What is the hub and spoke model and how does it benefit the flexible office sector?

We speak to Freddie Ward, Associate Director, Workthere and Lauren Roth-Brown, Associate, Savills to explore what the hub-and-spoke model is and what it means for the flexible office sector.

What is the hub-and-spoke model?

Lauren: The office hub-and-spoke model is not a new concept, in fact, it has been used for many years in the real estate occupier sector. In simple terms, the idea is that a company will have a headquarters, which 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 hub can generally be found in a core location (city-centre) with excellent access to public transport and acts as the cultural centre of the business. 

What are the benefits?

Lauren: The model is something often implemented by companies who follow a centralised model where the headquarters maintains consistency over regional offices. We see this most in regulated industries such as healthcare, financial, pharmaceuticals and auto manufacturers in order to sustain a coordinated business. This is very different to some companies who follow a decentralised model where organic programmes spring up and an open culture is adopted; the technology sector is one such example.

Although in principle the hub-and-spoke model looks attractive for companies which recruit nationally, there are lots of factors to consider as part of the approach. These might include commute times, availability of public transport around the ‘spoke’ offices and the provision of local amenities. In addition, the occupier must look to provide high quality office space for the hub as well as break out areas, soft seating and areas for large team meetings. The spoke offices should accommodate single team or company function ranging from drop in spaces to spaces for collaboration. With the role of the office traditionally being a space in which to collaborate, it is important we keep hold of this.

What does it mean for employees?

Freddie: One could argue that the hub-and-spoke model might mean less face time with management and as a result the spoke offices might have trouble keeping up the culture, brand integration and community spirit, nevertheless the positives are clear to see. First and foremost, the arrangement of spoke offices across different locations gives employees a significant level of flexibility to work not only closer to home but also to cut down on commute times which boosts general work/life balance and often results in a happier workforce. Not to mention the environmental benefits of not commuting as far. The model is also an efficient way to ignite local economies, creating local jobs and expanding the talent pool which might have otherwise been restricted to more central locations.

Where do flexible offices come in?

Freddie: Despite all the obvious benefits, there can still be the hurdle of leases thrown into the mix which is often a reason for companies not to try the model. More recently, the clear answer to this has been the flexible office which allows employers to test the waters before committing to a longer-term arrangement. This allows for a more relaxed, ‘drop-in’ approach where the company can gauge appetite from employees first and even try out different locations within the area while establishing what size office suits the team best. With many flexible office providers offering monthly memberships, this is certainly more sustainable. The flexible option is often cheaper in the short-term too, freeing up capital to invest in other parts of the business.

What’s next for hub-and-spoke?

Lauren: So we’ve established the clear drivers for a company to explore a hub-and-spoke strategy, but how sustainable is it as part of an overall real estate strategy? While most companies have some sort of a hub and spoke model in place already, it is whether this is now disseminated further. Instead of having one headquarters and then regional hubs within cities, we are seeing some companies having hubs around the central HQ/cities so that people do not have to go into the cities. In light of the recent effects of Covid-19 this is something we can expect to see more of.

In the long term, we can expect to see many more companies implement the hub-and-spoke model. With more employees expecting increasing flexibility, it will be necessary in order to attract and retain the very best talent, show awareness towards sustainability and ultimately to be considered a market leader.