Exclusive Use Clauses
Provisions limiting competing uses in a property, and limits on how a tenant may use its own space.
01
What It Is
An exclusive use clause prevents the landlord from leasing other space in the same property or center to a business that competes with the tenant's protected use. The related permitted use clause defines what the tenant itself may do in the space.
Both clauses are drafted around a specific description of use, and the precision of that description determines how much protection or flexibility it provides.
02
Why It Matters
For a retailer or service business, an exclusive can protect the customer base that justified the location in the first place.
The same specificity cuts both ways. A narrow permitted use can prevent a tenant from adding a product line, changing concepts, or subleasing to a slightly different business.
For owners, broad exclusives granted to one tenant can constrain leasing for years, so scope, duration, and remedies deserve careful thought.
03
Common Misconceptions
- "An exclusive blocks all competition nearby." It applies only to property the landlord controls, not to the surrounding market.
- "My permitted use covers anything reasonable." It covers what is written.
- "Existing tenants don't affect me." Prior exclusives held by other tenants may restrict your own use.
04
Questions to Ask
- How precisely is my permitted use described, and does it allow for growth?
- What exclusive can I obtain, and how is the protected use defined?
- Do existing tenants hold exclusives that limit what I may sell or do?
- What is the remedy if the landlord breaches my exclusive?
- Does the exclusive survive renewal, assignment, or a sale of the property?
05
Related Reading & Resources
The most successful real estate decisions often involve collaboration between several professionals working toward the same goal. Understanding each person's role helps you ask better questions and make more confident decisions.
06
Other Lease Terms
- Gross LeaseA lease where the landlord pays most or all operating expenses and the tenant pays a single, predictable rent.
- Modified Gross LeaseA middle-ground structure where landlord and tenant split operating expenses in a negotiated way.
- Triple Net (NNN) LeaseA structure where the tenant pays base rent plus property taxes, insurance, and maintenance.
- CAM ChargesThe shared costs of operating and maintaining areas all tenants use, billed as a pro-rata share.
- Letter of Intent (LOI)A preliminary document outlining the main business terms before a formal lease is drafted.
- Tenant Improvements (TI)Modifications made to a space so it fits the tenant's use, and the negotiated question of who pays.
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