Artificial intelligence (AI) is accelerating the pace of business and forcing companies to rethink how much and what type of office space they need, according to new research from International Workplace Group (IWG).

IWG is the world’s largest platform for flexible workspace, with brands including Regus and Spaces. Mortar Research carried out its survey, which involved 504 people who work as directors or above, and have a central office space in Canada. The research was carried out online between July 21 and 22. 

Eighty-seven per cent of survey respondents agreed that flexibility is important when planning future office space needs while 37 per cent admitted that the rise of AI is making it harder to predict office space requirements over the next two years.

“The future belongs to businesses that can move quickly, access talent wherever it is, and give people professional workspace wherever they need it,” IWG’s North American CEO Jeff Doughman wrote in response to questions emailed by RENX.

“AI will make creativity, judgment and adaptability more valuable, not less — and flexible workspace gives companies the agility to respond.”

With rapidly advancing technology transforming productivity, workforce planning and business velocity, the research revealed that 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 influencing where office space is located

When asked how technology, including AI, is influencing decisions about where office space is located, 46 per cent said it enables remote working and reduces the need for a central office, while 38 per cent said it encourages decentralized or flexible office models.

Thirty-three per cent of survey respondents said technology, including AI, expands access to global and distributed talent.

“Technology makes it easier for companies to build teams based on where the best talent is located rather than requiring every employee to live within commuting distance of a headquarters,” wrote Doughman.

Since the work from home experience of the COVID-19 pandemic, then the move to a hybrid work model, companies and institutions have more recently been implementing policies where people are supposed to be in the office on almost a full-time basis. 

Doughman cited research by Stanford University economics professor Nick Bloom that shows that work from home has settled at roughly 25 per cent of full paid days in the United States.

The office will become more important

Fifty-nine per cent of survey respondents said the role of the office will become more important for their organization over the next two years.

“Companies need professional spaces for collaboration, innovation and culture, and employees still want to be able to access high-quality workplaces, but they want them closer to home,” wrote Doughman. 

“Offering a network of professional work spaces that employees can access when and where they need them will become increasingly important and valuable rather than making an entire workforce commute five days a week to a central downtown headquarters.”

Flexible workspaces can improve productivity

A 2025 study from IWG and global engineering consultancy firm Arup revealed that hybrid working models, particularly those enabling staff to use flexible workspaces closer to home, can deliver an 11 per cent uplift in productivity over the next five years. 

“The 11 per cent productivity boost is driven by lower commutes, with employees benefitting from increased focus time and fewer distractions, ultimately spending up to 40 per cent of time saved from travelling on additional work,” wrote Doughman. 

“The rate of employees reporting their productivity levels as "excellent" in flexible workspaces is 67 per cent higher than those working from home.”

Cost reduction is a consideration

Seventy per cent of business leaders said their organization is actively looking to move real estate costs from fixed to flexible to free up capital to invest in the growth and future of their business. 

Seventy-two per cent of survey respondents said cost reduction is a driver in decisions about where to locate office space, with 27 per cent saying it’s a major driver. 

Doughman cited the Arup study, which showed companies transferring all their portfolios in neighbourhood hubs or providing co-working memberships to their employees, as opposed to space in central offices, are expected to reduce real estate costs by 55 per cent in the U.S. 

The report found American companies could collectively save up to $58 billion annually by 2030 and $122 billion annually by 2045 by shifting to less centralized locations or leveraging flexible work space memberships. Doughman expects there would be similar savings for Canadian companies.