The hub and spoke concept is coming like a freight train to corporate real estate. It works as a rough picture of how workplace portfolios might evolve, but operationally I cannot imagine how it would actually work.
For those not familiar with it, the hub and spoke concept has been one of the dominant approaches for transportation, logistics, and technology for over half a century. Imagine an airline, that would have several large “hub” locations across the country but hundreds of smaller “spoke” locations. Volume from the spokes would feed into the hubs. This allows the hubs to be where all services are available leaving the spokes as a lower-cost, easier-to-manage sites. The hubs in turn are larger with greater complexity. Having a small number of hubs simplifies the overall operation, but anyone who primarily uses a spoke location would have a lesser experience.
From a 50,000-foot view level, it is easy to see why CRE talking heads like to bring up this concept. They convince businesses to maintain full-service downtown locations that are for clients, high-touch engagement, and full-service amenities while also convincing them to open smaller suburban drop-in spoke offices to ease employee commutes, allow casual collaboration, and provide a lower overall cost of operation. It sounds really good until you actually begin to model how it would work in reality.
Let’s start by understanding that employees are almost never going to visit more than a single office in a day. There is no distribution or transportation happening between sites for the most part. Similarly, employees will generally have a go-to location that they prefer usually due to their commute time. This brings us to the crux of the hub-spoke issue. Smaller spoke locations mean smaller teams with easy access to each which means less in-person collaboration actually happens.
If you look at the typical commute chart around a downtown office, there are employees in all four cardinal directions. There are often clusters of employees in denser suburban areas, but it is rare for there to be a single convenient suburban site for all employees. The good thing about a downtown site is that anyone who lives around a city is used to the idea of commuting there. If you pick up and move the hub site to a suburban site central to the majority of employees, it often still works for most as it is logical and still familiar.
However, hub and spoke is something different entirely. In corporate real estate, it is effectively sub-optimizing all locations for all employees instead of doing some optimization. The spoke locations pull employees away from the hub site meaning the amenities and services are not shared. The hub location also becomes an event destination for most instead of a normal workday spot. Spoke locations will also run the risk of splitting up teams. If half the team is nearer Site A but the other half is split between the hub and Site B, some people will always be compromising more to do in-person activities.
In the world of distribution logistics, this exact issue plays out on about 10-year cycles with companies centralizing all distribution into a handful of strategic hubs but then shifting to hub and spoke when fuel and transportation costs go up. The right answer usually lies somewhere between the two models with a sensitivity around cost and operational complexity.
All told I am not fully convinced that hub and spoke models cannot work for workplace strategies, but I am moving in that direction. It will be interesting to see how all of this evolves over the next five years or so.