What follows are my own general observations and opinions from reviewing commercial leases for Los Angeles business tenants. It is not legal advice, it is not a definitive statement of California law, and every lease and every situation depends on its own particular facts.
The use clause is the shortest provision in most commercial leases and, in my experience, the one most likely to strand a business two years later. It is usually a single sentence describing what the tenant is permitted to do in the space. Tenants skim it because it appears to describe exactly what they already intend to do. The problem is that it also describes everything they are not permitted to do, and businesses change.
My general view is that a tenant should negotiate the use clause as though the business will pivot, because a meaningful number of them do. A clause reading “for the operation of a coffee shop and for no other purpose” is a clause that, as I read it, gives the landlord a reasonable argument that adding a lunch menu, selling retail bags of beans at volume, or converting half the floor to co-working seats requires their consent — consent they are free to condition, price, or withhold.
Narrow use clauses and the consent problem
What makes a narrow use clause expensive is not usually an outright refusal. It is timing and leverage. A tenant who needs to change their operation is generally under commercial pressure to do it now, and the landlord knows it. In my experience the request for consent becomes an opportunity to reopen terms — a rent bump, a shortened term, a demand that a renewal option be released, or a fee simply for signing the consent.
The fix I usually suggest is not to argue about whether the landlord may object. It is to broaden the permitted use at the outset and to make the consent standard objective. Language permitting the stated use “and any other lawful retail use” is dramatically stronger than the stated use alone. Where a landlord will not go that far, I generally push for consent that may not be unreasonably withheld, conditioned or delayed, with an outside date after which silence is treated as approval. A landlord who can simply not respond has, in practical terms, a veto.
Exclusivity — the other half of the same conversation
An exclusive use provision is the mirror image: it restricts the landlord from leasing other space in the property to a competing business. For a tenant whose economics depend on being the only operator of their kind in a center, my view is that this is often worth more than a few dollars per square foot in rent.
Exclusives are also where I see the most drafting that reads well and protects poorly. A clause promising the tenant will be “the only coffee shop in the center” does not, as I read it, stop the landlord leasing to a bakery that sells espresso, a sandwich shop with a drip machine, or a convenience store with a self-serve counter. Competition in Los Angeles retail rarely arrives wearing the same label. I generally suggest defining the exclusive by activity and revenue share rather than by business category — for example, prohibiting any other tenant from devoting more than a stated percentage of its floor area or gross sales to the specified products.
What I look for in an exclusive before I think it has teeth
Whether an exclusive is worth anything depends almost entirely on details that sit outside the clause itself. The questions I work through:
- Does it bind existing tenants? An exclusive granted today generally cannot override leases already signed. I look at the rent roll and the existing tenant mix before assuming the protection means anything.
- What is the remedy if it is breached? A clause with no stated consequence leaves the tenant proving damages, which is difficult. Rent abatement, a right to terminate, or a defined reduction while the violation continues gives the provision actual force.
- Does it survive a sale of the property? I look for language binding successors and, where the stakes justify it, a recorded memorandum of lease so a buyer takes with notice.
- Are there carve-outs? Anchor tenants and existing occupants are frequently excepted. Sometimes reasonably; sometimes the carve-outs swallow the clause entirely.
- Does it cover space the landlord owns nearby? Protection inside one center means little if the landlord owns the adjacent parcel.
Los Angeles-specific pressure points
Two local realities shape how I read these clauses. The first is zoning and permitting. A broad use clause is only as broad as the certificate of occupancy and the underlying zoning allow, and in Los Angeles a change of use can trigger plan check, parking requirements, and sometimes a conditional use permit — particularly for anything involving food service or alcohol. I generally suggest tenants confirm that the permitted use is actually permitted by the City before signing, rather than relying on the landlord’s description of the space, and consider conditioning the lease on obtaining the necessary approvals within a stated window.
The second is the age and configuration of a lot of LA commercial stock. Many older strip centers and converted buildings have parking counts that were legal when built and are constrained now. A use that increases parking demand — a restaurant replacing an office, for example — can run into problems that have nothing to do with the landlord’s willingness to consent.
Being candid about leverage
I do not want to suggest every tenant can obtain these terms. Leverage in a lease negotiation is mostly a function of the market, the tenant’s covenant strength, and how long the space has been sitting. A single-location business taking 1,200 square feet in a well-occupied Westside center will not get what a regional operator taking 8,000 square feet in a half-empty building will get.
What I do think is achievable in almost any negotiation is clarity. Even where a landlord will not broaden the use clause, knowing precisely how narrow it is — before signing — lets a tenant price the risk, plan around it, or walk. In my experience the damaging outcome is not a narrow clause. It is a narrow clause the tenant did not know was narrow.
If you are reviewing a commercial lease and want a second set of eyes on the use and exclusivity provisions before you sign, I am glad to help. Commercial lease and contract review work of this kind is handled on an hourly or flat-fee basis, agreed in writing before the work starts, so you know the cost going in. You can reach me at (310) 556-9692.
Related reading: Commercial lease review and negotiation · Why a lease review before signing matters · Assignment and subletting provisions · Understanding CAM charges
Again, the above reflects my general opinions and how I read these issues, not legal advice about your particular lease, and not a definitive statement of California law. Reading this article does not create an attorney-client relationship. Every lease turns on its own language and its own facts, and I would encourage anyone negotiating one to get advice specific to their circumstances before signing.
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