The hub-and-spoke office model is gaining currency as COVID-19 continues to rage on. But companies considering this new setup should realize it may work better in some cities than others.
Jennifer Frisk, senior managing director at Newmark Knight Frank’s downtown Los Angeles office, thinks the model has more potential in areas like New York, Boston and San Francisco, where public transit is prevalent. “It’s a little bit easier in Los Angeles because you’re getting in your car, whether it’s to go five minutes or 45 minutes,” Frisk says. “The hub-and-spoke model doesn’t solve for that as much as it does in those cities that are relying on public transit.”
Still, Frisk thinks the impetus for the hub-and-spoke model, companies, looking for more flexibility, will be a trend regardless of the public transit situation.
“Companies will look more at their culture and what their people need,” Frisk says. “Instead of needing 25 offices, 50 workstations, a kitchen and a conference room, they’ll define their needs a little differently.”
Frisk says that flexible space is needed now more than ever as the whole. While WeWork had its problems, it proved the value of having flexible leases.
“WeWork was born out of the need for that flexibility,” Frisk says. “Coming out of the last recession, many of these growing technology companies had a real need for flexible office space because a five-year lease term is an eternity for them.”
While flexible space is here for the long-term, it might look different in the future. Companies sharing kitchens and conference rooms may not make as much sense after COVID. “There was a need for the product [flexible space],” Frisk says. “But because of COVID, the way the product is set up from a layout standpoint, from a use standpoint and from a safety and wellness standpoint, it doesn’t work now,” Frisk says. “Even after a vaccine, we believe there will be changes in the way it is set up.”
But regular office space could also transform, according to Frisk. Coming out of the COVID shutdown, Frisk thinks more areas will be allocated for team building or training. Since office space is often the second most expensive item for most companies (beyond payroll), it makes sense that they’ll look to downsize.
“I think office space will have to provide a different function because it’s been proven that people can work from anywhere,” Frisk says. “So if the office is just a place where you can go in, be at your computer and do your work, most companies are not getting value for what they’re spending on rent.”
But that doesn’t mean offices aren’t necessary. “I think we all want to get back to our offices,” Frisk says. “For collaboration, having a team together, creative thinking and feeling like you are part of a company, brand and culture, you can’t be at home.”