Artificial intelligence is adding a new and unusually difficult variable to corporate real-estate planning: companies can no longer forecast with much confidence either the scale or composition of their future workforce. That uncertainty strengthens the business case for flexible workspace — not necessarily as a replacement for headquarters, but as a way of buying operational optionality rather than committing prematurely to a fixed property footprint.
For years, occupiers have wrestled with hybrid working, variable attendance and macroeconomic uncertainty. AI adds a further, more structural problem: a five-year lease decision implicitly assumes that management can make a reasonably informed judgement today about the number, location and type of people it will employ in five years’ time. In many businesses, that assumption is becoming harder to defend.
The longer-term prediction, made by this writer and many others, is therefore increasingly plausible: as the workplace becomes less predictable, the proportion of corporate space supplied through coworking, serviced offices and managed workspace will rise. Orega’s recent expansion strategy reflects precisely that expectation, while IWG’s latest results show the commercial momentum behind the broader “generation flex” proposition.
The AI forecasting dilemma
The central issue is not that AI will necessarily reduce employment across every sector. It is that adoption, productivity effects and workforce consequences will differ materially between industries, companies and job categories — and the timing remains deeply uncertain.
Some organizations will use generative AI to automate routine drafting, research, customer-service interactions, coding, administrative processing and parts of professional work. They may need fewer people in certain functions, recruit more slowly, or redesign teams around smaller numbers of highly productive specialists. Others may use AI to generate new products, open markets, improve service levels and expand faster than before, requiring more staff rather than fewer. Many will experience both effects at once: reductions in back-office headcount alongside growth in technology, data, governance, sales and client-facing roles.
Commercial-property decisions have traditionally been based on a relatively straightforward combination of projected headcount, assumed desk ratios and a chosen workplace strategy. AI unsettles each part of that calculation. A company may not know whether an AI implementation will eliminate repetitive tasks, create demand for additional experts, require new control functions, or fail to deliver the anticipated productivity gain.
As Newmark has observed, AI is likely to moderate labor-driven office demand as adoption accelerates, but the effect is expected to vary across organizations and occupations rather than follow one uniform path.
This matters especially because office property is a long-duration commitment. A conventional lease can run for ten years or more, often with substantial fit-out expenditure, dilapidations exposure and an implicit assumption that the occupier will remain broadly the same size. Even where break clauses are available, they may be infrequent and expensive to exercise.
In an environment in which a management team cannot sensibly predict its staffing requirements two years ahead, committing confidently to a fixed estate five or ten years ahead becomes much more difficult.
Recent IWG-commissioned research illustrates the point sharply. In a survey of 1,000 senior executives, 60 percent said that AI had made it more difficult to predict the office space their organization would need during the next two years, while 88 percent said it made flexibility in workspace or real-estate solutions more important.
Headcount is only one issue
The impact reaches beyond the raw number of employees. AI may alter the nature of work, the balance between teams, security requirements, the amount of collaborative space needed and the geographical distribution of staff.
A legal, financial-services or consulting firm might reduce the time spent by junior staff on document review, standard research or first-draft preparation. Yet it may simultaneously need more people in data governance, cyber-security, model validation, client assurance and regulatory compliance. A software company may find that AI coding tools allow a smaller team to produce more output, but it may also bring forward new products and need more customer-success, sales and implementation staff. A retailer may automate customer enquiries while expanding logistics, analytics and digital marketing.
The physical implications are equally varied. Smaller teams are not necessarily satisfied with smaller, inferior offices. They may demand better-equipped collaboration space, secure project rooms, high-quality meeting facilities and locations that help retain scarce talent.
Conversely, a business that grows rapidly could require extra capacity quickly in a city where suitable conventional premises are scarce or expensive.
That is why the AI effect should not be simplified into a prediction of office-market decline. It is more accurately a source of volatility in space requirements. The demand question becomes less “will we need an office?” and more “how much space, of what specification, in which locations, and for how long?”
Flex as corporate insurance
Flexible workspace addresses that problem because it converts part of a company’s property exposure from a fixed, long-term commitment into a variable operating cost. Instead of taking an entire floor or building on a conventional lease, an employer can retain a core office and use flexible space to absorb expansion, contraction, project teams, new-market entry and changing patterns of attendance.
The economic value is not limited to lower initial capital expenditure. It is the value of avoiding a costly forecasting error.
A company that signs too much conventional space risks years of paying rent, service charges, rates and fit-out costs for underused desks. A company that signs too little may find itself unable to accommodate a growing team, forced into an expensive relocation or deprived of the collaborative space that management believes is necessary. Flexible space offers a partial hedge in both directions.
This does not mean every occupier will abandon long leases. Large corporations with stable requirements, specialist technical needs or an appetite for bespoke headquarters will continue to take conventional space, particularly for prime buildings in major business districts. But they are increasingly likely to divide their portfolios: a core estate for strategic functions, complemented by managed offices, coworking memberships, satellite locations and on-demand meeting capacity, the so-called corporate ‘donut.’
JLL describes this as a growing “imperative” for flexible space, arguing that AI-driven uncertainty around workforce composition and headcount makes it harder to plan long-term real estate, while flex gives companies the ability to adapt their footprint in real time.
Evidence from IWG
The most compelling evidence is commercial rather than theoretical. IWG, the owner of brands including Regus, Spaces and HQ, has continued to expand its global network through company-owned, managed and franchised locations.
Its 2025 annual report recorded the group’s highest-ever network expansion, with 782 openings during the year. That pace matters because it demonstrates continuing appetite from landlords, franchisees and occupiers for a model in which flexible workspace is embedded in a much wider range of office buildings and locations.
IWG’s most recent interim results, published in August 2026, followed a strong first quarter in which group revenue rose 4 percent year-on-year to $958 million and system-wide revenue rose 9 percent to $1.166 billion. Management retained its full-year guidance, including adjusted EBITDA of $585 million to $625 million, company-owned revenue growth of at least 4 percent and recurring management-fee income of $80 million.
The composition of growth is significant. IWG’s managed-and-franchised business, which produces fee income rather than requiring the group itself to take the full leasehold risk, was reported to have increased fee income by 70 percent in the first quarter. This is a model that aligns with the interests of landlords seeking to make buildings more attractive and occupiers seeking flexible terms, while reducing the operator’s capital intensity.
For corporate clients, the attraction is not merely a temporary desk. IWG’s proposition is increasingly a distributed network: headquarters space where it is needed, neighborhood locations for hybrid workers, project rooms in other cities and rapid capacity in new markets. Its own research with Arup has suggested that giving employees access to local workspaces and offices as part of a hybrid strategy could raise productivity by 11 percent over five years.
Orega’s expansion signal
Orega’s recent plans point in the same strategic direction, though from a U.K.-focused premium flex perspective. Its 2026 Flex Report found that 81 percent of office landlords, advisers and asset managers planned further flex-space expansion within one to three years. It also found that economic uncertainty was identified by 36 percent of respondents as the single biggest driver of flex growth over the next five years, while valuation uncertainty was another concern.
That is important because it shows that the trend is no longer being driven solely by small businesses, freelancers and early-stage companies. Landlords and advisers increasingly see flex as part of the solution to changing occupier demand and to the problem of maintaining the relevance of conventional office assets.
Orega’s expansion is therefore a practical endorsement of the view that uncertainty itself is a market opportunity. Operators can offer organizations a credible workplace without asking them to make a long-term judgement that their management teams may be unable to support. They can also help landlords reposition buildings where conventional leasing demand is slower, more selective or concentrated in the best-quality space.
The limits of the argument
Flexibility has a price. On a desk-by-desk basis, serviced or managed space may cost more than a well-negotiated conventional lease, particularly for a large, stable occupier that can efficiently fill a building. Companies must also consider privacy, brand, security, resilience and whether a third-party environment suits sensitive work.
The correct comparison, however, is not simply annual rent per square foot. It is the total expected cost of the property decision, including fit-out, void space, surplus capacity, relocation risk, lease liabilities and the cost of being wrong about future staffing. When uncertainty is high, a seemingly cheaper long lease can become more expensive in economic terms.
AI is unlikely to make the office obsolete. It is more likely to make workplace requirements more varied, more changeable and harder to forecast. That shift makes conventional property commitments less comfortable for many boards, and it gives flexible workspace a wider role in the corporate portfolio — not as an emergency substitute, but as a deliberate response to an increasingly unknowable future.
