Los Angeles leaders are placing their bets on artificial intelligence and those bets are reshaping how work gets done, where it happens, and which organizations pull ahead.

From AI pilots to enterprise advantage

AI adoption in Los Angeles is moving decisively from experimentation to industrialization. According to KPMG’s Local Insights report, 92% of Los Angeles business leaders say AI will be a top investment priority in 2026, and nearly all expect their organization’s use of AI to increase over the coming year. In Los Angeles, AI is now shaping how work is assigned, reviewed, and governed – not just how quickly it’s done.

That shift is forcing leaders to rethink productivity, skills and governance all at once. Leaders are seeking the balance between rapid deployment and sufficient oversight with guardrails that prevent costly mistakes. The focus is less on acceleration for its own sake and more on building durable capabilities that improve performance over time.

The workplace still matters in a more digital world

As AI is changing how work happens, it’s also sharpening when, and why, people need to be together. As work evolves, so does the role of physical space. Real estate decisions are no longer just about footprint size or consolidation. Instead, leaders are rethinking space as a strategic asset that supports collaboration, client engagement and talent access in a more flexible, distributed operating model.

In response, Los Angeles business leaders are responding accordingly. The report found that 65% plan to increase their commercial real estate footprint in 2026, while many are redesigning that footprint to support hybrid work and regional flexibility. Nearly half are planning distributed office models with hubs across Southern California, reflecting a shift away from single-center strategies toward networks of spaces aligned with how work happens.

This approach treats real estate as an operating lever, not a fixed cost. Offices are increasingly designed to bring teams together at critical moments, and accelerate decision making, particularly in sectors where work is organized around project-based collaboration.

Understanding Los Angeles’ dual market reality

Downtown L.A. remains central to the region’s civic, legal, financial and professional services ecosystem. At the same time, areas such as El Segundo have emerged as fast-growing innovation corridors, anchored by aerospace, defense, technology and creative industries. Los Angeles is not a single-center market. This duality is not a transition phase. It is the model.

According to the Los Angeles County Economic Development Corp., Los Angeles County’s economy exceeds $886 billion and is anchored by a diversified industry base, a structure that allows the region to adapt more quickly than less diversified markets. That diversity helps cushion economic uncertainty while enabling different sectors to absorb and apply AI at varying speeds, reducing concentration risk as operating models evolve.

Geography is a strategic choice

Per the LAEDC, organizations are responding by distributing their presence across multiple hubs, prioritizing flexibility, proximity to specialized talent and alignment with industry ecosystems. Geography is indeed part of the strategy.

This geographic diversity reinforces why AI investment and real estate strategy are interconnected. As AI shortens decision cycles and automates routine work, the highest-value in-person moments become more important.

Taken together, these signals point to a business community focused on readiness. Los Angeles leaders are investing in the capabilities and environments that allow organizations to adapt, scale and compete in a more dynamic operating landscape.

This is what disciplined investment looks like in practice, reflecting a focus on building the foundations needed to navigate complexity, increase visibility and support longterm growth in the age of AI. In Los Angeles, the future is being shaped through a deliberate combination of technology, place and strategy.

Michelle Wroan is the managing partner of KPMG’s Los Angeles operation.