Chicago, Dec. 17, 2025 (GLOBE NEWSWIRE) -- The global low carbon building market size was valued at USD 721.67 billion in 2025 and is poised to skyrocket to USD 2,049.2 billion by 2035, registering a CAGR of 11% from 2026 to 2035.
Today, the demand within the low carbon building market is growing aggressively because the cost of inaction now exceeds the cost of retrofitting. Wherein, stakeholders in the built environment are currently witnessing a definitive structural pivot where sustainability has evolved from a corporate responsibility metric into a primary driver of asset valuation. Asset owners face a "pincer movement" of regulatory enforcement and market obsolescence. Penalties for carbon-intensive assets have transitioned from theoretical threats to balance-sheet liabilities in 2024, forcing landlords to upgrade properties to avoid "brown discounts." Simultaneously, blue-chip tenants are instituting strict net-zero leasing mandates, creating a premium rental market for verified green spaces.
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Investors and developers are set to capitalize on this shift by targeting early-stage decarbonization technologies and adaptive reuse projects. The financial rationale is clear: low-carbon assets command higher occupancy rates, secure cheaper "green" capital, and future-proof portfolios against tightening global standards. Consequently, the market is seeing a rush to acquire compliant materials and retrofit solutions. Stakeholders who fail to adapt risk holding stranded assets, while those who move quickly are securing market leadership in a sector defined by scarcity and high value.
Key Findings in Low Carbon Building Market
| Market Forecast (2035) | US$ 2,049.2 billion |
| CAGR | 11% |
| Largest Region (2025) | Europe (39.12%) |
| By Type | Energy-Efficient Materials (47.55%) |
| By Application | Commercial (51.22%) |
| By Component | Structural Components (42%) |
| Top Drivers |
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| Top Trends |
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| Top Challenges |
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Mandatory Compliance and Fines Trigger Urgent Retrofit Activity
Regulatory enforcement became the primary catalyst for the Low carbon building market in 2024. New York City Local Law 97 began its compliance period, levying a fine of USD 268 per metric ton of CO2 equivalent for emissions exceeding the cap. City officials in the Comptroller’s office identified 44 specific office buildings entering the conversion pipeline in early 2025 to mitigate these risks. These urgent projects aim to repurpose 15.3 million gross square feet of potentially stranded commercial assets in Manhattan. Furthermore, the US Department of Energy awarded USD 38.8 million in 2024 to support compliance through 25 distinct projects across 17 states.
European markets mirrored this regulatory intensity, driving further Low carbon building market expansion. The EU’s Energy Performance of Buildings Directive (EPBD) set a strict target for residential buildings to reduce average primary energy use by 16 kWh/m²/year by 2030. Nations responded with immediate retrofit programs. The United Kingdom’s "Great British Insulation Scheme" successfully upgraded 46,900 households with efficiency measures by the end of 2024. These enforcement mechanisms ensure that demand for decarbonization services remains non-negotiable and financially motivated.
Concrete Majors Profit From High Margin Sustainable Materials
Heavy material producers are proving that the Low carbon building market drives superior profitability. Holcim achieved a record net sales volume of CHF 26.4 billion in 2024, delivering a recurring EBIT of CHF 5.05 billion. Shareholders saw the benefits as Holcim’s recurring EBIT margin expanded to an industry-leading 19.1%. Sales of "ECOPact" low-carbon concrete accounted for 29% of ready-mix net sales, while "ECOPlanet" captured 26% of cement sales. Additionally, the company recycled 10.2 million tons of demolition materials. Holcim generated free cash flow of CHF 3.8 billion and earnings per share rose to CHF 5.70.
Competitors in the Low carbon building market also posted robust figures. Heidelberg Materials reported stable 2024 revenue of USD 22.9 billion (EUR 21.2 billion). The firm successfully reduced specific net CO2 emissions to 527 kg per ton of cementitious material. Operational efficiency remained high, with Heidelberg’s result from current operations (RCO) reaching USD 3.4 billion (EUR 3.2 billion). These figures confirm that low-carbon product lines are now central to the financial health of industrial giants.
Record Green Bond Issuance Signals Massive Capital Inflow
Capital markets unleashed unprecedented liquidity into the Low carbon building market during 2024. Global green bond issuance reached a record USD 688 billion, pushing the total outstanding market size past USD 2.34 trillion (EUR 2.22 trillion). European issuers dominated this landscape, contributing USD 170 billion to the total. US-based issuance also showed strength, hitting USD 44 billion. Supranational, Sovereign, and Agency (SSA) issuers released USD 274 billion in green bonds, specifically funding public infrastructure and building upgrades.
Investment vehicles heavily favored the Low carbon building market asset class. Global sustainable fund assets reached USD 3.2 trillion by the end of 2024. Real estate firms participated actively in this capital deployment. JLL invested USD 4.75 million into 18 early-stage climate technology startups in 2024. These financial flows indicate that institutional investors view decarbonized real estate as a safe haven, providing the necessary liquidity to scale green construction technologies.
Tenant Demand Outpaces Supply Creating Strategic Shortages
A critical supply-demand imbalance is defining the current Low carbon building market dynamics. JLL research in 2024 predicted a 70% supply shortage of low-carbon buildings in major global cities by 2030. The deficit is particularly acute in key metropolitan hubs. Paris faces a projected 54% gap between demand and supply by 2030, while New York expects a 65% shortfall. Sydney’s forecast is even more severe, with a predicted 84% deficit. Such scarcity is driving asset values upward for compliant properties.
Investors are reacting to these Low carbon building market signals. Surveys from 2024 indicate that 50% of UK investors identify "occupier requirements" as their primary driver for acquiring green assets. Leading firms are racing to demonstrate their own sustainability credentials to attract tenants. JLL reported that 48% of electricity across its global office portfolio came from renewables in 2024, and 68% of its offices held green building certifications. Owners without low-carbon inventory risk losing prime tenants to these certified spaces.
Office Conversions Surge To Address Asset Obsolescence
Adaptive reuse has emerged as a dominant trend within the Low carbon building market. In Q1 2024, 70 million square feet of US office space was undergoing conversion, representing 1.7% of the total office supply. Developers created 55,300 new housing units from these repurposed buildings in 2024 alone. This volume marks a massive 400% increase in conversion activity since 2021. The sheer scale of these projects highlights the sector's shift toward reducing embodied carbon by saving existing structures.
Specific regions are leading this Low carbon building market sub-sector. The Washington D.C. metro area topped the list with 5,820 apartment units planned from conversions in 2024. The New York metro area followed closely with 5,215 new units. Individual projects are reaching unprecedented scales; the 25 Water Street project in Manhattan is converting a single facility into 1,263 units. These figures underscore how developers are monetizing obsolete office stock through substantial low-carbon retrofit investments.
Circular Economy Players Expand Through Strategic Acquisitions
Building envelope efficiency remains the "first fuel" of the Low carbon building market. Kingspan reported that insulation systems sold in 2024 will save 172 million tonnes of CO2 over their lifetime. The company also recycled 1.1 billion waste plastic bottles into manufacturing and harvested 44.1 billion liters of rainwater via its systems. Such metrics prove that material circularity is achieving industrial scale. Manufacturers are aggressively expanding their capacity to meet this growing need for thermal efficiency.
Strategic M&A activity is reshaping the Low carbon building market supply chain. Saint-Gobain completed 4 acquisitions worth USD 5.2 billion (EUR 5 billion) in 2024/25. The company’s "Construction Chemicals" segment saw sales increase by a factor of 2.3 over five years. To support this growth, Saint-Gobain opened 9 new plants and production lines in the first half of 2024/25. These expansions confirm that major suppliers anticipate sustained long-term demand for high-performance building solutions.
Heat Pump Market Shows Volatility Despite Policy Support
Electrification remains a complex but vital segment of the Low carbon building market. European heat pump sales totaled 2.2 million units in 2024, representing a 21% decline from the previous year. This contraction forced 4,000 job cuts across the sector, highlighting sensitivity to energy prices and policy shifts. France remained the largest volume market with 546,000 installations, while Italy followed with 348,000 units.
However, specific regions within the Low carbon building market defied the downturn. The UK market grew by 63% in 2024, driven by robust government incentive schemes. In the United States, residential heat pump stock showed resilience, reaching 24.5 million units. These contrasting figures suggest that while the technology is mature, stable regulatory frameworks are essential for consistent adoption. Stakeholders must navigate this volatility by focusing on markets with strong public sector backing.
Mass Timber Projects Gain Momentum Across North America
Bio-based construction is carving out a significant niche in the Low carbon building market. As of late 2024/25, there were 2,598 mass timber projects in progress or built in the United States. Globally, the sector has scaled vertically, with 139 mass timber buildings of eight stories or higher reported. The "Victory Capital Performance Center," completed in 2024, stands as the largest mass timber training facility in US professional sports, showcasing the material's viability for high-performance commercial use.
Ambitions in the Low carbon building market are reaching new heights. A proposed tower in Milwaukee for the 2024/25 cycle targets 55 stories, aiming to become the world's tallest mass timber structure. These projects demonstrate that timber is no longer experimental but a scalable solution for reducing embodied carbon in vertical construction. The increasing project count reflects growing developer confidence in wood as a primary structural material.
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Corporate Spending and Verification Standards Validate Market Growth
Corporate transparency is aggressively validating the Low carbon building market. CBRE spent USD 6.29 billion with sustainable suppliers and screened 677 companies via EcoVadis in 2024. They employed 933 sustainability professionals and reduced absolute emissions to 88,425 metric tons CO2e, a 30.8% drop. JLL reduced fleet emissions by 3.3%, though Scope 3 rose 29%. Globally, 151 countries have net-zero building commitments, and 20% of new OECD commercial buildings achieved green certification in 2024.
Verification is exploding in the Low carbon building market. By early 2025, 40,000 EPDs were verified to EN 15804, and the EC3 database housed 100,000 EPDs. The GRESB assessment included 2,200 participants representing USD 7 trillion in Gross Asset Value. In the UK, verified heat pump installations reached 19 per 1,000 households. These metrics prove that data-backed sustainability is now the industry standard for value preservation.
Low Carbon Building Market Major Players:
- CEMEX S.A.B DE C.V.
- CRH plc
- GreenJams
- Holcim
- Honeywell International Inc.
- Johnson Controls
- Kenoteq
- Kingspan Group PLC
- Saint-Gobain
- Skanska AB
- TITAN Group
- VEXO International
- VINCI Energies Building Solutions
- Other Prominent Players
Key Market Segmentation:
By Type
- Energy-Efficient Materials
- Renewable Energy Systems
- Low Carbon HVAC Systems
- Green Building Certifications
- Others
By Component
- Structural Components
- Energy Systems
- HVAC Systems
- Lightning Solution
- Others
By Application
- Commercial
- Residential
- Industrial
By Region
- North America
- Europe
- Asia Pacific
- Middle East and Africa
- South America
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