60% CEOs and CFOs believe AI has made it harder to predict office space requirements

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 new research from International Workplace Group (IWG).

The study of CEOs and CFOs found that 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 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,” said Christian Schmitz, CEO of International Workplace Group.


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India is already experiencing this transition at scale. The country has the world's highest workplace AI adoption, with 73% of professionals regularly using AI tools. While Global Capability Centres (GCCs) operating in India are expected to exceed 2,400 by 2030, employing around 2.8 million people, they are already the largest customer segment for new office space, accounting for 45.5% of gross office leasing in Q1 2026.

Flexible workspace has also become increasingly mainstream, with penetration rising from around 5% in 2017 to approximately 21% today. Together, these trends are fundamentally changing how organisations plan their workforce and real estate strategies, making flexibility an increasingly important competitive advantage.

“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,” said Mark Dixon, Executive Chairman of International Workplace Group.

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88% 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.

“India is one of the clearest examples of how AI adoption, and changing workforce expectations are reshaping office demand. Organisations can no longer confidently forecast workforce requirements several years ahead, making flexibility a strategic necessity rather than simply a real estate decision. We're increasingly seeing companies build workplace networks across metro and Tier-2 cities so they can access talent, reduce commuting times and scale much more quickly,” said Harsh Lambah, Country Head, IWG India.

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 having the ability 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 are looking at setting up a network of locations closer to where employees live (55%), whether in suburban corridors like Noida, Thane and Whitefield or in emerging Tier-2 and Tier-3 cities, while 52% are considering decentralised workspace models.

Tier-2 cities including Ahmedabad, Kochi, Jaipur and Coimbatore now host more than 575 flex centres, with occupiers achieving cost savings of up to 50% compared with metro markets.

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.

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.

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 one fixed location for years at a time.