Artificial intelligence is making one of the most familiar assumptions in corporate real estate increasingly difficult to defend: that companies can predict how much office space they will need several years from now.
A new study by International Workplace Group plc (LSE: IWG), the operator of flexible workspace brands including Regus and Spaces, shows that corporate leaders are increasingly responding to that uncertainty by shifting away from long-term office commitments and towards more flexible, variable real estate models.
Six in 10 CEOs and CFOs surveyed, or 60%, said the rise of AI has made it impossible to know how much office space their organisations will require two years from now. A further 73% said technological change, including AI, has made their organisations less willing to commit to long-term office leases or conventional real estate solutions.
The findings point to a broader change in how companies are approaching workplaces. Office space is increasingly being treated as a variable business resource that needs to adjust alongside workforce size, technology adoption and the location of talent.
AI is changing the geography of work
The impact of AI extends beyond the amount of space companies require. It is also influencing where that space should be located.
According to the study, 88% of CEOs believe the rise of AI means organisations need greater flexibility in their workspace and real estate strategies. Among those surveyed, 42% said technology enables remote working and reduces the need for a central office. Another 39% said it encourages decentralised or flexible office models, while 37% said it expands access to global and distributed talent.
For India, where technology-led employment and the expansion of Global Capability Centres (GCCs) are reshaping commercial real estate, the implications are particularly significant.
India has the world’s highest workplace AI adoption, with 73% of professionals regularly using AI tools, according to the data provided with the study. At the same time, the number of GCCs operating in the country is expected to exceed 2,400 by 2030, employing about 2.8 million people, according to a February 2026 FICCI-ANAROCK estimate.
These centres are already a major source of office demand. They accounted for 45.5% of gross office leasing in India during the first quarter of 2026, according to JLL India (NYSE: JLL).
The combination of rapid technology adoption and continued GCC expansion is therefore creating a workplace market in which companies may need access to more talent and more locations while remaining cautious about making long-term commitments.
From fixed property costs to flexible capacity
The shift is also visible in corporate spending decisions. Almost all the CEOs and CFOs surveyed — 99.8% — said their organisations are actively looking to move real estate costs from fixed to more variable spending.
For companies, the logic is relatively straightforward. A long lease can provide stability, but it also fixes a significant cost at a time when workforce requirements can change quickly. Flexible workspace allows companies to add or reduce capacity without making the same level of long-term commitment.
The research found that 57% of respondents are actively investing in hybrid workspace arrangements. Another 55% are considering networks of locations closer to where employees live, while 52% are looking at decentralised workspace models.
That is already changing the geography of office demand in India. Locations such as Noida, Thane and Whitefield are increasingly relevant to companies seeking workplaces outside traditional central business districts. Tier-2 and Tier-3 cities are also becoming part of that equation.
According to a March 2026 Vestian report, Tier-2 cities including Ahmedabad, Kochi, Jaipur and Coimbatore now have more than 575 flexible workspace centres. Occupiers can achieve cost savings of up to 50% compared with major metropolitan markets, the report said.
Cost remains central to location decisions
While AI is increasing the need for flexibility, cost remains one of the strongest forces behind changes in office strategy.
The IWG research found that 99% of CEOs and CFOs consider cost reduction when deciding where to locate office space. For 27%, it is the primary driver.
That is significant because the workplace conversation is increasingly moving beyond the traditional choice between a headquarters in a major business district and remote work. Companies are exploring distributed networks of professional offices that can serve employees across different locations.
For employers, such models can reduce property costs while also addressing commuting challenges and widening access to talent. For employees, offices closer to residential areas can make hybrid working more practical, particularly in cities where long daily commutes remain a significant barrier.
The productivity argument is also becoming part of the calculation. The research indicates that hybrid models, particularly those that allow employees to use flexible workspaces closer to home, could deliver an 11% productivity uplift over the next five years.
The office is becoming more important
Paradoxically, the move towards flexible offices does not mean corporate leaders expect the workplace itself to become irrelevant.
In fact, 76% of CEOs surveyed said the role of the office will become more important to their organisations over the next two years. Only 0.8% expected its importance to decline.
The finding suggests that the debate is shifting from whether companies need offices to what those offices should accomplish.
As routine work becomes increasingly supported by automation and AI, physical workplaces are likely to be used more deliberately for collaboration, innovation, team interaction and organisational culture. The office may therefore become more important as a destination for activities that benefit from people working together, even as the amount of permanently assigned space declines.
Christian Schmitz, CEO of IWG, said companies need workplace strategies that can respond quickly to changes in technology and business requirements.
Mark Dixon, Executive Chairman of IWG, argued that the acceleration of business activity caused by AI is making long-term office commitments harder to justify because companies cannot reliably forecast their requirements several years ahead.
Harsh Lambah, Country Head of IWG India, said India’s rapid AI adoption and changing workforce expectations were already reshaping office demand, with companies increasingly building workplace networks across metropolitan and smaller cities.
The underlying shift is therefore less about abandoning the office than changing its role. As AI makes workforce planning more fluid, companies are seeking real estate that can move with the business rather than constrain it.
For India’s commercial property market, that could mean a gradual move from the traditional model of large, fixed headquarters towards a distributed workplace network — one designed around changing talent patterns, variable demand and the increasingly unpredictable pace of technological change.
