The office hub-and-spoke concept is nothing new. Companies have used itfor years.
Basically, the headquarters serves as thehub of the business, while the spokes are ageographically distributed network ofoffices, usually based on talent and clientneeds. The headquarters is generally in acore location accessible to public transportation, and it acts as the cultural centerof the business.
Like many things in commercial realestate, COVID- 19 has acted as an accelerant for the hub-and-spoke model.
“It’s inevitable that COVID has forcedcompanies to rethink their space andlogistical needs, and this model is evolving,” says Bryan Murphy, CEO of Breather.
As companies have grown more accustomed to their employees workingremotely, Murphy says they’re now looking to downsize their headquarters.
“HQ will still be the cultural hub butmay have only 30% of employees workingfrom there on a day-to-day basis,” Murphysays. “Ultimately, executives want moreflexibility when it comes to real estate—both for their people and their leases.
They’re looking to supplement with flexi-
ble spaces that serve the needs of their
“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 mul-
tiple breakout rooms, different areas of
soft-seating and areas for large team meet-
Since the hubs serve as a company’s
headquarters, they often have a larger
employee count. 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, market-
ing, call centers and special projects.
“These spokes will range from drop-inspaces located closer to their homes toreduce commuting time, to spaces wherethey can drop in for some quiet time, tospaces built for collaboration where teamscan come together to ideate and plan,”Murphy says.
The implications of more companiesadopting the hub-and-spoke model could
So far the multifamily asset class has fared well during the pandemic, withthe vast majority of renters staying on topof their monthly obligations. In addition,the capital markets for apartments haveremained open for business during thistime.
However a set of unfortunate factorsare coalescing to create what IvanKaufman, CEO of Arbor Realty Trust, sayswill be the perfect storm for multifamily.These include the expected end to thesupplemental unemployment payments
FOR A REVERSAL IN
be huge for office landlords. “This willimpact landlords because the hub andspoke model means that tenants don’thave a need for a massive HQ,” Murphysays. “We expect to see tenants move awayfrom 10-year leases, and instead addspokes on flexible terms based on the current needs of the business.” —Les Shaver
THE OFFICE HUB-AND-SPOKE MODEL IS COMING