Is hub-and-spoke yesterday’s news?

It’s too easy to have an opinion on the future of workspace: taking a view costs most people nothing. If their predictions are wrong, or their understanding confused, so what? It’s just another point of view.

Unless, of course, you are a developer. In that case, a fascinating conversational topic becomes a matter of seriously expensive significance. Call the market the wrong way, and it could cost you more than a shrug of the shoulders because building workspace in Spring 2021 comes with a massively inflated set of risks.

Fabrix is an unusual developer in that its roots lie deep in the world of private equity. This means its founders understand what it is to have skin in the game.

And this is why Co-founder and Chief Executive Clive Nichol’s take on the hybrid office and the plausibility of hub-and-spoke office networks means so much. If he’s got this muddled, he’s going to pay for it.

Clive is a former head of investment for a European private equity house, a former fund manager at Canada Life and an asset manager for Telereal Trillium. Since 2016, his business has concentrated on some of the funkier office districts of central London, carrying out value-added schemes with a strong creative vibe. If there is such a thing as cutting edge workspace, Fabrix is producing it. Their portfolio of under-loved and now repurposed London workspace totals 2 million sq ft.

Is Clive worried that he’s sitting on an expensive turkey? Absolutely not. Fabrix launched the 25,000 sq ft Billiard Factory refurbishment at London’s Holloway Road a year ago and it is now 50% let. The latest innovation is to add a few dozen coworking spaces, operated under the landlord’s own steam.

‘The coworking is less about revenue, and more about capturing local people who are already in the neighbourhood and wanted a place to go for a coffee and a few hours work, but I can see how it fits into new hybrid or hub-and-spoke ways of working,’ Clive says.

Adding coworking space to its Billiard Factory campus at London’s Holloway Road gives Fabrix the flexibility many developers now seek: to cater both to corporates and to more footloose working-away-from-the-office employees.

Purchased in May 2017, the Billiard Factory campus totals 23,000 sq ft across three buildings, all arranged over ground and two upper floors.

Does close-to-home coworking have a role in the workplace mix of the future? ‘What we’ll see depends on the size of the organisation we’re looking at,’ says Clive. ‘Global businesses with big city HQs will still have HQ buildings, because they need a space to reflect what the organisation is saying about itself.’

Until now, that kind of public-facing we-are-where-we-work development has been limited to the global tech players with pockets deep enough to afford it: Google, Facebook, Amazon. But Clive’s hunch is that this ethos will descend further down the business hierarchy.

‘We’ll see an emphasis on great places to work connected to the local community. The kind of places you would only normally see from big tech corporates.’

This is where bold visions – the boldest visions – have a place. Revealed in Mix earlier this year, the 385,000 sq ft Roots in the Sky development on the site of the former Blackfriars Crown Court, Southwark, is a case in point.

The project, which has been approved by planners, involves a 1.4 acre rooftop forest of over 100 established trees and 10,000 plants on top of contemporary and sustainable office, commercial and community space.

A lightweight hybrid steel and CLT frame, with the ability to support the urban forest – and its 1,300 tonnes of soil and 1.5m deep tree pits – is at the heart of the brief. This is placemaking with a vengeance. Work on site was due to begin as we went to press, with completion due for late 2024.

‘This is the kind of building that organisations will centralise themselves in, rather than in three or four offices scattered around the West End or the City,’ says Clive.

‘What we’ll see is people working three or four days a week in that office, and then at home or in their own locality, and various kinds of flexible working. I don’t see the need for spokes from the hub, because every hotel everywhere has an element of coworking.’

Multinational corporations will follow this pattern, he believes, with larger UK corporates adopting a scaled-down version of the same approach.

The hub-and-spoke idea, which dominated conversations about the workplace in the first few months of the pandemic, is rated as rather a low possibility.

Hub-and-spoke, you will recall, was an early effort to explain how office occupiers will cope with staff reluctant or unable to come into the main office simultaneously. The idea was that some would work in the hub, the rest dispersed around the spokes.

That idea has since taken a tumble, as it dawned on employers that they simply didn’t need everyone to come into any office, let alone the head office.

As March turned to April, and the end of lockdown began to concentrate minds, the list of large businesses planning to radically shrink or perhaps abolish their office floorplate was growing very long.

British Airways says it will look at selling its campus HQ at Waterside, near Heathrow. Reach, the newspaper publisher, says it no longer needs local newsrooms. BP, the energy giant, told staff they could work away from the office for two days a week; whilst HSBC expects to reduce their global office footprint by 40% as a result.

The consequence is that hub-and-spoke no longer seems like a compelling solution. Why bother with spokes if you will hardly bother with a hub?

Clive agrees that hub-and-spoke is yesterday’s news. ‘In the very formal way that it was imagined, with a central office and lots of other offices elsewhere, the idea may have been overplayed,’ he says.

Instead, he expects more use of contracted flexible workspace, combined with working from home, from a hotel, or a coffee shop. Deals announced this spring with serviced office giant, IWG, appear to point the way.

Japan’s Nippon Telegraph and Telephone has become the latest global occupier to agree a worldwide tie-up with IWG, allowing its 350,000 staff to use IWG space wherever they happen to be. The week before, Standard Chartered Bank agreed a similar deal for its 3,500 office locations around the world.

Rather than hub-and-spoke, we end up with a hub surrounded by a hazy penumbra of workspace solutions.

‘For the big multinationals, the kind for whom hub-and-spoke might have made sense, it now seems that all this model would produce would be an even higher reliance on real estate,’ says Clive. And a greater reliance on real estate is exactly what office occupiers do not want.

Clive expects the hospitality sector to pick up a lot of workspace-related business.

‘I think we’ll see more IWG-type arrangements, although perhaps not as many as you’d think because most of the hospitality venues, which people could use informally for work, are now closed. All that office workspace in cafés and hotels is not available. And when they are allowed to re-open, the cafés and hotels and other hospitality venues will really up their game.

‘When the economy re-opens, office users won’t be short of somewhere to work, whether it’s a pub or a coffee shop,’ he concludes.

Clive could be as wrong as anybody else – the future is, after all, a closed book. But he has a finger on the pulse of the office market, and a keen financial reason for making the right call.

If he’s right, it’s not hub-and-spoke we’re heading towards, but something much more diffused and complicated.