Where would I store my work papers? Right now at my work desk I have a little library of technical books. What about putting up pictures of family? Decorations during holidays? The older I get the more these things are important to me, as silly as they may sound. Perhaps it's because work becomes a larger and larger portion of my life. When I was fresh out of school it kind of felt like something I did for X hours before coming home to my "real" life, like a pseudo-school environment. But as time passes (and if you like where you work), work can become a bit of a second family. Having my own space adds a sense of belonging and stability that really acts to boost my productivity and sense of team commitment. I did something that that basically amounted to hot desking at a previous job and I found it miserable. I never felt settled.
Perhaps there is some sort of introvert/extrovert thing going on. I am social and love my coworkers but at heart I'm an introvert; having my little space gives me a sense of being able to retreat a bit. Paradoxically that improves my sense of belonging -- it begins to feel a bit homey. Maybe extroverts are able to fully get their sense of belonging just from being around people.
I do think that flexibility will probably be the way forward. If Bob wants to be full time remote, and Mary wants to be a hybrid, totally reasonable. I would just seriously miss "my" space.