VRN, May 2016

Leasing Headache No. 1: Inclusion of Exclusions

By: Lori Kilberg and Benno Rothschild

Exclusive covenants have been part of the retail leasing landscape for many years. They represent an important facet of the push-and-pull relationship between landlords and tenants: Tenants want to maximize sales by restricting or prohibiting other tenants in a shopping center from selling the same or similar products, and landlords need merchandising flexibility to achieve maximum returns. In traditional shopping centers, the landlord is focused on drawing shoppers with a wide variety of tenants, from sporting goods and book stores to grocers and pharmacies. Tenants in these centers often seek exclusive restrictions so that they are the sole provider of any one use (other than general apparel). Landlords may agree to some of these exclusives to attract particular tenants and product types…

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