just one of several loads on it, and the cable no longer has to be justified by lighting alone.

The MarketsandMarkets forecast does not split its $20.50 billion between relay-based control and PoE, so the choice is still made one building at a time.

Radios, code books and hospital wards

The engineering press is frank about the limits. Consulting-Specifying Engineer states that none of these solutions is perfect, but that if implemented at scale they have the potential to be cost-effective, dependable, compliant and long-lasting. PoE, wireless and cloud platforms bring cost, infrastructure and code-compliance challenges along with their efficiency, and every design still has to comply with NFPA 70, the National Electrical Code.

The magazine begins with the engineer's point of view. Engineers are frequently asked to deliver the newest, most efficient systems while fitting new techniques into infrastructure that already exists. The results must be code-compliant, reliable and suited to the specific application. Its argument is that PoE and wireless lighting, if they are engineered and regulated properly, can produce significant energy savings, long-term value and operational flexibility, especially in mission-critical and health care environments.

The gap appears largest in hospitals. PoE has spread into commerce and hospitality, but the feature itself frames it this way: the practical and safety potential of PoE-based lighting controls is something hospitals and health care facilities have not yet realized.

The choice of radio is a separate decision. MarketsandMarkets lists Wi-Fi, Bluetooth Low Energy, Zigbee, Thread and wired protocols as options, chosen according to building size, device density, interoperability needs, cybersecurity requirements and maintenance. Some systems run on local controllers, while others connect to cloud platforms for remote monitoring and analytics. According to Consulting-Specifying Engineer, PoE is regarded as a more dependable and secure option for IoT networking than wireless alternatives, although Wi-Fi and similar protocols can still be used to connect wireless devices.

For a hospital weighing the options, that security ranking and PoE's backup-power path point the same way. The cost and infrastructure challenges the magazine flags sit on the other side of the ledger, which is why the comparison has to be priced project by project.

Where the forecast shows up first

MarketsandMarkets describes the demand as an opening for lighting equipment suppliers, electrical component makers, automation companies and smart building technology providers. It also says the shift is pushing manufacturers to offer interoperable, energy-efficient and scalable control solutions, and it places the buyers in offices, commercial complexes, hospitals, educational institutions and industrial facilities.

The payoff reaches past the meter. C&C Technology Group, writing on smart buildings and IoT, notes that smart lighting can dim or turn off in empty rooms, saving energy and making bulbs last longer. It also cites Pelion's view that IoT-driven automation cuts maintenance costs, a second line of savings for operators who budget for lamp replacement as well as electricity.

Interoperability is the requirement worth underlining. A connected switch that has to work with occupancy sensors, daylight sensors, voice assistants and a building automation platform is only as useful as the protocols it shares with them, so the radio choice is a purchasing decision as much as an engineering one. For suppliers, the ACEEE layering suggests the growth is less about selling a better lamp than about selling the control layer and showing what it saves, room by room.