Matt Barnette, President and CEO of PSA Security Network discusses the outlook for 2024 and which markets integrators should see the most success in.
2023 saw an influx of merger and acquisition activity in the security industry and money typically floods into industries that are considered good bets.
However, the economy and geopolitical issues make the outlook for 2024 a little murky.
While there are signs in North America that the economy will improve, these changes take time to matriculate through the economy before the effects can be felt at the integrator and security manufacturer level.
The US economic outlook is influenced by various factors and it’s important to consider both the positive and challenging aspects.
Positively, as we head into 2024, data shows consumers are resilient with strong spending, a healthy labor market with low unemployment and government investment in manufacturing and infrastructure leading to more jobs and demand for goods and services.
On the shaky side, we must consider potential uncertainties that affect the economic outlook, such as stubborn inflation, high interest rates, tight lending standards, labor shortages, rising energy prices, geopolitical risk and election year politics.
So, what vertical markets should you place your bets on in 2024?
I recommend following the money. The data points to security investment these key vertical markets:
Education: K-12 construction was up in 2023 and projected to continue to grow in 2024.
K-12 schools are utilizing state and federal funds to implement upgrades to security at their facilities.
Meanwhile, the college and university markets are seeing an expansion of campuses, building lab space and the desire to implement newer technologies like mobile IDs with Apple and Google pushing into the security landscape.
Healthcare: while clinic and emergency care facility construction is estimated to slow, the number of new construction starts is still significant.
Older hospitals are upgrading facilities while new hospitals are being built. In the US in 2023, three of the top ten largest institutional project construction starts were hospitals.
Critical infrastructure: regulated industries like electrical generation and transmission have security budgets they spend annually.
With the price of energy increasing, these budgets will grow to offset the higher revenue. In addition, three of the top five construction starts in 2023 were airports.
There is a lot of government money going into infrastructure projects that all have various security requirements.
Data centers: construction of data centers went from negative growth in 2021 to 44% growth in 2022 and up 14% in 2023.
The category is projected to be up 9% in 2024. For reference, five of the top six commercial building construction starts in 2023 were data centers.
These facilities consume a lot of security equipment, wire, etc., and there are only positive forecasts of future growth with the computing artificial intelligence (AI) demands.
With a concerted effort in these vertical areas, there is ample opportunity to have a banner year.
While every market is different, one or more of these vertical markets are in your area.
Are you going to put all your chips on this bet?
Matt Barnette joined the PSA Network as CEO in January of 2021.
He is a seasoned veteran in the physical security industry with over 30 years of experience in technical, sales, management and executive roles.
Matt joined Mercury Security in June 2016 as President and after the successful sale of Mercury to HID Global in October 2017, he maintained the operational responsibility for the Mercury business worldwide, in addition to leading the HID Government Solutions Business (PIV) and the HID Global Accounts organization.
In July 2020, Matt took over leadership of the Physical Access Control Solutions (PACS) North America Market (NAM) Business Unit, providing leadership through the reorganization.
This article was originally published in the Special February Influencers Edition of Security Journal Americas. To read your FREE digital edition, click here.