Use Clause

A use clause defines what the tenant is allowed (and required) to do with the leased premises. In office leases it is usually a short statement of permitted use. In retail leases it is a major negotiated provision that controls trade category, exclusivity, prohibited activities, and continuous-operation duties. The breadth of the use clause shapes the tenant's flexibility, the landlord's tenant-mix control, and — crucially — the marketability of the lease if the tenant ever wants to assign or sublet.

What it does in plain language

The use clause draws the boundary between activity inside the premises that is permitted and activity that is not. It also, often, requires the tenant to actually conduct that permitted use (continuous-operation), and to refrain from prohibited uses (the negative list). For tenants, breadth is value: a narrow use clause limits assignment options, exclusivity protections, and commercial flexibility.

What a typical use clause contains

A workable use clause has three parts.

A permitted-use statement. This is the affirmative description of what the tenant can do. Common drafting:

• Narrow: "Tenant shall use the Premises solely as the corporate headquarters of XYZ Corporation and for no other purpose." Locks the tenant in completely.
• Moderate: "Tenant shall use the Premises for general office purposes consistent with the operation of a financial-services firm." Permits the use category but constrains industry.
• Broad: "Tenant shall use the Premises for general office purposes and for any lawful use ancillary to general office operations." Maximum flexibility.

In retail leases, the permitted use is more specific: "the operation of a retail clothing store under the trade name [X]" or "a quick-service restaurant featuring sandwiches and salads."

A prohibited-use list. The negative side: things the tenant cannot do regardless of permitted-use language. Common items: storage of hazardous materials, residential use, illegal activity, generation of noise / odour / vibration, video gaming, gun shows, adult-oriented businesses. Some leases also prohibit categories that compete with other tenants (the inverse of an exclusive-use clause).

A continuous-operation duty (in retail and some office). The tenant must operate continuously during defined hours and days, conduct business in compliance with stated standards, and refrain from going dark. This is heavy in mall leases (where co-tenancy depends on operations) and rare in office.

Sample wording — office

Tenant shall use and occupy the Premises solely for general office purposes
consistent with the operations of a financial-services firm, and for no
other purpose without Landlord's prior written consent. Tenant shall not
use the Premises for any of the following: (i) any unlawful purpose; (ii)
the manufacture, storage, or disposal of hazardous materials except in
quantities customarily found in office settings; (iii) any use that
violates the certificate of occupancy or applicable zoning; (iv) any
residential use; (v) operations that generate noise, vibration, or odour
materially exceeding levels customary for office use; or (vi) any use
that is in violation of the exclusive-use rights granted to other
tenants of the Building.

Sample wording — retail with continuous operation

Tenant shall use and occupy the Premises solely for the operation of a
specialty retail store selling [Permitted Goods] under the trade name
[Tenant Trade Name] and for no other purpose. Tenant shall: (i) operate
continuously during the Center's required operating hours; (ii) maintain
the Premises in a clean, well-stocked condition; (iii) maintain inventory
levels and merchandise mix appropriate to a first-class retail operation;
(iv) refrain from operating any "dark store" or temporary use other than
brief operational closures (under three consecutive days) for inventory,
remodelling, or unavoidable cause.

Tenant shall not use the Premises for: (a) any of the prohibited uses
listed in Exhibit C; (b) operations that compete with the exclusive-use
rights of other tenants of the Center as set forth in Exhibit D; (c)
storage or warehouse use except as ancillary to the retail operation;
or (d) operations during hours other than the Center's required
operating hours.

What to negotiate — tenant side

Tenants want broad permitted use and flexible prohibited-use carve-outs.

For office tenants:

Broad permitted use. "General office purposes and any other lawful use" is the goal. "General office purposes for the operation of [specific industry]" is a narrowing. "Solely as the headquarters of [Tenant]" is most restrictive.

Carve-outs from prohibited uses. Hazardous materials in normal office quantities should be permitted (cleaning supplies, copier toner, etc.). Restaurants in conjunction with corporate dining facilities should be specifically permitted if the tenant intends to operate one.

No continuous-operation duty. Office leases should not require continuous operation. The tenant should be able to vacate the space, close offices for renovation, or operate at reduced capacity without breaching.

For retail tenants:

Reasonable category breadth. Don't lock yourself into a single product category. "Specialty retail store selling [category] and reasonably ancillary products" gives flexibility for product-line evolution.

Trade-name flexibility. Permit changes of trade name with landlord consent (not unreasonably withheld). Brand evolution and rebranding should not require a lease amendment.

Limited continuous-operation duties. Specify exceptions for renovation, force majeure, casualty, market conditions, and "going dark" rights with reasonable notice. Permit reduced hours during off-peak seasons.

Match prohibited uses to industry standards. Don't accept prohibited-use lists that are so broad they preclude reasonable business expansion.

What to negotiate — landlord side

Landlords want:

Narrow permitted use, especially in retail. The landlord wants control over tenant-mix optimisation; broad use clauses dilute that control.

Comprehensive prohibited-use list. Standard items plus discretionary additions (e.g., uses that conflict with the landlord's leasing strategy, uses that affect building reputation).

Strict continuous-operation duties in retail. Going dark damages the centre's appeal; the landlord wants commitment to operate.

No assignment without use confirmation. The assignee's use should match or fall within the original permitted use; broader uses require landlord consent.

Common drafting traps

Use language that's too narrow for assignment. If the original tenant has a use clause limited to "the operation of an investment management firm," any assignee that isn't an investment management firm may need landlord consent. This restricts the tenant's exit options. Broaden the use clause where possible.

"And reasonably ancillary uses". The phrase is important but vague. Specify what's ancillary: for an office tenant, "ancillary uses" might include conference centres, cafés, fitness facilities, mailrooms, medical offices for staff, and similar.

Conflict with exclusive-use rights. If another tenant has an exclusive on coffee retail and the use clause permits "any retail use," the tenant can be in technical violation. Cross-check the prohibited-use list against existing exclusives.

Continuous-operation duty interaction with co-tenancy. If the centre has a co-tenancy clause that permits the tenant to "go dark" during co-tenancy failure, the use clause should include a corresponding carve-out from continuous operation.

Standards of operation. "First-class retail operation" or "comparable to a XYZ-tier store" requires definition. Without it, the landlord can argue the tenant's operations don't meet the standard.

Compliance with building rules. The use clause typically subjects the tenant to building rules and regulations. The lease should specify that rules cannot be unilaterally amended in a way that materially changes the tenant's permitted use.

APAC variations

Hong Kong office leases typically have brief permitted-use clauses ("general office purposes consistent with the operations of [Tenant]") and short prohibited-use lists. Retail leases in flagship malls (IFC, Pacific Place, Hysan Place) have detailed use clauses with continuous-operation duties and trade-name protection.

Singapore practice resembles Hong Kong's. URA zoning compliance is integrated into use-clause drafting; the tenant should confirm the permitted use is zoning-compliant.

In Japan, the Land and Building Lease Act and Building Standards Act provide overlapping use-restriction frameworks. Tokyo international-grade office leases for foreign tenants follow US-style use-clause drafting; domestic-format leases historically used shorter permitted-use language with broader landlord discretion to limit changes.

If you are abstracting a portfolio and want each lease's permitted use, prohibited-use list, continuous-operation duties, and exclusive-use protections captured per lease with citations to the source PDF, LeaseTrace extracts those fields with page-level references in the same structure across leases.