The office is not disappearing. But the long lease, once treated as a badge of corporate stability, is starting to look like a liability.
A new study by International Workplace Group (IWG), the flexible workspace operator behind brands such as Regus and Spaces, suggests that artificial intelligence is becoming a fresh source of uncertainty for corporate real estate planning. The research found that six in 10 CEOs and CFOs believe the rise of AI has made it harder to predict how much office space their organisations will need over the next two years.
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That uncertainty is changing how business leaders think about the workplace. According to the study, 73 per cent of respondents said technological change, including AI, has made their organisation less willing to commit to long-term office leases or traditional real estate solutions. Nearly all, at 99.8 per cent, said their organisation is actively trying to move real estate costs from fixed commitments to more variable spending.
For founders and operators in Southeast Asia, the findings land at a moment when the region is still settling into its post-pandemic work patterns. Hybrid work is no longer a temporary workaround, yet return-to-office mandates have not fully restored the old rhythm of five-day office attendance. At the same time, AI is beginning to reshape hiring plans, team structures and the pace at which companies scale or contract.
The result is a more fluid view of space: less headquarters-first, more networked, and increasingly tied to where employees actually live.
AI makes headcount harder to forecast
Corporate real estate decisions have always involved a degree of guesswork. Companies sign leases based on expected hiring, expansion plans and market conditions. AI adds another layer of volatility because it can change both how many people a company needs and where those people work.
The IWG study found that 88 per cent of CEOs believe the rise of AI means organisations need greater flexibility in workspace and real estate decisions. When asked how technology, including AI, is influencing office location strategy, 42 per cent said it enables remote work and reduces the need for a central office. Another 39 per cent said it encourages decentralised or flexible office models, while 37 per cent said it expands access to global and distributed talent.
This does not mean companies are simply cutting space. It means they are becoming less comfortable with locking themselves into a single, expensive footprint when the underlying assumptions can shift quickly.
The same tension is visible across Southeast Asia’s startup and technology ecosystem. AI tools may allow leaner teams to do more with fewer people in areas such as customer support, software development, marketing and analytics. But they can also create new roles, new product lines and new collaboration needs. A startup that looks like a 50-person company today may need 120 people in 18 months, or may remain small while expanding revenue through automation.
For CFOs, that uncertainty makes a 10-year lease harder to justify.
Singapore’s office map is already shifting
In Singapore, the debate is particularly sharp because office costs remain high. CBD rents have continued rising, while tight supply has pushed some demand into decentralised areas such as Alexandra and Paya Lebar. For companies watching costs, the question is no longer only whether to be in the CBD, but how much of the workforce really needs to be there every day.
IWG’s study found that cost reduction is now almost universal in office location decisions, with 99 per cent of CEOs and CFOs saying it is a factor. More than a quarter, or 27 per cent, said it is their main driver.
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The shift also aligns with Singapore’s broader urban planning direction. The Urban Redevelopment Authority’s Draft Master Plan 2025 emphasised the development of brownfield precincts such as Bishan and Woodlands into business and residential nodes, bringing housing, community facilities and work infrastructure closer together. Technology hubs are also forming outside the traditional CBD, including the Punggol Digital District and Jurong Innovation District.
More recently, one-north was named as the site for Kampong AI, Singapore’s first dedicated AI park. The project is designed to bring startups, companies, practitioners and experts into a live-work environment focused on AI development.
These initiatives point to a future in which work is distributed across multiple nodes rather than concentrated in one central business district. For a small country such as Singapore, this is partly about land use and transport efficiency. For businesses, it is about giving employees access to professional workspaces without insisting that everyone commute to the same central office.
Flexible space becomes a financial tool
Flexible workspace was once seen mainly as a short-term option for freelancers, small teams or companies between leases. That perception has changed. For many firms, it has become a financial tool that allows them to match office costs more closely with headcount and business demand.
According to IWG, 57 per cent of CEOs and CFOs are actively investing in hybrid workspace arrangements. Another 55 per cent are looking at networks of locations closer to where employees live, while 52 per cent are considering decentralised workspace models.
The appeal is not only lower rent. Flexible offices convert part of a company’s property bill into a variable cost, freeing up capital that might otherwise be tied to deposits, fit-outs, underused desks and long-term commitments. That matters to startups and scaleups, especially in a funding environment where investors are paying closer attention to burn rates and operating discipline.
In Southeast Asia, where teams often span several markets before a company has the scale to justify full offices in each, this model can be useful. A company headquartered in Singapore may have staff in Jakarta, Manila, Ho Chi Minh City or Bangkok, but may not want to sign conventional leases in every market. Flexible workspace gives such teams a halfway point between remote work and a permanent office.
The model also supports talent strategy. IWG cited research suggesting that hybrid working models, particularly those that let staff use flexible workspaces closer to home, can deliver an 11 per cent productivity uplift over five years. That claim should be read with caution, as productivity is difficult to measure across different roles and industries. Still, it reflects a broader point: employees increasingly value time saved from commuting, while employers want work arrangements that do not erode collaboration.
The office still matters
Perhaps the most interesting finding is that business leaders are not writing off the office. More than three quarters of CEOs, or 76 per cent, said the role of the office will become more important over the next two years. Only 0.8 per cent said it will become less important.
That suggests the argument has moved beyond “office versus remote”. Companies still need physical spaces for collaboration, onboarding, culture-building and complex problem-solving. AI may even increase that need if teams must rethink workflows, train employees and make judgement-heavy decisions about how automation is used.
The question is what kind of office they need. CapitaLand Investment’s research, cited in the IWG report, found that AI-ready workspaces are likely to require collaboration areas, infrastructure for AI-enabled work, and layouts that support both remote participation and flexible work patterns. In other words, the office may become less of a place for routine desk work and more of a space for coordination, learning and decision-making.
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Christian Schmitz, CEO of IWG, framed the shift around uncertainty. “Nobody knows exactly what their organisation will look like in two years’ time, but they do know they need the agility to respond,” he said.
That is the core challenge for companies across Southeast Asia. AI is not only changing software budgets or job descriptions. It is making business planning less linear. In that environment, a fixed office footprint can quickly become either too much space or too little.
The office is not dead. But in the AI era, it is becoming less like a monument and more like infrastructure: useful when it is adaptable, costly when it is rigid.
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