South West –

The rise of the satellite office

Is the satellite office the future of work? Demand for regional office space is growing as more businesses turn to the hub and spoke model. We look at the benefits.

Office workings smiling in a meeting with laptops and papers

 

Remote working became the necessary norm during lockdown in 2020. Has the pandemic just accelerated a trend of employees wanting to work closer to home? 

Regional, or satellite, office space can provide a work environment closer to home than say, a central London office, and also reduce costs. In the last 12 months, rising demand for this type of office space has accelerated the hub and spoke model, with many businesses opting for a dispersed office space portfolio.

My office was Arbuthnot Latham’s first satellite office and back in 1994 it gave the bank a foothold in the South West. 

Arbuthnot Latham now has three remote offices in Manchester, Bristol, and Exeter. Since I joined just over five years ago, the Exeter office has grown from ten employees to 33, and we now have roles undertaken in Exeter that were previously purely HQ-based jobs.

A desk in a regional centre like Exeter costs around 20% of a desk in London based on rental per sq. ft values, and I would argue employees have the opportunity of better work/life balance in Devon compared to London.

In his Arbuthnot Latham insight articles, Venaspace CEO Alex Bonnet talked about the appeal of coworking offices and said, "with employees working from home, some companies have also started to downsize, moving from a 30–40-person office to 15 max capacity”.

Close up of the hub and spokes on a bike wheel

What is satellite office space?

A satellite office is a branch of an organisation opened at a strategic location to facilitate business. It is also known as the hub and spoke model, with businesses modelling their corporate real estate strategy around the concept of having a headquarters (the hub) and a geographically distributed network of offices (the spokes).

The benefits of using a satellite office space

Businesses looking to open up a satellite office might be expanding their offerings or emerging into new markets, so they will want some employees on the ground to network, learn about the locality, or handle in-person logistics.

Some of the major benefits that satellite office space brings are better talent, access to markets, reputation, and cost-efficiency. On the flip side, the disadvantages include managing cultural variation between offices and brand control. Without people under the same roof, inconsistencies can appear.

Our clients benefit from regional offices too. We often get clients commenting that they ‘like dealing with local people who they know and understand their way of life’. It is so much more difficult but of course not impossible to do this from ‘head office’.

 

Wealth migration

There undoubtedly has been an acceleration of money moving from the major cities to the regions. This is most clearly demonstrated by the UK House Price Index (HPI) showing double digit annual percentage increases for most regions, with the South West annual increase quoted at 10.9% compared to London at just 3.7%. Interestingly, Yorkshire and Humber topped the charts with 14%. Local estate agents selling the more expensive South West properties have certainly been very busy, and my contacts report extremely high demand for coastal and properties with space. I have also heard of London buyers offering on coastal properties without even viewing them.

 

So, what does this mean for satellite offices?

Will they be in more demand, or will workers commute to their London HQ infrequently and just work from home most of the time?

My personal view is that the majority of businesses work best when their employees collaborate and to do that effectively, you need office space. If that can be close to home in a remote or flexible office space, then that is a good and sustainable position. I think satellite offices will increase and the centralisation trend seen in the last 20 years is now on the reverse.

 

 


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Author -

Rob Salisbury

Rob Salisbury

Director, Head of South West Office

Rob Salisbury joined Arbuthnot Latham & Co in 2016 to set up the South West Commercial Team and now has responsibility for both the Commercial and Private Banking teams based in the Exeter Office. Rob has over 30 years’ experience in the local banking sector, holding senior positions in a number of different parts of the industry across the South West of England.

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