Every clause in a commercial lease can impact the obligations of a landlord and their tenant(s). Lease terms dictate who is responsible for facility maintenance and taxes. Commercial leases can even influence how people conduct their businesses.
From limitations on when customers can access the property to restrictions on the total number of vehicles in a shared parking lot, the details of a commercial lease can have a profound impact on how a company operates. Tenants can sometimes request clauses intended to protect their interests when renting business space. An exclusive use clause can help protect tenants from splitting their market share with a competitor who is too close for comfort.
What is an exclusive use clause?
When a commercial lease includes an exclusive use clause, the landlord agrees not to rent a nearby property to another business with the same basic business model. Exclusive use clauses can protect tax preparation specialists, hairdressers and others who could lose business if a similar company begins operating in the same office building or strip mall.
Exclusive use clauses limit nearby competition, making it easier for a company to establish a local market for its goods or services. Tenants who are aware that there may be substantial competition for a limited amount of local demand may want to negotiate with their landlords to ensure that a commercial lease protects them from another business directly competing in a limited geographic area.
In cases where landlords do not uphold exclusive use clauses or where existing tenants change their business model to one that directly competes with another tenant, legal action may be necessary. Working with a commercial real estate attorney can help business owners negotiate reasonable commercial leases and enforce the terms of the leases they’ve signed.
