A Real Estate Plan by Stage: Seed, Series A, Series B and Beyond

Funding stage is not a real estate rule. Nothing about closing a round obliges a company to change its office. Stage is useful because it tends to move four things that do drive real estate decisions, and it tends to move them together.

• Forecast horizon: how far ahead you can predict headcount with any confidence.
• Credit: how a landlord views your ability to pay, which affects the security it asks for and the build-out it will fund.
• Cash priorities: how much capital you are willing to tie up in deposits, furniture and construction.
• Identity: how much the office has to do for recruiting, customers and culture.

The pattern fails whenever one of those four is out of step with the round name. A seed company building robots needs a real facility from the first day. A profitable later-stage company with a fully remote team may need very little. Read the stages below as descriptions of what commonly fits, then check them against the override signals at the end.

At seed, the honest headcount forecast often covers a short horizon, and the company itself may change direction. The governing principle is to match the length of the commitment to the length of the forecast. For most seed teams that points to coworking, a small furnished sublease, or sharing space with a friendly company.

The reasons are practical. These options ask for little or no capital up front, come furnished and connected, and can be exited or resized on short notice. A landlord offering a direct lease to a seed company will usually ask for substantial security and may ask for a personal guarantee, both of which pull cash and personal risk into a decision that does not need them yet.

The exceptions at this stage are companies whose work cannot be done in shared space: hardware, lab work, regulated data, or anything that needs equipment a coworking operator will not allow. Those teams should look at small flex or light industrial space early and accept that their first real estate decision is a serious one.

A Series A typically brings a hiring plan the board has approved, a team large enough that shared space starts to cost more and work worse, and a need for privacy. The common move is into a first private office, and the common mistake is to treat that move as permanent.

What tends to fit is a space that is ready or nearly ready to occupy, on a term short enough that you are not betting on a forecast you cannot make. Subleases and landlord-built spec suites both serve this well. A sublease often offers attractive economics and furniture, with the limits that come from sitting under another tenant’s lease. A spec suite is a direct relationship with the landlord and usually a newer build-out, with less ability to change the layout.

This is also the stage where the lease terms start to matter more than the rent. A company that might double is better served by flexibility than by the lowest rate.

After a raise, there is pressure to take a space that announces the round. Size the office from the hiring plan, not from the bank balance. Cash in the bank is runway, and a lease is a fixed cost for its whole term.

By Series B, many companies have enough scale, history and capital that a direct lease with a custom or semi-custom build-out makes sense. The office starts doing more work: it supports recruiting, hosts customers and holds teams with different needs. Landlords also view the company differently, which can improve the allowance and soften the security requirement, though a deposit or letter of credit is still normal.

The risk at this stage is growth in either direction. A longer term gives you a better build-out and more stability, and it also stretches past what you can forecast. The answer is to buy flexibility inside the lease. Our guide to lease terms for fast-growing companies covers the clauses in detail. At the planning level, decide which of these you need before you go to market.

• A defined way to grow in the building: an expansion option or a right of first offer on adjacent space.
• A defined way out or down: a termination right, a contraction right, or sublease language you can actually use.
• Protection for a financing or acquisition, so a change in ownership does not require landlord consent.
• A security structure that reduces as you perform.

Series B is also when a second location often appears, whether a sales office, an engineering hub in another city or space for a team that came with an acquisition.

Later-stage companies usually stop thinking about an office and start thinking about a set of them. The questions change accordingly. Which markets do we need to be in for talent and customers? Which leases expire when, and do any expirations line up in a way that helps or hurts? Where are we carrying space we no longer use?

Several habits become worthwhile at this stage. Keep a single schedule of every lease with its expiration, notice dates and option deadlines. Standardize the terms you ask for in every market, so that assignment, sublease and security provisions are consistent. Review underused space regularly and decide whether to sublease, restructure or hold. Some companies at this stage also consider owning a facility, especially for specialized hardware or lab uses where the build-out investment is large and long-lived.

Finance and legal teams become more involved here, since lease obligations affect reported financials and get examined closely in a financing, an acquisition or a public offering. Coordinate real estate decisions with your CPA and counsel.

Use these questions to test whether the pattern for your stage applies to you. If your answers point elsewhere, follow the answers. Helping a company work through them and then take the right requirement to market is where a tenant representative such as TAG starts an engagement.

• ✓How far ahead can we forecast headcount with real confidence, and does the lease term we are considering exceed it?
• ✓Does our work require space that shared offices cannot provide, such as equipment, a lab, or strict data controls?
• ✓Are we in the office most days, a few days, or rarely, and is that likely to change?
• ✓How much cash are we willing to commit to deposits and build-out instead of hiring?
• ✓Is our revenue strong enough that a landlord would view us differently than our round name suggests?
• ✓Could a financing, acquisition or reorganization happen during the term?
• ✓Is hiring concentrated in one city, or are we likely to need a second location?
• ✓If the next round takes longer than planned, can we carry this lease?

One planning habit holds at every stage: look one stage ahead. The lease you sign after a Series A will still be in force when you are behaving like a Series B company, so negotiate it for that company.