Artificial intelligence is making it harder for companies to predict how much office space they will need, while cost pressures and distributed work are pushing businesses toward more flexible real estate strategies, according to new research from IWG (reported by RENX.ca).
Nearly nine in 10 respondents, or 87%, said flexibility will be important when planning future office needs. At the same time, 37% said AI is making it harder to predict their office space requirements over the next two years.
Technology is also changing where companies locate their workplaces. Forty-six percent said technology, including AI, enables remote work and reduces the need for a central office, while 38% said it encourages decentralized or flexible office models.
Another 33% said technology expands access to talent in different geographic locations.
Companies Still See a Role for Offices
Despite the uncertainty, 59% of respondents expect the office to become more important to their organization over the next two years.
The research suggests that importance may increasingly come from having access to professional space when needed rather than maintaining a large centralized headquarters. Companies are balancing the need for collaboration and workplace culture with employees working across different locations.
Cost Is Driving Flexibility
Real estate costs are another factor pushing companies toward flexible arrangements. Seventy percent of respondents said their organizations are looking to move real estate costs from fixed to flexible expenses, freeing capital for other business priorities.
Cost reduction was a factor in office-location decisions for 72% of respondents, including 27% who called it a major driver.
IWG also pointed to a 2025 study conducted with engineering consultancy Arup, which estimated that hybrid models using flexible workspaces closer to employees could increase productivity by 11% over five years. The study also projected that companies could reduce real estate costs by moving away from centralized offices and using neighborhood hubs or coworking memberships.
The findings point to an office market where companies still need physical space, but are becoming less certain about exactly how much they will need, where it should be located and how long they will need it.
