Tenant Protections
Exclusive use clause
Also called: exclusivity clause, use exclusive
An exclusive use clause bars a landlord from leasing other space in the same property to a tenant whose primary business competes with the protected tenant's stated use. It is the provision that stops a second coffee shop from opening four doors down in the same center.
Exclusivity is only as good as its definition. The clause is short, the definition is everything, and the carve outs are where a landlord recovers most of what it gave.
Drafting the exclusive itself
Too narrow and it fails. A café protected against "coffee shops" does not stop a bakery that sells espresso. Too broad and the landlord will not agree, or will agree with carve outs that swallow it. The workable middle is usually a description of the protected use plus a sales threshold: no other tenant may devote more than a stated percentage of its floor area, or derive more than a stated percentage of gross sales, from the protected category.
The carve outs to expect
- Existing tenants and their renewals. Standard and generally unavoidable, but confirm the list is attached as an exhibit rather than described generically, and that a renewal does not permit a use expansion.
- Anchors and major tenants. Also standard. Check the square footage threshold that defines a major tenant.
- Incidental sales. The percentage matters. 10 percent of floor area is very different from 25 percent.
- Space the landlord does not own. Pads and out parcels under separate ownership are outside the landlord's control, but the lease should say so explicitly rather than leave it ambiguous.
The remedy is the part that gets deleted
An exclusive with no stated remedy is a promise with no price. Ask for a defined consequence: alternate rent at a percentage of gross sales while the violation continues, a right to injunctive relief, and a termination right if the violation persists beyond a cure period. Landlord redlines commonly strike the alternate rent remedy and leave only a covenant, which converts a business protection into a lawsuit.
Continued protection conditions
Landlord forms often condition the exclusive on the tenant continuously operating and not being in default. Continuous operation as a condition is reasonable in principle, but read it against any go dark right the tenant negotiated, because the two clauses can be drafted so that exercising one forfeits the other.
Watch it across rounds
Because the exclusive lives in the use article and the carve outs often live in an exhibit, a change to the exhibit will not appear anywhere near the clause it guts. Check both together in every round.
Catch this clause when it changes
CRE Redline pulls every tracked change out of each redline round, ranks it by how much it moves, and keeps contested clauses visible from round to round. Round 1 of every deal is free.
Analyze your first round freeRelated terms
A co-tenancy clause lets a retail tenant reduce rent or terminate its lease if named anchor tenants close or if overall occupancy at the center falls below a stated threshold.
A go dark clause governs whether a retail tenant may close its store while continuing to pay rent through the end of the term.
A continuous operation clause requires a tenant to remain open for business during stated hours throughout the term, rather than merely paying rent.
Percentage rent is additional rent a retail tenant pays based on gross sales above a stated breakpoint, letting the landlord participate in the location's performance.
This page is general information, not legal advice. Review lease language with qualified counsel.