During the pandemic, growth in secondary cities and suburbs has outstripped demand in CBDs as 57% of employees want an office closer to home, according to a new research report from The Instant Group and HICKEY, “The Rise of Suburbia: Can a hub and spoke model really work?”
 
This desire presents a stark contrast to existing supply in New York City, where more than 81% of the office and more than 85% of all New York City flexible workspace supply is in Manhattan.
 
With a dispersed portfolio model, Instant and HICKEY found that businesses could save more than 23% on office leases, while employees would save on average 1.5 hours a day in commuting time and in New York, $7,000 a year in mileage costs and $1,100 a year in public transportation costs.
 
This would mark a huge shift for people working in New York City, who have the longest average commute time in the U.S., since 59% of NYC-based employees live in the suburbs.
 
“When we think about this, if just 5% of New York’s 1.5 million office workers want to relocate to spoke locations in the suburbs, existing and planned supply would not be able to cope,” said Joe Brady, CEO Americas, The Instant Group.

“Change is needed,” he continued. “Losing talent is the number one risk for CEOs, with turnover costing tens of thousands of dollars. Based on how and where employees want to work, we believe that corporate headquarters will shrink by up to 40%, on average, in the coming years, as a result of this marked pandemic shift.”
 
Using the greater New York market as an illustration—the study also delves into the London and Manila office markets—Instant and HICKEY charted real estate portfolios of the future. The most likely regional locations in a dispersed portfolio for businesses considering a hub-and-spoke model, particularly in pharmaceutical and financial services, are Huntington, NY; Nyack, NY; New Brunswick, NJ; and Trenton, NJ.
 
Secondary towns in the U.S. have seen reasonable levels of investment, with modern office options. However, most locations would currently be hard-pressed to offer an employer more than 30 desks, let alone the 60 or more that are likely needed.
 
There will also be opportunities for spoke locations in second-home locations as people in executive and senior roles are increasingly spending time in these vacation and coastal areas to the north and east of New York.
 
Guy Douetil from HICKEY said, “Employees are now more empowered than ever to choose where, when and for whom they work. Companies need to understand that in selecting a location the emphasis has changed from ‘where do people go to the office to work’ to ‘where do people live’?’ It is also worth remembering that no single city is the same, it is vital to understand how commuting patterns vary between locations in terms of mode, ease and time of commute.”