Despite growing research on hybrid work, studies on leadership in the public sector remain limited. Hybrid work is sometimes combined with activitybased workplaces (ABW). ABW is a workplace strategy that promotes flexibility and self-leadership by providing employees with various activityspecific workspaces. However, this transition poses significant challenges for managers, particularly in performing key behaviors related to leadership behaviors and strategic management. Quantitative data from 4200 employees showed managers are more positive than subordinates about motivation, leadership, and strategic management. Furthermore, managers scored higher on advocacy measures, indicating that they are more likely than employees without leadership positions to recommend the municipality as an attractive workplace. This study employs a mixed-methods design to explore changes in managers' perceptions of leadership challenges one year before and after the implementation of Activity-Based Working (ABW) in a hybrid work setting within the public sector. First, a content analysis of 71 managers' written perceptions of the shift from cell offices to ABW was conducted. The analysis identifies key themes, including challenges such as ergonomic issues, organizational and social risks, reduced productivity, stress, noise, distractions, and concerns related to confidentiality and privacy, highlighting the difficulties managers face in adapting to this new work environment. To further deepen the understanding of leadership challenges in ABW environments, six qualitative interviews were conducted with managers from a single department. The interviews indicate that managers encounter challenges in communicating goals and expectations, monitoring and assessing performance, and cultivating trust and engagement among employees within a decentralized and flexible work environment. While challenges emerged, the analysis also highlighted positive aspects, such as autonomy and flexibility among employees adapting to ABW. The study aims to provide valuable insights into the role of leadership in ABW settings and offer practical recommendations to support managers in effectively navigating the challenges associated with this work environment.