Your Neighbors Are Negotiable. Exclusive Use and Cotenancy.
Three provisions control who operates around your clinic: your use clause, your exclusive, and the exclusives other tenants signed before you. Your use clause sets what you can do in your space. Your exclusive limits what the landlord can lease to a competitor nearby. The other tenants' exclusives restrict you because they signed first. You negotiate all three at the LOI, and after that your leverage drops sharply.
When you tour a center, you look at the other tenants. Who brings traffic, who might send you patients, what the mix says about the location. I've written about that read before. What's easier to miss is that the mix is temporary. Leases turn over, and the vitamin shop next to you in year one can be an urgent care by year four. Your lease, and the leases signed before yours, control whether that happens.
These three don't sit together in the document. The use clause is up front with the basic terms. Your exclusive is its own section or a rider. The other tenants' exclusives usually arrive as an exhibit, often late, sometimes after your attorney has already scoped the review. Different documents, different moments, different readers. They only make sense read together, but are rarely provided that way.
What should your use clause say?
Your use clause says what you can do in the space. It's the landlord's main tool for controlling the center, so they defend it. It protects the exclusives they've already handed other tenants, it ensures the tenant mix maintains the image and underwriting they've scoped, and their lender has opinions about it. Expect redlines.
The instinct is to solve that by listing every service line you might ever add. This will not work. A long list of hypotheticals tells the landlord you aren't clear about the service you're offering or the benefit you're providing to the center, and they respond by narrowing the clause. You can also walk yourself into a problem: name a service that collides with an existing tenant's exclusive, and the landlord may not even respond to your LOI.
Ask for something narrower and more useful. Your primary use, plus the activities that come with running it. That covers how you actually operate without asking permission to do it.
Then know where the boundary sits. A use clause is not carved in stone. If you make a material change later, say outpatient primary care to a freestanding ER, you're having a conversation with your landlord regardless of how the clause reads. What you're negotiating at the LOI is room to run the business you described, not pre-approval for one you haven't started. The same clause gets read again when someone buys you, next to the assignment provision, which I covered in the lease terms that protect exit value.
Whose exclusives already restrict you?
Other tenants' exclusives bind you, and they are not in your lease. They live in the leases those tenants signed, and you'll see them as an exhibit, usually titled something close to existing exclusives and prohibited uses. Ask for it by name in the LOI phase. The leasing agent has the document and once you've turned the LOI at least once, they will usually provide it.
Read it against what you actually do, not just what you plan to add. A pharmacy's exclusive on dispensing may reach in-clinic dispensing. An urgent care's exclusive on walk-in treatment can reach how you market same-day appointments. A dental group's exclusive can close off a specialty before you've hired for it. Always ask for confirmation, and leverage your broker to help you craft language to distinguish your service from exclusives in the center.
Then ask two questions the exhibit won't answer. Is this list current? And is anything out for signature right now that carries an exclusive? Stale exhibits are common, and and the leasing agent can confirm this for you. The worst case scenario is negotiating a lease and starting your test fit, and find out that a lease is dead because of an old list of exclusives.
Ask the landlord to agree it won't grant a future exclusive that prohibits your permitted use. Landlords keep signing tenants for years after you move in, and each new exclusive can narrow what you're allowed to do. Without this covenant, the protection you negotiated at the LOI erodes one lease at a time, and you won't hear about it until you try to do something and can't.
If an existing exclusive collides with your business, you have three moves. Ask the landlord for a carve-out, which means they go negotiate with that tenant. Ask to narrow how the exclusive is defined. Or accept it and change what you were planning to do in that center. All three are workable.
Should you negotiate your own exclusive?
If a direct competitor in the same center would take real volume from you, yes, and the LOI is where you ask. Four things decide whether the exclusive is worth anything.
Scope. Name your service lines. Unless you are a major hospital system, insurance provider, national credit tenant, you will not get "medical," because that would gut the landlord's ability to lease medical space to other tenants without your consent, and they know exactly what you're asking for. A tight, specific exclusive gets granted. A broad one gets refused or priced.
Definition. Decide what counts as a violation before you need to argue about it. Does an exclusive on physical therapy catch a chiropractor who bills some PT? Does a med spa exclusive catch a dentist offering injectables? You will be the one asking the landlord to enforce, and a vague definition means you lose that conversation.
Remedy. An exclusive with no remedy is a promise. Ask for rent abatement after a cure period, and a termination right if the violation continues past it. That combination is what makes a landlord pick up the phone and call the other tenant. "Landlord shall use reasonable efforts" does not.
Carve-outs. Expect them for existing tenants, their renewals and expansions, and national credit tenants. Those are normal. Push back hard on anything carving out future tenants above a certain size, which isn't a carve-out, it's the whole center. Expect the landlord to want your exclusive to lapse if you stop offering that service or go dark for a stated period. That's fair. Negotiate the period, not the principle.
Be honest about what it costs. Every exclusive narrows what the landlord can do with the center, and they price that, sometimes in rent and sometimes by taking something else off your list. Ask for the exclusive that protects revenue you would actually lose. Spend the rest of your leverage on provisions like the relocation clause, where the downside is your license and your patient base rather than a share of your volume.
What else controls the tenant mix?
The prohibited use list is the floor for the whole center, the uses the landlord has agreed nobody can operate. Read it for what it allows as much as for what it blocks. Everything not on that list is available to whoever signs next.
Co-tenancy is worth being realistic about. True co-tenancy, where your rent drops or you can walk if the anchor goes dark, is rare for clinic tenants. Landlords give it to retailers whose sales depend on the anchor's foot traffic. If your patients arrive by appointment, you have a weak case and you'll spend leverage you need elsewhere. What you should do instead is find out what happens if the anchor leaves, and whether the landlord holds redevelopment rights that let them rebuild the center around you mid-term. Those provisions rarely appear under a heading about neighbors, but that's what they govern.
- The complete exclusives and prohibited use exhibit, with written confirmation that it's current and nothing carrying an exclusive is out for signature.
- A use clause covering your primary use and the activities that come with running it.
- Your own exclusive, scoped to the service lines that carry your revenue, with a defined violation and a remedy that costs the landlord money.
- A covenant that the landlord will not grant future exclusives that prohibit your permitted use.
- The carve-outs written down, so you know what your exclusive doesn't cover before you decide what it's worth to you.
All five belong in the term sheet. Once the LOI is signed, the answer to a new request is that it wasn't in the term sheet, and they're right.
Key takeaways
- Three provisions control who operates around you: your use clause, your exclusive, and the exclusives other tenants signed first. They sit in different documents and get read at different times, which is why they're treated as boilerplate.
- Ask for a use clause covering your primary use and the activities that come with it. Listing speculative future service lines reads as a red flag and gets the clause narrowed, not widened.
- A use clause isn't permanent. A material change later is a landlord conversation no matter how it's drafted, so negotiate for room to operate, not pre-approval.
- Other tenants' exclusives bind you and aren't in your lease. Request the exhibit by name at the LOI, confirm it's current, and ask whether anything with an exclusive is out for signature.
- An exclusive is only worth its remedy. Rent abatement after a cure period plus a termination right makes a landlord act; reasonable efforts language does not.
Frequently asked questions
What is an exclusive use clause in a commercial lease?
An exclusive use clause stops the landlord from leasing other space in the center to a competing use. For a clinic, a workable exclusive names your actual service lines, defines what counts as a violation, and carries a remedy such as rent abatement after a cure period with a termination right if the violation continues. Expect carve-outs for existing tenants, their renewals, and national credit tenants.
Can another tenant's exclusive restrict my clinic?
Yes, and it won't appear in your lease. Existing tenants' exclusives bind later tenants and arrive as an exhibit of restrictions your lease is subject to. A pharmacy's dispensing exclusive or an urgent care's walk-in exclusive can reach services you already provide. Retained CRE tells founders to request that exhibit by name during the LOI, confirm it is current, and ask whether any lease carrying an exclusive is out for signature.
What should a medical office use clause say?
Cover your primary use plus the activities that come with running it. Avoid listing speculative future service lines: landlords read that as a signal you may become something they didn't underwrite, and they narrow the clause in response. A material change later, such as moving from outpatient primary care to a freestanding ER, requires landlord approval regardless of how the clause is written.
What happens if a landlord violates your exclusive use clause?
It depends entirely on the remedy you negotiated. With rent abatement after a defined cure period and a termination right if the violation persists, the landlord has a financial reason to resolve it with the offending tenant. With only a covenant to use reasonable efforts, you have a claim and little leverage, which is why the remedy matters more than the exclusive itself.
What's the difference between exclusive use and cotenancy?
An exclusive protects you from competitors: the landlord agrees not to lease to a competing use. Cotenancy protects you from vacancy: it ties some of your obligations to other tenants staying open, usually an anchor, with remedies if they leave. Clinics rarely obtain meaningful cotenancy, because it's priced for retailers whose sales depend on anchor traffic rather than appointment-based practices.
Negotiating an LOI Right Now?
I read the exclusives exhibit against how you actually operate, and negotiate the use provisions while you still have leverage.
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