Emerging Hub and Spoke Model in Philippine Office Sector

by PRIME Philippines Research & Advisory  June 16, 2020

Firms have to constantly check how they can adjust their business operations amidst the changing business landscape. As more companies become more open to modernizing their work space setups because of the continued quarantine measures, modern workplace models are seen emerging. One of which is the hub and spoke real estate model.

 

Introducing the hub and spoke real estate model

In this model, a company has a ‘hub,’ which serves as its headquarters, and designated ‘spokes,’ which serve as satellite offices. Ideally, hubs are located in prime locations such as in central business districts and are used for ‘core’ employees and for hosting client meetings. Spokes, on the other hand, are support offices that are located in various locations, usually at the fringes of or outside business districts and nearer to residential areas.

 

IT-BPM sector’s use of the hub and spoke model

Although the hub and spoke model may sound new to the Philippine real estate landscape, it has actually been practiced in the industry, primarily by IT-BPO companies. Most BPO companies are having their headquarters or hubs in Metro Manila, Cebu, and Davao central business districts. These companies have been expanding their businesses or their ‘spokes’ domestically through tapping emerging and digitally-ready markets. 

 

More companies opting for modern work setups 

Through the hub and spoke model, companies can ensure minimized operational disruptions as employees can conveniently access their companies’ integrated spokes. Moreover, it can facilitate the scaling of businesses. In adjusting business operations to the new normal, more companies may opt for a hub and spoke model to ensure overall business efficiency and sustainability.

 

Implications for office space demand

With more firms being more receptive to modern and flexible workplace arrangements similar to the hub and spoke model, changes in office space demand are also likely to be observed. With this model, some companies may look for smaller office spaces in central business districts to accommodate fewer ‘core’ employees. Meanwhile, companies may look for more office spaces in the fringes of prime locations, where rental rates are more affordable, for the workstations of their employees. With this evolving space requirements, demand for coworking spaces and serviced offices may ramp up.

 

In this unprecedented time, the key to business survival and sustainability is agility. Firms have to constantly check how they can adjust their business operations amidst the changing business landscape. Considering how the real estate hub and spoke model can work for your business can be vital in determining how it can move forward effectively.

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