The commercial lease use clause is important to both the landlord and tenant. The landlord of a retail shopping center should state in the use clause the specific tenant use allowed and limit the tenant to that use only. As a landlord, to keep your anchor tenant happy, and your other tenants, the commercial use clause will help to maintain a proper tenant mix. If a shopping center has a grocery chain as its anchor tenant, the commercial lease use clause will prohibit certain types of uses. The use clause will prohibit adult novelty stores, head shops, and adult entertainment establishments. The “best” use clause for the landlord defines permitted uses and uses not permitted.
The commercial lease use clause also helps the tenant. A bakery may want the exclusive use to create and sell desserts and cakes so the landlord cannot lease another space to a cupcake shop. If the use clause includes environmental prohibitions, it will help to prevent dry cleaning processing plants and gas stations from becoming tenants. Other uses may not be attractive to credit tenants and anchors, such as martial arts studios, large restaurants or any use that requires many parking spaces or creates traffic issues.
Landlords favor language disallowing a tenant’s change of use without the written consent of landlord, and consent may be withheld without stating a reason for doing so. Landlords will prohibit uses that may lead to demonstrations, such as abortion clinics and puppy mills.
The tenant will want to negotiate with the landlord so the commercial lease use clause is as broadly written as possible. The tenant would be pleased to have a use clause stating the “Tenant may use the Premises for any lawful purpose or purposes.” It is rare when a landlord will allow such a broad use provision. With the bakery shop mentioned above, the tenant would be better off to have the use clause refer to the creation and sale of cupcakes and “… all types of confectionary items and bake goods”. If the tenant wants to expand its business model, a broader use clause will provide the flexibility to do so.