Many very productive people will not work in an office at all, thus harming productivity. When you're remote, you can hire the best.

I would also be interested to know how true this is for individual productivity versus group productivity.

There is no way to prove this and you know it. However I can tell you I'm orders of magnitude happier working from home, and that makes me a better employee overall. I'm not driven by stress and resentment, but actual will to improve things and deliver.