Apple, Tesla Mumbai showroom lease deals: Impact of ‘exclusivity clause’ on premium retail space rentals
Apple and Tesla Mumbai showroom lease deals highlight how exclusivity clauses boost rent and secure better terms for brands
The Apple and Tesla lease deals in Mumbai’s Bandra Kurla Complex (BKC) have brought exclusive contractual obligations into focus, highlighting their impact on India's rapidly growing retail sector. Exclusivity clauses can significantly impact rental prices in malls, often driving them higher. Experts note that these clauses are a powerful negotiation tool for major brands, particularly anchor stores, allowing them to secure more favourable lease terms.
In 2022, Apple secured a prime space in the Jio World Drive Mall with an exclusivity clause preventing competitors, including Tesla, from opening a retail outlet in the same building. Tesla, however, found a workaround by leasing space in the adjacent Maker Maxity building to establish a foothold in India’s expanding EV market.
According to the lease document accessed by Propstack, Apple outlined that the licensor will not lease space to any ‘Competing Brands,’ restricting them from setting up stores in the shopping center, underscoring Apple’s control over its retail environment.
The Apple lease document said that the licensor will not lease any brands listed in Schedule D ("Competing Brands") to set up retail stores for retailing, advertising, selling, offering, displaying and merchandising their products and services within the shopping centre.
Schedule D included the names of 22 competing brands, including Tesla, Microsoft, Google, Dell, and others.
These moves highlight how exclusive leasing clauses are becoming more common among retail brands seeking to dominate premium showroom spaces in India’s retail market, say experts.
Apple and Tesla retail leases in Mumbai
According to data from Propstack, Apple leased a larger space at Jio World Drive with a revenue share component, resulting in an estimated rent of ₹600-650 per sq ft per month.
In contrast, Tesla secured a smaller space at Maker Maxity without a revenue share clause but at a higher rent of ₹881 per sq ft per month. Documents accessed by CRE Matrix revealed that the company paid ₹35 lakh in monthly rent and ₹23.38 crore for a five-year lease.
"Tesla, undeterred by Apple's exclusivity clause, cleverly navigated this hurdle by securing space in the adjacent Maker Maxity building. This strategic move highlights Tesla's determination to establish a strong presence in this key market," said Sandeep Reddy, founder of Propstack.
What is an exclusivity clause?
An exclusivity clause in the retail segment is a contractual provision that prevents a landlord from leasing space to competing brands within the same property or a designated area. This clause is typically included in lease agreements to give a retailer a competitive edge by ensuring that direct competitors do not operate nearby, thereby protecting market share and brand positioning.
Experts say these clauses are common in upscale malls, shopping centres, and commercial hubs, where brands strive to maintain exclusivity and strengthen their market position.
"To boost footfalls, malls often bring in anchor stores—large, well-known retailers that serve as major attractions. A similar practice is also common in office parks, where multinational corporations may include exclusivity contracts to prevent competitors from setting up offices in the same building," an industry source noted.
What is the purpose of an exclusivity clause?
An exclusivity clause prevents direct competition within the same shopping area, allowing high-end brands to maintain market dominance and preserve their premium status. By limiting competition, these clauses help optimize foot traffic and sales, ensuring that customers are directed toward a specific store rather than splitting their attention among competitors, say experts.
Retailers invest heavily in marketing and store design to create a unique shopping experience. Exclusivity clauses protect this investment by preventing competitors from tapping into the same customer base. Experts note that these clauses are essential for brands to maintain control over their market presence and secure a competitive edge, ensuring they remain the sole brand in their category within a particular location.
Do exclusivity clauses impact rentals?
Exclusivity clauses can significantly impact rental prices in malls, often driving them higher. Experts note that these clauses are a powerful negotiation tool for major brands, particularly anchor stores, allowing them to secure more favourable lease terms.
Industry sources highlight that landlords often capitalise on the premium footfall generated when a major brand secures exclusive space in a mall, leading them to demand higher rents from other brands looking to lease space. This can increase rentals by 20-30%, as seen in a mall near Mumbai, where anchor stores contributed to a 10-15% hike in rental rates for other tenants.
