Employees who split their time between home and local offices are significantly more productive, according to new global research by International Workplace Group (IWG) and engineering consultancy Arup. The study found that 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.
The findings suggest a clear link between proximity, focus, and performance. Workers who operate from flexible workspaces are 67% more likely to rate their productivity as “excellent” compared to those working entirely from home. Key to this performance is the effective use of commuting time, with up to 40% of time saved from travel being reallocated to work tasks.
This gain in productivity translates into significant economic value. The report projects that hybrid working could contribute US$219 billion ($282 billion) to the US economy annually by 2030, rising to US$566 billion by 2045. That’s equivalent to the economic output of Austin, Texas. In the UK, the productivity boost could generate GBP 24 billion ($41.7 billion) a year, increasing to GBP 46 billion by 2045, on par with the entire contribution of Leeds.
These gains stem not only from enhanced productivity, but also from cost reductions linked to real estate and employee turnover. Companies offering hybrid options could see quit rates fall by as much as 20%, resulting in annual savings of US$22 billion in the US alone by 2030. By 2045, this figure could double to US$45 billion. The reduction in voluntary turnover is attributed to higher employee satisfaction, improved work-life balance and increased flexibility—benefits that are especially important in competitive labour markets such as Singapore.
A previous IWG survey revealed that 77% of Gen Z workers in Singapore experienced greater job satisfaction under hybrid models, with 34% reporting improved work-life balance. Flexible work is also seen as a key factor in talent attraction and retention, as companies rethink traditional models in response to shifting workforce expectations.
Real estate cost savings present another strong case for hybrid adoption. The study estimates that firms moving their office footprint to neighbourhood hubs or offering coworking memberships could cut real estate expenses by up to 55%. In the US, such a shift could translate into US$58 billion (S$74.7 billion) in savings per year by 2030 and up to US$122 billion by 2045. This is prompting a wider rethink of space usage, particularly in markets where commercial rents remain elevated. In Singapore, a Knight Frank report found that 30% of business leaders now cite flexible work as a key input in portfolio planning and real estate strategy.
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IWG has been a major beneficiary of this demand shift. In 2024, the group added 899 new centres worldwide, including 115 in Asia Pacific. Many of these were opened in suburban or secondary locations, reflecting growing corporate interest in decentralised workplace models. The company has reported record revenue, EBITDA and cash generation, driven by increased uptake of hybrid working in locations closer to where employees live.
IWG’s CEO and founder, Mark Dixon, said the evidence was clear. “The office isn’t dead — it’s just moved closer to where people live. When businesses give employees the freedom to work in well-equipped, local spaces, the results are clear: better focus, fewer distractions, higher engagement and improved wellbeing. These all contribute directly to measurable productivity gains.”
The report also aligns with ongoing urban planning initiatives. In Singapore, the Urban Redevelopment Authority’s Draft Master Plan 2025 highlights a continued push to grow commercial hubs in residential areas such as Woodlands and Bishan. These efforts support a shift away from centralised commuting and towards integrated, community-based work models.
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The IWG-Arup study identifies three emerging firm typologies in the hybrid work landscape: fully distributed organisations without a central HQ, hub-and-spoke models combining a central office with decentralised nodes, and remote-first companies using coworking spaces for periodic collaboration. Each model reflects different strategies to balance flexibility, employee engagement and operational efficiency.
Dr Isaac Lim, founder of social science consultancy Anthro Insights, says that companies now view hybrid work not just as a perk, but as a tool to optimise workforce performance. “Hybrid models not only sustain productivity but also significantly boost employee satisfaction. Well-structured arrangements reduce churn, expand access to talent, and align workforce planning with business outcomes. The real gains come when hybrid work is intentional—supported by technology, outcomes-focused management and workplace design.”
Katie Randall, leader of city economics and strategy at Arup, said hybrid models also support broader societal goals. “They enhance employee wellbeing, reduce carbon emissions from commuting, revitalise neighbourhood economies and support national productivity growth. The ripple effects are substantial.”
