Hybrid Working Boosts Productivity by 11% When Teams Work Closer to Home: New Study by IWG and Arup

New global research from International Workplace Group (IWG) and global engineering consultancy Arup shows that businesses empowering employees to use local workspaces and offices as part of their hybrid working approach could boost productivity by 11 percent over the next five years.

This latest figure combines research from the National Bureau of Economic Research, which looks at how much of time saved from commuting is reallocated to work, and from the Economist Impact’s study on time lost to distractions when working from a company HQ in the US. These findings build on previous academic research from the likes of Professor Nicholas Bloom of Stanford University which highlighted that hybrid work boosted productivity by 3-4 percent in a randomised pilot conducted for Trip.com.

• Employees reporting their productivity levels as ‘excellent’ in flexible workspaces and offices closer to home is 67 percent higher than those solely working from home
• Employee quit rates could be reduced by up to 20 percent in the hybrid model
• International Workplace Group added 899 new locations globally and opened 115 workspaces across Asia Pacific in 2024, posting record revenue, EBITDA and cash generation as businesses looked for first class, efficient, flexible working space in places that suit their employee needs.

Hybrid working could add up to $566B (S$729B) to the US economy by 2045

The “IWG Hybrid Working Productivity Report” analysed the potential impact on business performance and economic growth if more white-collar workers were to work in the hybrid model in offices and workspaces in the heart of local communities.

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The study shows that hybrid working could generate $219 billion (S$282 billion) in Gross Value Added (GVA) annually by 2030 to the US and $566 (S$729 billion) billion by 2045 – the equivalent to the GVA of Austin, Texas - through increased productivity, reduced turnover, replacement costs and portfolio costs. In the UK, productivity could increase by 12 percent, contributing £24 billion (S$41.7 billion) in GVA to the economy each year, with that impact increasing to £46 billion (S$78.2 billion) by 2045, equalling the contribution of the city of Leeds.

Hybrid work: driving productivity gains and saving economies billions per year

This 11 percent productivity boost is driven by lower commutes, with employees benefiting from increased focus time and fewer distractions, ultimately spending up to 40 percent of time saved from travelling on additional work. In fact, the rate of employees reporting their productivity levels as ‘excellent’ in flexible workspaces is 67 percent higher than those working from home.

This more productive use of time has the potential to have a significant impact on businesses and the economy. If workers spend half their time in local flexible workspaces or offices - gaining improved focus and saving time on commutes, it could unlock 170 extra productive hours per worker, each year. That’s the equivalent to $42 billion (S$54.4 billion) in annual GVA within five years, rising to $109 billion (S$140.3 billion) by 2045. Just by using a flexible workspace “occasionally”, remote companies could reduce costs by $5billion (S$6.44 billion) a year by 2030.

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Hybrid working is also proving to be essential to employee retention. Flexible arrangements can reduce voluntary turnover rates by up to 20%; in the U.S, this could translate to annual savings of $22 billion (S$28.3 billion) by 2030 and $45 billion (S$57.9 billion) by 2045. These predicted savings stem from lower recruitment and training costs, with employees three times more likely to stay in roles where they can choose flexible working options.

1 KPMG – Singapore Employment Outlook 2025, flexible work has become highly valued by employees and remains crucial for attraction and retention.

Workers are reaping the rewards of being able to work closer to home, too, and access workspaces locally. Removing the need to commute daily, workers could save up to $30,000 (S$39,400) per year by working in the heart of their local communities, according to research2

2 IWG – The Hybrid Working Calculator conducted by IWG and Development Economics. A previous IWG study surveying Gen Z workers in Singapore also revealed greater job satisfaction (77 percent) and improved work-life balance (34 percent) for those working in a hybrid model.

In line with the push for greater flexibility, recent government initiatives in Singapore are helping to formalise the shift towards decentralised ways of working. As part of Singapore’s long-term land-use strategy, the Urban Redevelopment Authority (URA)’s recently unveiled Draft Master Plan 20253

3 URA – Draft Master Plan 2025 continues to place a strong emphasis on developing business nodes beyond the city centre, including in residential neighbourhoods such as Bishan and Woodlands.

Companies shifting to local hubs or coworking memberships can cut real estate costs by 55 percent, saving businesses up to $122B (S$157.2B) by 2045.

By adopting hybrid working and flexible office spaces, businesses can also significantly cut their real estate costs and reduce overheads, while also providing access to higher-quality workspaces at a fraction of the cost of traditional long-term leases. 

According to the study, companies transferring all their portfolios in neighbourhood hubs or providing coworking memberships to their employees as opposed to space in central offices are expected to reduce real estate costs by 55 percent in the US. On a broader scale, US companies could collectively save up to $58 billion (S$74.7 billion) annually by 2030 and $122 billion (S$157 billion) annually by 2045 by shifting to less centralised locations or leveraging flexible workspace memberships.

In Singapore, companies of all sizes are adopting more flexible work models and this along with the desire to reduce rising costs has led to businesses optimising their real estate portfolios and the greater adoption of platform working. A Knight Frank report4

4 Knight Frank – (Y)OUR SPACE 4th Edition 2025 found that leaders have identified portfolio right-sizing and achieving agility as a key objective, with about 30 percent citing flexible work arrangements as a key factor guiding their real estate strategies.

Mark Dixon, CEO and Founder of International Workplace Group, commented: “Our latest study with Arup builds on the growing body of academic research showing the compelling productivity gains of hybrid working. When businesses give employees the freedom to work closer to home in well-equipped spaces without the need for longer daily commutes the results are clear: better focus, fewer distractions and improved work-life balance, all of which translate into meaningful productivity gains. These benefits, when scaled, have the potential to deliver billions in value to economies around the world.”

“Put simply, it’s a win-win for both companies and their teams. Employees are more engaged with an improved work/life balance, while businesses benefit from higher productivity, lower real estate and recruitment costs and ultimately, a happier workforce.”

He continues: “In 2024, International Workspace Group signed a record 899 new centres, many in suburbs or smaller towns, driven by the increasing demand for hybrid working in locations closer to where employees live. The office isn’t dead, it’s just moved closer to where people live – and businesses adopting this way of working will reap significant rewards.”

Katie Randall, Leader of City Economics & Strategy, Arup added: “As organisations rethink the role of the workplace, hybrid models can be a catalyst for both personal and economic growth. Empowering employees to choose flexible, local workspaces not only sharpens concentration and reduces commuting stress but also fuels a culture of satisfaction and loyalty.

The ripple effects are profound: companies see stronger performance, communities thrive with new business hubs, and the global economy stands to gain significantly. With productivity growth a key priority for national governments, our research shows that hybrid working forms a helpful part of the solution.”

Dr Issac Lim, Social Scientist and Founder of Anthro Insights, said: “Hybrid work has evolved from a pandemic necessity to a permanent fixture, and Singapore is particularly progressive in this transformation. Companies are now focused on optimising workforce performance, and research shows that hybrid models not only sustain productivity but also significantly boost employee satisfaction. Workers place substantial value on flexibility, and companies offering well-structured hybrid arrangements experience meaningful reductions in turnover. Such arrangements also open up the talent pool to skilled professionals previously limited by location, caregiving responsibilities, or mobility constraints. This creates better matching between talent and opportunity, benefiting both employers and employees.”

He added: “To truly see productivity gains, companies must go beyond simply offering flexibility, they need to implement it thoughtfully. This starts with understanding the nature of the work and designing hybrid arrangements that accommodate both business and employee needs. Equally important is investing in the right technology and equipping managers to lead by outcomes. When hybrid work is structured and intentional, that’s when the real productivity benefits emerge.”