Are You Exclusive?
Tenants entering into commercial leases for retail shopping centers often request an exclusive use clause. An exclusive use provision is intended to protect a tenant from competitors who sell the same goods (i.e., no other bakeries in the shopping center, no other sandwich stores, no other drug stores). On the other hand, the exclusive use provision will restrict the landlord's freedom to rent out space to other tenants who desire to be in the shopping center. While the tenant may want the clause, the landlord usually does not want their hands tied by an exclusive.
Real estate attorneys who represent retail tenants in lease negotiations should always consider whether an exclusive use provision is appropriate. A tenant may not consider the idea of an exclusive on their own, but when a competing business opens up next door, they will call their attorney asking whether the lease allows the landlord to do such a thing. Larger national credit tenants may have more leverage in lease negotiations to request such a clause but exclusives are used even in small neighborhood strip centers. The tenant's
real estate brokershould address whether the landlord is willing to enter into an exclusive during the letter of intent stage of negotiations.