Operating on the old adage that “location is everything,” you looked long and hard for just the right commercial space for your new business. You found it, got your lease and launched your company.
Now, a couple of years down the road, you find that your business model needs some adjustments — but your landlord says that you can’t make your intended changes.
Do they really have that power? Maybe. Here’s what you need to consider.
Use and exclusive-use clauses can limit your operations
Commercial leases are much more complicated than residential leases, so it’s easy to overlook problematic clauses when you’re new to the game. Use and exclusive-use clauses are two of the biggest clauses in your contract that can put restrictions on your operations.
A use clause essentially tells you how you can use the space you’re renting. It may specifically limit you to a specific line of business, enforce certain hours of operations, restrict the way that you advertise and more.
An exclusive-use clause is a tool that commercial landlords sometimes use to appease their premiere tenants, like the anchor stores in a large commercial plaza or mall. These restrict tenants in ways that keep them from directly competing with each other.
If, for example, you operate a small bakery, you may be restricted from offering anything that resembles lunch meals to your customers so that you aren’t competing with the corner restaurant for business — even if all you intend to offer is pre-made sandwiches in “grab and go” packs.
When you’re looking at a commercial property lease or negotiating with your landlord, you never want to try to handle things on your own. Speak with an experienced commercial real estate attorney here in the Bronx about your issues right away.