The lease provision defining the specific business activities the tenant is authorized to conduct at the premises, limiting the tenant to those stated purposes and prohibiting other uses without landlord consent.
The permitted use clause is one of the most consequential provisions in a commercial lease. Landlords want a narrow, specific use (e.g., "retail sale of women's apparel only") to preserve their right to consent to any business change. Tenants want a broad use clause (e.g., "retail and/or office use for any lawful purpose") to preserve operational flexibility. A use that falls outside the permitted use clause constitutes a default, even if the new use is otherwise legal. In lease abstracts, the permitted use must be captured verbatim - particularly in retail leases where it interacts with exclusive use clauses, co-tenancy rights, and percentage rent calculations.
The permitted use clause defines the specific business activities a tenant may conduct in the leased space. Operating outside the permitted use is a lease default that can trigger termination, eviction, and liability for remaining rent. A restaurant tenant whose lease permits "sit-down dining" but not "food delivery operations" may be in default if delivery becomes a primary revenue channel. The clause also affects assignment and subletting - a permitted use that is too narrow limits the pool of potential assignees and subtenants.
Tenants should negotiate the broadest possible permitted use language to accommodate potential business model changes. Rather than "coffee shop," negotiate "the preparation and sale of food, beverages, and related consumer products." Include catch-all language such as "and any other lawful use consistent with first-class office/retail operations" to provide flexibility. Avoid hyper-specific descriptions that lock the business into a narrow operating model that may need to evolve over a 5- to 10-year lease term.
A "general retail" permitted use allows the tenant to sell virtually any retail products, providing maximum operational flexibility and strong subletting/assignment potential. A specific use restriction like "the sale of women's athletic apparel" dramatically narrows what the tenant can do and whom they can sublet to. Landlords in shopping centers often insist on specific use restrictions to maintain their tenant mix strategy. The trade-off between operational flexibility and landlord control over the tenant mix is one of the most actively negotiated provisions in retail lease transactions.
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