We Can Help You Prosper

What is an exclusive use clause in commercial lease agreements?

On Behalf of | Nov 29, 2021 | Commercial Real Estate |

If you are thinking of setting up a business, there are a lot of factors that will influence its location. For starters, you do not want to set shop in an area with direct competitors. If anything, you do not wish to share the same physical address with them.

That is where an exclusive use clause in a commercial lease agreement comes into play as a tenant. It bars your landlord from leasing the property to another tenant with a similar business. The whole point of an exclusive use clause is to protect your business.

Negotiating your exclusive use provision

It is essential to go through your lease agreement carefully and review your exclusive use clause. Otherwise, you might end up signing a lease agreement that gives the landlord unlimited power to choose tenants, which might end up hurting your business. 

Like any other term of a contract., you can negotiate the exclusive use clause with the landlord to align with your business objectives. For instance, you can request exclusive use in a certain mile radius where the landlord owns other property. The main factors to consider are the duration, scope of exclusive use, and the remedies available for you in case of a breach, such as reduced rent. 

Protect your business interests

Learning more about this and other protection clauses at your disposal will give you and your business an edge when you settle on an ideal location.  

Importantly, exclusive use clauses are not the preserve of large businesses or corporations. Therefore, if you need to protect your new business from any unnecessary competition, having such clauses well-defined and part of your lease agreement may be an excellent place to start.