All you need to know about
Common Area Maintenance charges (CAM)
What is CAM?
Common areas in commercial real estate refer to portions of a building that are shared by multiple tenants. Common areas include hallways, elevators, lobbies, bathrooms and parking lots. In addition to the base rent, commercial tenants are generally obligated to pay their share of the costs necessary to maintain building common areas. These costs are often referred to as “CAM” costs .
CAM costs can vary widely from building to building, be extremely complicated to calculate, and even more complicated to allocate amongst the many tenants in a commercial building. With the considerable financial burden they represent, it is crucial for tenants to protect themselves by ensuring that their share of CAM costs is properly calculated.
CAM provisions vary significantly from lease to lease and need to be CAREFULLY negotiated.
CAM costs may include a multitude of operating expenses such as:
- Repairs, maintenance, and janitorial expenses
- Building expenses
- Landscaping and pest control expenses
- Painting expenses
- Parking lot maintenance expenses
- Structural and roofing repairs expenses
- Plumbing, electrical, sewage and HVAC expenses
- Elevator maintenance expenses
- Renovation expenses
- Utilities and trash removal expenses
- Advertising and promotional expenses
- Fire alarm monitoring, security systems and personnel expenses
- Permits, taxes, and insurance expenses
- Legal and accounting expenses
- Management and administrative salary expenses
- Maintenance of leasing office expenses
- Expenses to comply with government regulations such as the American with Disabilities Act
However, many expenses are properly borne by landlords and are NOT properly included in CAM costs. For example, CAM costs should not include costs directly attributable to building ownership or capitalized expenses (such as expenses incurred for a new roof).
It is vital for tenants to CAREFULLY negotiate the CAM provisions in their leases, and for CAM costs to be clearly identified and completely understood prior to lease execution.
LeaseWatch is a team of highly skilled professionals who provide economical lease administration and support services to clients. If you are a commercial tenant frustrated by Common Area Maintenance Charges, please give us a call today!