The Playbook / Clause 1
Permitted Use
Use Clause; Permitted Use; Scope of Tenant’s Permitted Operations
The Use clause identifies what the tenant may do at the premises. A narrow Use clause functions as a control on tenant mix, an anchor for assignment and subletting restrictions, and a potential default trigger if the tenant’s business changes. A broad Use clause preserves the tenant’s flexibility to evolve its operations, transfer the lease, and avoid an inadvertent default.
What the landlord’s form is doing
Landlord wants a narrow use to control tenant mix, protect other tenants’ exclusives, ensure compliance with REA and zoning, and reserve the right to recapture or relet if the tenant’s business changes. Narrow permitted use also pairs with continuous-operation and going-dark provisions to keep the project at full economic occupancy.
Landlord may seek to condition any change of use on its sole-discretion consent, to bar trade-name changes, and to incorporate the recorded REA’s use restrictions by reference.
Anticipate the landlord pairing any consent to a change of use with a recapture or termination option exercisable upon the tenant’s change-of-use notice, and with a minimum floor-area commitment to the primary use.
What tenants should watch for
Winning a broad use
Push for broad use language. At minimum: the named primary use “and any other lawful retail use,” or “and any other lawful use customarily found in first-class [retail/office] projects.” A narrow use clause is a default trigger if the tenant pivots its business, and it limits assignment and subletting because most landlord forms condition consent on the proposed transferee’s use matching the permitted use.
Fallback: match your other locations. If Landlord refuses a broad permitted use, negotiate for a use consistent with the operations of a majority of the tenant’s other locations, which preserves flexibility to adjust concept, menu, or merchandise over the term.
Fallback: primary use plus capped secondary uses. Where the landlord will not grant a broad use clause, structure the clause as a primary use plus enumerated secondary uses subject to objective caps (percentage of gross leasable area, sales area, or lineal display footage). Resist gross-sales-based caps on secondary uses; even landlord-side commentary concedes such caps are impractical to monitor and can force the tenant to refuse sales.
Flexibility over the term
Trade names and franchise changes: resist restrictions that interfere with normal business decisions. Where the tenant operates under a franchise, confirm the use clause accommodates the re-imaging, re-branding, and menu or concept changes the franchise agreement requires. A use clause narrower than the franchisor’s requirements can force the tenant to choose between defaulting under the lease and defaulting under the franchise agreement, and a landlord consent requirement does not cure the conflict.
Change of use when the law changes. Negotiate an express right to request a change of use if a subsequently enacted law materially impairs the permitted use. Landlord-published model language conditions the right on the law taking effect, a stated revenue decline (e.g., fifty percent) not attributable to the tenant, and notice to the landlord; the structure provides continuity relief without dependence on rent concessions or termination.
Change-of-use recapture: keep a withdrawal right. If Landlord conditions a change of use on a termination or recapture option, insist on a corresponding tenant right to nullify the termination by withdrawing the change request.
Drafting and interpretation traps
Preserve the permissive-drafting gap where possible. A use clause providing that the tenant “shall use the Premises” for a stated purpose, without “solely” or “only,” is permissive rather than restrictive, and courts construe the ambiguity against the drafting landlord; landlord-side drafting guidance now instructs owners to insert “solely” plus an express prohibition on any other use. If the landlord insists on “solely,” respond by broadening the stated use itself and adding an express ancillary-uses right.
Descriptive references are not obligations. Merely descriptive lease references to the tenant’s business do not create an operating obligation or a use restriction. A landlord could not compel a restaurant to continue food sales at the premises where the lease described the space but contained no express operating covenant. Resist landlord efforts to convert recitals, trade-name references, or percentage-rent mechanics into implied use restrictions; an enforceable restriction must be drafted expressly.
Check the companion clauses. Confirm consistency with the Continuous Operation, Going Dark, and Assignment provisions.
Insurance-premium spillover. If the lease passes any insurance premium increase to the tenant, confirm (or have the landlord represent) that anticipated operations, including any cooking, storage, or process uses, will not increase Landlord’s insurance premiums or render coverage void.
How this typically gets negotiated
The fight here is over breadth. Landlords open with a narrow, single-purpose use clause; tenants push for flexible language that accommodates a changing business and keeps the lease transferable. The negotiated result usually pairs a defined primary use with room to evolve, and is coordinated carefully with the assignment clause, because a narrow use clause can quietly gut an otherwise generous transfer right.
The specific language that resolves each of these points depends on the deal. Talk to Paul about your lease →
How the states treat it
Majority rule. Most jurisdictions enforce commercial use restrictions between sophisticated parties under a rule-of-reason analysis. Use clauses are typically construed against the drafter where ambiguous.
REA / recorded restrictions. In many states, use restrictions are imposed through a recorded REA rather than the lease, and bind subsequent owners.
Notable cases
Frisch’s Restaurants, Inc. v. Shoney’s, Inc., 759 F2d 1261 (6th Cir 1985) (Useful for the proposition that use covenants are construed against the drafter and require clear scope language.)
Genuinely Loving Childcare, LLC v. Bre Mariner Conway Crossings, LLC, 209 So. 3d 622 (Florida Ct. App. 2017). Where the risk that the daycare tenant’s operating license would be denied was foreseeable at lease inception and the lease did not expressly allocate that risk, judgment for the landlord was reversed; supports express licensing and permitting contingencies in use-dependent leases
KJ-Park, LLC v. Match Group, LLC, 2026 WL 177930 (9th Cir. 2026). The building’s noncompliance with a ground-floor retail zoning ordinance did not breach the landlord’s obligation to deliver the base, shell, and core in compliance with “Applicable Law” and did not excuse the tenant’s termination; delivery conditions and zoning contingencies must be drafted expressly if they are to reach use-related legal compliance
Game film: real clauses from real leases
Excerpts from commercial leases filed as exhibits with the Securities and Exchange Commission, trimmed for length. Follow the citation for the full document on EDGAR.
“Tenant shall use the Premises for the permitted use specified in the Basic Lease Information … and for no other use or purpose. Uses incidental to a general office use in the Premises may include (a) storage areas for records, furniture, equipment, and supplies of the type customarily used by office building tenants, (b) kitchen, lunchroom, vending area, lounge, or break areas, (c) training centers, meetings, and conference rooms, and (d) printing, mail handling, duplicating, word processing, data processing, and such other communication technology areas as customarily needed by office building tenants … Tenant acknowledges that the prohibition on a change in use contained in this Paragraph 4.1 is expressly authorized by California Civil Code Section 1997.230 and is fully enforceable by Landlord against Tenant.”
Why it matters. Strict "for no other use or purpose" language backed by an express statutory enforceability acknowledgment gives the landlord veto power over any change in the tenant’s operations, so tenants should negotiate the broadest workable defined use before signing.
“Subject to Sections 13.2 and 13.3, the Premises may be used for the Permitted Use. Landlord shall take no action that would impair or limit Tenant's ability to conduct the Permitted Use. Landlord represents and warrants to Tenant that (A) the Premises is, or as of the Commencement Date shall be, properly zoned for use by Tenant as a retail footwear location, (B) there are no restrictive covenants or other title encumbrances which restrict in any way the use of the Premises as a retail footwear location, and (C) Landlord has not entered into, and shall not hereafter prior to the expiration or termination of this Lease enter into, any leases, agreements or restrictive covenants that would prohibit or interfere with the use of the Premises by Tenant as a retail footwear store.”
Why it matters. The tenant turns the use clause into affirmative landlord obligations, obtaining zoning and title representations plus a covenant against future restrictions that could interfere with its business.
“Tenant and its employees, visitors, contractors, invitees and/or subtenants … may use the Garage only for parking purposes; provided, however that if Tenant seeks to provide parking to any user other than Tenant and its permitted subtenants and their respective employees, visitors, contractors and/invitees or to use the Garage for other than ordinary parking purposes (herein a “Third Party Use”), such Third Party Use must comply with all Applicable Laws and shall not be materially more intensive (as far as wear and tear on the Garage facility) than the use of the Garage for ordinary vehicular parking purposes. … Tenant shall be entitled to all revenue generated from any Third Party Use and such use will not be subject to the subleasing or assignment provisions, or any Transfer Premium sharing provisions,”
Why it matters. A narrowly defined permitted use for special-purpose space shows how parties can carve a facility out of standard office lease mechanics, here with an express tenant right to keep parking revenue free of any Transfer Premium sharing.