AI is accelerating the pace of business and forcing companies to rethink how much and what style of office space they need, opting for the benefits of flexible and decentralised workspace models.
According to a new study of CEOs and CFOs from International Workplace Group, 60% believe the rise of AI has made it harder to predict their organisation’s office space requirements over the next two years.
With rapidly advancing technology transforming productivity, workforce planning and business velocity, leaders are moving away from fixed, long-term real estate commitments and towards capital-light workspace strategies that can scale with changing demand.
AI is redrawing the map of where work happens
Eighty-eight percent of CEOs say that the rise of AI means organisations need flexibility when it comes to their workspace or real estate solutions as rapid technological change makes it incredibly difficult to anticipate future space needs.
When asked how technology, including AI, is influencing decisions about where office space is located, 42% said it enables remote working and reduces the need for a central office, 39% said it encourages decentralised or flexible office models, and 37% said it expands access to global and distributed talent.
Flexible over fixed spend
This shift is already underway. 99,8% of CEOs and CFOs said their organisation is actively looking to move real estate costs from fixed to flexible, adopting capital-light models, freeing up capital to invest in the growth and future of their business.
Recognising the benefits of being able to flex their office space rather than be locked into lengthy, expensive contracts, the majority (57%) are actively investing in hybrid workspace arrangements. Just over half (55%) are looking to set up a network of locations closer to where employees live, while 52% are considering decentralised workspace models.
Cost is also now a near-universal factor in location strategy for the C-Suite, with 99% saying cost reduction is a driver in decisions about where to locate office space, and more than a quarter (27%) saying it is their major driver.
A more productive, lower-cost workplace model
Rather than relying on a single expensive city-centre headquarters, businesses are increasingly building networks of professional workspaces that support hybrid teams, improve agility and give employees access to high-quality office space closer to where they live.
While there are clear cost savings to be made, companies that give their employees access to flexible locations to work also stand to gain the most productivity – hybrid working models, particularly those enabling staff to use flexible workspaces closer to home, can deliver an 11% uplift in productivity over the next five years; a significant pull for businesses wanting to manage their retention of the best talent, as well as their long-term costs.
‘The office’ is becoming more important, not less
More than three-quarters of CEOs (76%) say the role of the office will become more important for their organisation over the next two years, with just 0.8% saying it will become less important.
This reflects a growing recognition that companies still need professional spaces for collaboration, innovation, and culture, but no longer need to lock themselves into a single fixed location for years at a time.
Christian Schmitz, CEO of International Workplace Group, comments: “AI is accelerating the pace of change for every business, and companies that want to succeed need workplace strategies that allow them to scale up or down quickly, reduce unnecessary fixed costs and give their people access to high-quality workspace wherever they need it.
“This is about giving businesses the flexibility to adapt as technology changes. Nobody knows exactly what their organisation will look like in two years’ time, but they do know they need the agility to respond. That’s exactly what the IWG platform is designed to deliver.”
Mark Dixon, executive chairman of International Workplace Group, says: “AI is not simply another wave of innovation. It is accelerating the velocity of business at a pace few could have imagined, making it far harder for companies to predict what they will need even two years from now. In this environment, long-term office commitments make less and less sense.
“The future belongs to businesses that can move quickly, access talent wherever it is, and give people professional workspace wherever they need it. AI will make creativity, judgement and adaptability more valuable, not less – and flexible workspace gives companies the agility to respond.”