The hub and spoke concept for companies using office space is an interesting concept. I am not sure it will work. I personally think it will be too complicated for companies to have 2-3 spoke locations for employees. That said, huge companies seem to have no choice as they search for talent. See Tech Crunch’s article here to read more on that.
However, the concept is worthy of consideration. I believe there are three outcomes we will see based on this pandemic and current trends already underway:
1. Smaller Headquarters. The hub where strategy is created and key decision-makers work.
2. More regional offices or spokes with groups by division. This trend has been happening and will accelerate, which is good for Arizona. Prior to COVID, companies were pulling all departments out of expensive locations and cities where they could not hire the talent they wanted at the price they were willing to pay.
3. Home will be a spoke for most employees. I believe working from home is now locked in as normal practice for all employees, at least 1-2 days a week.
I have talked about trends that are accelerating in previous narratives. These ideas are not new but the concept and the way to think about them for your company can be valuable. Call us if you have a question about your company’s office space strategy.
The Office Hub and Spoke Model is Coming
As companies demand flexibility, landlords must adjust
By Les Shaver
June 17, 2020
The office hub-and-spoke concept is nothing new. Companies have used it for years.
Their headquarters serves as the hub of the business, while the spokes are a geographically distributed network of offices, usually based on talent and client needs. The headquarters is generally in a core location accessible to public transportation, and it acts as the cultural center of the business.
Like many things in commercial real estate, COVID-19 has acted as an accelerant for the hub-and-spoke model.
“It’s inevitable that COVID has forced companies to rethink their space and logistical needs, and this model is evolving,” says Bryan Murphy, CEO of Breather. “With more and more companies becoming comfortable with their employees working from home and as a result, extending their work from home policies comes a change for the future of work.”
As companies have grown more accustomed to their employees working remotely, Murphy says they’re now looking to downsize their headquarters.
“HQ will still be the cultural hub but may have only 30% of employees working from there on a day-to-day basis,” Murphy says. “Ultimately, executives want more flexibility when it comes to real estate—both for their people and their leases. They’re looking to supplement with flexible spaces that serve the needs of their employees.”
“Larger spaces typically work better for hubs as they’re equipped with the tools, features and layouts needed for acting as a business’s core location,” Murphy says. “Typically, a hub space would include multiple breakout rooms, different areas of soft-seating and areas for large team meetings.”
Since the hubs serve as a company’s headquarters, they often have a larger employee count. “When employees from out of town (or who typically work in a spoke) meet as an entire team, they will usually meet in the hub,” Murphy says. “Larger spaces that are built and designed specifically for fuller teams can fulfill the needs and purpose of a hub.”
Spokes are traditionally smaller locations that are often designed as an open space to accommodate the needs of a single team or company function. They can be appropriate for sales, marketing, call centers and special projects.
“These spokes will range from drop-in spaces located closer to their homes to reduce commuting time, to spaces where they can drop in for some quiet time, to spaces built for collaboration where teams can come together to ideate and plan,” Murphy says.
The implications of more companies adopting the hub-and-spoke model could be huge for office landlords. “This will impact landlords because the hub and spoke model means that tenants don’t have a need for a massive HQ,” Murphy says. “We expect to see tenants move away from 10-year leases, and instead add spokes on flexible terms based on the current needs of the business.”
The move away from long-term leases will force landlords to offer more flexibility. “People want space solutions that provide flexibility and options,” Murphy says. “Companies that are able to provide flexible space and, more specifically, private space options, in particular, will continue to see upticks and grow in popularity as people seek alternatives to traditional office space.”