State of physical security in 2026: what 15 years of installs reveals

The US commercial physical security market reached $52B in 2025 (MarketsAndMarkets). Cloud-managed video and access control overtook on-prem deployment for the first time in 2024 (SDM Magazine 2025 Forecast). NDAA Section 889 enforcement is concentrating procurement on a smaller compliant vendor list. AI video analytics are now in roughly 40% of new commercial installs, up from under 10% in 2020. Multi-site rollouts are the dominant deal shape; single-site projects shrunk to 30% of integrator revenue.

§1 - Market size

The US commercial physical security market hit $52B in 2025

That's up from $36B in 2021, a 9.6% compound annual growth rate. Most of the growth comes from access control and AI video analytics; legacy intrusion and traditional CCTV grew under 3% annually. Source: MarketsAndMarkets Video Surveillance Market Report and SDM Magazine forecast aggregations.

2025

$52B

2024

$48B

2023

$43B

2022

$39B

2021

$36B

Source: MarketsAndMarkets Video Surveillance Market Report 2025 + SDM Magazine 2025 Forecast.

§2 - Architecture

Cloud-managed deployment overtook on-prem in 2024

Of new commercial installs in 2025, 56% were cloud-managed, 32% on-premises, and 12% hybrid. The flip happened in 2024 and is unlikely to reverse outside data-sovereignty-restricted environments. Cloud-native VMS feature parity with on-prem closed the last decision gap for general commercial buyers.

Cloud-managed

56%

On-premises

32%

Hybrid

12%

Source: SDM Magazine 2025 Industry Forecast Study.

§3 - AI adoption

AI video analytics in 41% of 2025 installs (from 8% in 2020)

Adoption tracks the camera-agnostic analytics movement. Once buyers realized they did not need to rip out existing fleets, deployment accelerated. SDM Magazine's 2025 Forecast tracks the curve from under 10% in 2020 to 41% in 2025 across new commercial installs.

2020

2021

14%

2022

22%

2023

31%

2024

38%

2025

41%

Source: SDM Magazine 2025 Industry Forecast + SIA 2024 Enterprise Buyer Report.

§4 - Deal shape

70% of integrator revenue is now multi-site

Single-site projects compressed to 30% of new commercial revenue in 2025, down from 45% in 2020. Multi-site rollouts (3+ locations) now drive 70% of integrator revenue. Of those, the 15+ site enterprise programs are the fastest-growing slice.

Multi-site (15+)

42%

Multi-site (3-14)

28%

Single-site

30%

Source: SIA 2024 Enterprise Buyer Report + Security Sales & Integration Gold Book 2025.

§5 - AI use cases

What AI is actually doing in commercial installs

Adoption percentage of each AI video analytics use case across new commercial installs in 2025. Intrusion and license plate are now table stakes; weapon detection and slip-and-fall are the growth slope.

Forklift / vehicle proximity

47%

PPE compliance

38%

Intrusion / loitering

62%

License plate (LPR)

55%

Slip-and-fall

19%

Weapon detection

24%

Source: SIA 2024 Enterprise Buyer Report.

§6 - Vertical mix

Where 2025 commercial security spending concentrated

Manufacturing led commercial spend in 2025 (22%), driven by multi-site rollouts and OSHA-driven AI analytics. Multi-site retail and healthcare followed. K-12 education saw NSGP and SVPP grant tailwinds.

Manufacturing

22%

Multi-site retail

19%

Healthcare

16%

Education K-12

14%

Hospitality

11%

Finance / auto dealer

Government

Source: Security Sales & Integration Gold Book 2025 + SDM 100 ranking.

§7 - Field perspective

What 15 years of Tec-Tel installs adds to the picture

Tec-Tel has operated as a nationwide security integrator for over 15 years. Customer references appear on the About page.

From the install side, three patterns stand out heading into 2026:

One-partner buyer fatigue. Multi-site operators we walk in 2025 want one phone number, not five vendor relationships. Consolidation pressure on the buyer side mirrors integrator-side consolidation.
NDAA carries beyond federal. Manufacturers selling into the DoD supply chain are pulling Hikvision and Dahua off their bills of materials even when not strictly required, because their customers are. Procurement policy is converging.
AI sells when it doesn't require rip-and-replace. Camera-agnostic analytics from Intenseye and Dragonfruit close more deals than camera-tied AI offerings, because they sidestep the multi-million-dollar fleet swap.

Sources cited in this report

Frequent buyer questions

Where is physical security budget actually moving in 2026?

Three places. First, AI overlay on existing camera fleets - the cheapest way to get value from infrastructure already in the ground. Second, multi-site cloud-managed access control replacing one-off legacy panels per site. Third, NDAA-compliant rip-and-replace at federal-touching customers, which is a budget line that did not exist five years ago.

Are integrators consolidating?

Yes. SDM 100 ranking shows the top 50 integrators captured an outsized share of new commercial revenue in 2024 and 2025. Private equity rollups continue to absorb regional integrators. The remaining family-owned integrators (like Tec-Tel) compete on continuity, single-point accountability, and direct partner-level relationships rather than scale.

Is the cloud-vs-on-prem question settled?

Mostly. Cloud-managed wins on speed, multi-site visibility, and zero on-prem servers - 56% of new installs in 2025 (SDM Forecast). On-prem retains roughly a third of installs for data sovereignty, large camera-count economies, and CMMC/CJIS-restricted environments. Hybrid is shrinking as cloud-native VMS catches up to on-prem feature parity.

What about AI? Hype or real?

Real, with caveats. Analytics for intrusion, loitering, and license plate detection are now table stakes - present in 55% to 62% of 2025 installs. PPE compliance and forklift proximity are real in industrial verticals (38% to 47%). Weapon detection and slip-and-fall are growing but still under 25% adoption. Generative-AI 'natural language video search' is in early commercial pilots.

How does Tec-Tel see the market from the field?

Multi-site is dominant. Customers calling us in 2025 and 2026 want one partner across cameras, access, AI software, monitoring, and service - not five vendors with five contracts. NDAA exclusions push procurement toward a tighter vendor list. Camera-agnostic AI is the line that closes most deals because it sidesteps rip-and-replace.

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State of physical security in 2026: what 15 years of installs reveals

The US commercial physical security market hit $52B in 2025

Cloud-managed deployment overtook on-prem in 2024

AI video analytics in 41% of 2025 installs (from 8% in 2020)

70% of integrator revenue is now multi-site

What AI is actually doing in commercial installs

Where 2025 commercial security spending concentrated

What 15 years of Tec-Tel installs adds to the picture

Sources cited in this report

Frequent buyer questions

Install cost benchmarks

Vendor matrix

Compliance reference

Response-time standards

Want this dataset for your own buyer brief? Just ask.

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