How Do I Negotiate Exclusive-Use and Co-Tenancy Clauses?

Curated by Kory White · Fractional CRO, CRO Syndicate

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📅 Published Jun 24, 2026 · Updated Jun 21, 2026 · 7 min read

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How Do I Negotiate Exclusive-Use and Co-Tenancy Clauses?

Direct Answer

These are two of the most valuable clauses a retail tenant can win, and most landlords leave them out unless you ask. An exclusive-use clause bars the landlord from leasing other space in the center to a competitor selling your core products or services — protecting your sales from being split.

A co-tenancy clause ties your rent (or your obligation to even open) to the center staying occupied: if the anchor tenant goes dark or occupancy drops below a threshold (commonly 60% to 80%), your rent drops to alternate rent — often 50% of base rent or a percentage-of-sales-only deal — until the center re-fills.

The money move: demand both, define them with hard percentages and named categories, and attach self-help remedies (rent reduction, then termination) so the clause has teeth. A well-drafted co-tenancy clause can save a struggling tenant $3,000 to $20,000+ per month when an anchor closes.

An exclusive-use clause can protect 15% to 40% of revenue that a same-category competitor would otherwise siphon off.

Exclusive-Use: Lock Out Your Competitors

An exclusive-use clause is your moat. Without it, the landlord can put a direct competitor three doors down and cut your sales in half. With it, you are the only operator in the center allowed to sell your protected category.

What to demand:

A precise category definition. "Sale of coffee and espresso beverages as a primary use" is enforceable. "Coffee shop" is not — a competitor will call itself a "bakery that also serves coffee." Pin the language to products and revenue share (e.g., any tenant deriving more than 15% of gross sales from your protected category).
Coverage of the whole center, including outparcels and pad sites, not just the inline shops.
Landlord enforcement obligation. The landlord must actively enforce against violators, with a cure period and then your remedies (rent reduction or termination) if they fail.
Carve-outs you can live with. Landlords will protect existing tenants and national anchors. Get the carve-out list named specifically — never "and similar uses."

The trap: a vague exclusive is worse than none, because it gives you false comfort. Spend the legal dollars to make the definition airtight.

CRO Syndicate — Need a fractional Chief Revenue Officer? CRO Syndicate connects you with vetted fractional and interim revenue leaders. Kory White, Fractional CRO · 25 yrs · $0 to $200M scaled.

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Co-Tenancy: Don't Pay Full Rent for an Empty Center

Co-tenancy protects you from the landlord's failure to keep the center alive. There are two flavors, and you want both:

Opening co-tenancy. You are not obligated to open (or to pay rent) until the anchor and a minimum percentage of inline space are open and operating. Protects you from opening into a ghost town.
Ongoing co-tenancy. If the anchor goes dark or occupancy falls below your threshold for more than 30 to 60 days, your rent converts to alternate rent.

Define the trigger with numbers:

Named anchor(s): list the specific anchor by name (e.g., the grocery or big-box that drives your traffic). "An anchor of comparable quality" is a loophole — landlords will backfill with a discount tenant.
Occupancy threshold: typically occupancy below 70% to 80% of leasable area, OR loss of the named anchor.
Alternate rent: commonly 50% of base rent, or the lesser of base rent or a percentage of gross sales (e.g., 5% to 8% of sales).
Cure window: landlord gets 9 to 12 months to re-tenant before your termination right kicks in.

The Remedies That Give These Clauses Teeth

A clause with no remedy is decoration. Stack the consequences so the landlord is motivated to keep the center full and competitor-free:

Step 1 — Rent reduction. Automatic drop to alternate rent the moment the trigger hits.
Step 2 — Continued reduction. Reduced rent persists for the full cure period (9–12 months).
Step 3 — Termination. If the trigger is not cured, you may terminate with no penalty and recover unamortized buildout in some negotiated deals.
Step 4 — Damages for exclusive breach. If the landlord lets a competitor in, you get rent abatement plus, in strong leases, the right to injunctive relief to force the competitor out.

Push for the reductions to be self-executing — you simply pay less, and the landlord must sue to dispute it. That flips the leverage: the burden is on them, not you.

flowchart TD A[Co-tenancy trigger?] --> B{Anchor dark OR occupancy below 70%?} B -->|No| C[Pay full base rent] B -->|Yes| D[Rent drops to alternate rent - 50% or % of sales] D --> E{Cured within 9-12 months?} E -->|Yes| C E -->|No| F[Tenant may terminate, no penalty] F --> G[Recover unamortized buildout if negotiated]

flowchart LR A[Exclusive-use clause] --> B[Define category by product + % of sales] B --> C[Cover whole center incl. outparcels] C --> D[Landlord must enforce] D --> E{Competitor moves in?} E -->|Landlord cures| F[No competitor - protected] E -->|Landlord fails| G[Rent abatement + injunction + termination right]

Common Mistakes That Gut These Clauses

Accepting "comparable anchor" language. Always name the anchor. A backfilled dollar store is not the grocery that drew your customers.
Vague exclusive categories. "Restaurant" or "apparel" invites competitors to claim a different label. Tie it to percentage of sales from named products.
No termination backstop. A rent reduction alone can trap you in a dying center for years. Always negotiate the walk-away right.
Ignoring percentage rent interaction. If you pay percentage rent, co-tenancy alternate rent should suspend or reduce it too — otherwise a dead center still costs you on the upside.
Forgetting the buildout. When you can terminate, fight to recover unamortized tenant improvements so a landlord failure does not strand your $/sq ft investment.

Brokers at CBRE, JLL, and Cushman & Wakefield treat co-tenancy and exclusive-use as the two clauses where a strong tenant-rep broker earns their entire fee — the dollars saved when an anchor closes routinely exceed the cost of the lease negotiation many times over.

FAQ

What's the difference between exclusive-use and co-tenancy? Exclusive-use keeps competitors out of the center so your sales aren't split. Co-tenancy reduces your rent or lets you leave if the center loses its anchor or drops below an occupancy threshold. One protects revenue; the other protects you from paying full rent in a failing center.

Negotiate both.

What is a typical co-tenancy rent reduction? A common structure is alternate rent at 50% of base rent, or the lesser of base rent or 5% to 8% of gross sales, lasting until the center re-tenants or the cure period (9 to 12 months) expires — after which you can terminate.

Will a landlord actually agree to these clauses? Larger, well-capitalized tenants and credit tenants get them routinely. Small tenants get them less often, but a good tenant-rep broker can win at least a scaled-down version — especially in a soft market or a center with vacancy the landlord needs to fill.

How do I make sure the exclusive-use clause is enforceable? Define the protected category by specific products and a percentage-of-sales threshold, cover the entire center including outparcels, require the landlord to enforce, and attach remedies (rent abatement, injunction, termination) if a competitor slips in.

Vague category language is the number-one reason these clauses fail.

Sources

CBRE — Retail occupier advisory on exclusive-use and co-tenancy negotiation.
JLL — Tenant representation guidance on co-tenancy triggers and alternate-rent structures.
Cushman & Wakefield — Retail leasing playbook on anchor protections and exclusivity.
International Council of Shopping Centers (ICSC) — Standards and case commentary on co-tenancy and exclusive-use clauses.
NAIOP — Commercial lease negotiation resources for retail tenants.
IREM (Institute of Real Estate Management) — Shopping center management on occupancy thresholds and tenant remedies.
Tenant-rep brokerage practice notes on drafting enforceable exclusive-use language.

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<svg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1200 340" role="img" aria-label="How Do I Negotiate Exclusive-Use and Co-Tenancy Clauses? — PULSE Buildouts"><rect width="1200" height="340" fill="#EBE9DE"/><rect width="14" height="340" fill="#C0531F"/><text x="58" y="116" font-family="Arial,Helvetica,sans-serif" font-size="32" font-weight="800" letter-spacing="3" fill="#C0531F">PULSE BUILDOUTS · COMMERCIAL REAL ESTATE</text><text x="56" y="198" font-family="Arial,Helvetica,sans-serif" font-size="60" font-weight="800" fill="#2b2b2b">Save money. Don’t get screwed.</text><text x="58" y="258" font-family="Arial,Helvetica,sans-serif" font-size="30" font-weight="600" fill="#6b5b4d">Leases, TI, NNN &amp; buildouts — negotiated in your favor</text><g transform="translate(1010,86)" fill="none" stroke="#C0531F" stroke-width="9" stroke-linejoin="round"><rect x="20" y="40" width="150" height="130"/><line x1="20" y1="40" x2="95" y2="6"/><line x1="170" y1="40" x2="95" y2="6"/><rect x="50" y="80" width="36" height="36"/><rect x="104" y="80" width="36" height="36"/><rect x="74" y="128" width="42" height="42"/></g></svg>

# How Do I Negotiate Exclusive-Use and Co-Tenancy Clauses?

## Direct Answer

These are two of the most valuable clauses a retail tenant can win, and most landlords leave them out unless you ask. An **exclusive-use clause** bars the landlord from leasing other space in the center to a competitor selling your core products or services — protecting your sales from being split. A **co-tenancy clause** ties your rent (or your obligation to even open) to the center staying occupied: if the **anchor tenant** goes dark or **occupancy drops below a threshold (commonly 60% to 80%)**, your rent drops to **alternate rent** — often **50% of base rent** or a percentage-of-sales-only deal — until the center re-fills.

The money move: demand **both**, define them with **hard percentages and named categories**, and attach **self-help remedies** (rent reduction, then termination) so the clause has teeth. A well-drafted co-tenancy clause can save a struggling tenant **$3,000 to $20,000+ per month** when an anchor closes. An exclusive-use clause can protect **15% to 40%** of revenue that a same-category competitor would otherwise siphon off.

## Exclusive-Use: Lock Out Your Competitors

An exclusive-use clause is your **moat**. Without it, the landlord can put a direct competitor three doors down and cut your sales in half. With it, you are the only operator in the center allowed to sell your protected category.

What to demand:

- **A precise category definition.** "Sale of coffee and espresso beverages as a primary use" is enforceable. "Coffee shop" is not — a competitor will call itself a "bakery that also serves coffee." Pin the language to **products and revenue share** (e.g., any tenant deriving more than **15% of gross sales** from your protected category).
- **Coverage of the whole center**, including **outparcels and pad sites**, not just the inline shops.
- **Landlord enforcement obligation.** The landlord must actively enforce against violators, with a **cure period** and then **your remedies** (rent reduction or termination) if they fail.
- **Carve-outs you can live with.** Landlords will protect **existing tenants** and **national anchors**. Get the carve-out list named specifically — never "and similar uses."

The trap: a vague exclusive is worse than none, because it gives you false comfort. Spend the legal dollars to make the definition airtight.


[![CRO Syndicate — Need a fractional Chief Revenue Officer? CRO Syndicate connects you with vetted fractional and interim revenue leaders. Kory White, Fractional CRO · 25 yrs · $0 to $200M scaled.](https://wsrv.nl/?url=files.catbox.moe/usgv65.png&w=1280&output=webp)](https://calendly.com/korywhiterevops)

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## Co-Tenancy: Don't Pay Full Rent for an Empty Center

Co-tenancy protects you from the landlord's failure to keep the center alive. There are two flavors, and you want both:

1. **Opening co-tenancy.** You are not obligated to open (or to pay rent) until the **anchor and a minimum percentage of inline space** are open and operating. Protects you from opening into a ghost town.
2. **Ongoing co-tenancy.** If the **anchor goes dark** or occupancy falls below your threshold for more than **30 to 60 days**, your rent converts to **alternate rent**.

Define the trigger with numbers:

- **Named anchor(s):** list the specific anchor by name (e.g., the grocery or big-box that drives your traffic). "An anchor of comparable quality" is a loophole — landlords will backfill with a discount tenant.
- **Occupancy threshold:** typically **occupancy below 70% to 80%** of leasable area, OR loss of the named anchor.
- **Alternate rent:** commonly **50% of base rent**, or the **lesser of base rent or a percentage of gross sales** (e.g., **5% to 8% of sales**).
- **Cure window:** landlord gets **9 to 12 months** to re-tenant before your **termination right** kicks in.

## The Remedies That Give These Clauses Teeth

A clause with no remedy is decoration. Stack the consequences so the landlord is motivated to keep the center full and competitor-free:

- **Step 1 — Rent reduction.** Automatic drop to alternate rent the moment the trigger hits.
- **Step 2 — Continued reduction.** Reduced rent persists for the full **cure period** (9–12 months).
- **Step 3 — Termination.** If the trigger is not cured, you may **terminate with no penalty** and recover **unamortized buildout** in some negotiated deals.
- **Step 4 — Damages for exclusive breach.** If the landlord lets a competitor in, you get **rent abatement** plus, in strong leases, the right to **injunctive relief** to force the competitor out.

Push for the reductions to be **self-executing** — you simply pay less, and the landlord must sue to dispute it. That flips the leverage: the burden is on them, not you.

```mermaid
flowchart TD
    A[Co-tenancy trigger?] --> B{Anchor dark OR occupancy below 70%?}
    B -->|No| C[Pay full base rent]
    B -->|Yes| D[Rent drops to alternate rent - 50% or % of sales]
    D --> E{Cured within 9-12 months?}
    E -->|Yes| C
    E -->|No| F[Tenant may terminate, no penalty]
    F --> G[Recover unamortized buildout if negotiated]
```

```mermaid
flowchart LR
    A[Exclusive-use clause] --> B[Define category by product + % of sales]
    B --> C[Cover whole center incl. outparcels]
    C --> D[Landlord must enforce]
    D --> E{Competitor moves in?}
    E -->|Landlord cures| F[No competitor - protected]
    E -->|Landlord fails| G[Rent abatement + injunction + termination right]
```

## Common Mistakes That Gut These Clauses

- **Accepting "comparable anchor" language.** Always name the anchor. A backfilled dollar store is not the grocery that drew your customers.
- **Vague exclusive categories.** "Restaurant" or "apparel" invites competitors to claim a different label. Tie it to **percentage of sales** from named products.
- **No termination backstop.** A rent reduction alone can trap you in a dying center for years. Always negotiate the **walk-away right**.
- **Ignoring percentage rent interaction.** If you pay **percentage rent**, co-tenancy alternate rent should suspend or reduce it too — otherwise a dead center still costs you on the upside.
- **Forgetting the buildout.** When you can terminate, fight to recover **unamortized tenant improvements** so a landlord failure does not strand your **$/sq ft** investment.

Brokers at **CBRE**, **JLL**, and **Cushman & Wakefield** treat co-tenancy and exclusive-use as the two clauses where a strong **tenant-rep broker** earns their entire fee — the dollars saved when an anchor closes routinely exceed the cost of the lease negotiation many times over.

## FAQ

**What's the difference between exclusive-use and co-tenancy?**
**Exclusive-use** keeps competitors out of the center so your sales aren't split. **Co-tenancy** reduces your rent or lets you leave if the center loses its anchor or drops below an occupancy threshold. One protects revenue; the other protects you from paying full rent in a failing center. Negotiate both.

**What is a typical co-tenancy rent reduction?**
A common structure is **alternate rent at 50% of base rent**, or the **lesser of base rent or 5% to 8% of gross sales**, lasting until the center re-tenants or the cure period (**9 to 12 months**) expires — after which you can terminate.

**Will a landlord actually agree to these clauses?**
Larger, well-capitalized tenants and credit tenants get them routinely. Small tenants get them less often, but a good **tenant-rep broker** can win at least a **scaled-down version** — especially in a soft market or a center with vacancy the landlord needs to fill.

**How do I make sure the exclusive-use clause is enforceable?**
Define the protected category by **specific products and a percentage-of-sales threshold**, cover the **entire center including outparcels**, require the **landlord to enforce**, and attach **remedies** (rent abatement, injunction, termination) if a competitor slips in. Vague category language is the number-one reason these clauses fail.

## Sources

- **CBRE** — Retail occupier advisory on exclusive-use and co-tenancy negotiation.
- **JLL** — Tenant representation guidance on co-tenancy triggers and alternate-rent structures.
- **Cushman & Wakefield** — Retail leasing playbook on anchor protections and exclusivity.
- **International Council of Shopping Centers (ICSC)** — Standards and case commentary on co-tenancy and exclusive-use clauses.
- **NAIOP** — Commercial lease negotiation resources for retail tenants.
- **IREM** (Institute of Real Estate Management) — Shopping center management on occupancy thresholds and tenant remedies.
- Tenant-rep brokerage practice notes on drafting enforceable exclusive-use language.

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How Do I Negotiate Exclusive-Use and Co-Tenancy Clauses?

How Do I Negotiate Exclusive-Use and Co-Tenancy Clauses?

Direct Answer

Exclusive-Use: Lock Out Your Competitors

Co-Tenancy: Don't Pay Full Rent for an Empty Center

The Remedies That Give These Clauses Teeth

Common Mistakes That Gut These Clauses

FAQ

Sources

What does the score mean?